Desperate Measures

The negative fallout from the recent coalition agreement, in terms of both market and domestic voter confidence, is potentially huge. Both LPR and SO are traditionally eurosceptic and anti-reform, and both were opposed to Poland's EU entry in 2004; now their leaders have been given the important ministerial portfolios of education and agriculture. One obvious risk going forward is the possibility of fiscal loosening, demonstrated all too well by the populist measures that followed February's informal power-sharing agreement. Despite agreeing to a PLN30bn deficit cap, lower taxes for families and increased spending on infrastructure have already been announced, and even

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