Plans for the economic revival of a small farming town in Southeastern Poland are in the works. Built by the Lubna sugar factory – which employed three generations of locals, the town of Kazimierza Wielka was devastated when the company closed in 2006.

Today, local officials have a new plan to lure investors back to their town, located some 50km north-east of Krakow.

Fuelled by the discovery of sulphur waters, and a grant from the EU, the municipality is preparing to build a spa which, if all goes according to plan, will be developed into a health resort to give the local economy a second pillar alongside its tradition of agriculture, reported The Financial Times.

Along with a host of other EU-funded projects in Kazimierza Wielka, the plan is an example of the role that European cash has played in the transformation of Poland’s economy since it joined the bloc a decade and a half ago. And it is an illustration of what is at stake for Poland as EU member states gear up for what are likely to be difficult negotiations over the bloc’s next seven-year budget.

“[The EU funds] are life-giving. Without them, we wouldn’t have been able to do the investments we have done, or those that we are planning to do,” said Adam Bodzioch, mayor of Kazimierza Wielka. “Roughly speaking, [if we had been relying on] our own funds, we would need another 20 years to get to where we are today.”

Poland is the EU’s biggest recipient of cohesion funds and the fourth biggest of agriculture aid. In the last seven-year budget, it was allocated more than €100bn in funding, accounting for around 2.4% of gross domestic product over the period.

In the area around Kazimierza Wielka — where the average gross monthly income of 3,240 zlotys is just three-quarters of the Polish average, and unemployment is roughly double the national level of 4.4 per cent — EU funds account for between 10 and 15 per cent of the annual budget, according to Jan Nowak, head of the county administration.

The funds have allowed the town to improve its public buildings, as well as create a park and a swimming pool. They have also revolutionised its transport links: the smooth new road through rolling countryside linking the town to Krakow is dotted with signs reminding motorists of the EU’s role in easing their journey.

According to The Financial Times, Brussels’ plans to shift cash from eastern to southern Europe in the next seven-year budget has got Polish officials preparing for a tough fight. The precise formula was being negotiated last week — but in the worst-case scenario Poland could see its cohesion funding cut by about 25%, according to officials involved in the talks.

Jerzy Kwiecinski, minister for investment and economic development, said such proposals would be unacceptable to Poland, and make the chance of a swift agreement on the budget — the commission is hoping for a deal by the spring — very slim. “We’ve heard some leaks that are not really very encouraging,” he said. “If they materialise, then we will be entirely stuck in the negotiations. I am afraid that it will be a really big problem.”