How Orbán is using Hungary’s economy to maintain his own power

Little consumption, great uncertainty

Although the time when Hungary is the highest Inflation rate recorded in the EU (January 2023: 26 percent), over in September the inflation rate was three percentbut that uncertainty has remained. The population consumes little, companies are holding back on investments for fear of arbitrary taxes; Growth forecasts are being scaled down further and further.

“Of course, the poor economic situation in Hungary’s immediate neighborhood also plays a role, for example the fact that important export countries such as Germany, Austria and Italy are not growing particularly strongly at the moment,” says economist Sandor Richter from the Vienna Institute for International Economic Studies (wiiw). COURIER. In addition, the government of the right-wing conservative Prime Minister Viktor Orbán – not without strong criticism – in recent years, especially on the resource-intensive side Battery industry set, but global demand for electric cars is currently experiencing a setback. “This one-sided specialization is now demanding a high price,” said Richter.

In conflict with Brussels

But the miserable situation is largely self-inflicted. On the one hand, there are the political ones Conflicts with the EU. Brussels because of deficits in the rule of law withheld funds have permanently weakened the state budget. Due to non-implementation of the EU asylum law A fine of 200 million euros was imposed on Hungary in June, increasing by one million euros for each day of violation.

The European Commission deducts the funds from EU payments to Budapest. Funds that Hungary lacks for public investments. “In good years, Hungary received around three percent of its GDP in EU money. That has almost halved,” said Richter.

And then there is Prime Minister Orbán, who has been pulling all the strings and who has also been the one for years Economic policy of the country rigorously participates in decision-making. Orbán always subordinates economic considerations to current, short-term political and economic considerations personal priorities under, say critics.

First sweet, then sour

Orbán’s government period can also be divided into economic policy periods. “In an election year, the economy is thriving, wages are rising, the government is distributing Election gifts“, says Richter – and usually quickly and without thinking. In the past, for example Price cap on energy, rent or food without paying much attention to the longer-term consequences of these measures, such as shortages or increases in inflation.

Then follows the “cat misery”, as Richter put it, inflation is increasing – and the government announces Special taxes and Tax increasesto get money back into the state treasury. For the nationalist Orbán, the measures usually also have a political component, such as this Special tax for foreign companies, with which Hungary has entered into infringement proceedings in Brussels. This has also caused severe problems for the Austrian retail chain Spar.

As miserable as the situation is, hardly anyone believes that things will get better soon. Also because 2026 the next ones General elections queue. And although the economic situation does not allow it, the government is likely to dig deep into the state coffers again for election gifts – perhaps even deeper than usual given the threat from the opposition movement, which was only founded at the beginning of the year Péter Magyar.

Dangerous opposition

One Opinion poll The Hungarian think tank 21 Research Center currently sees the Orbán critic’s party ahead of the Fidesz party (TISZA: 42 percent, Fidesz: 40 percent). It is the first time in almost two decades that the Fidesz party has been pushed into second place by the opposition in a poll. “The opposition has never been more dangerous in the last 14 years,” said Richter.

On many issues, Magyar shares Orbán’s conservative views; Above all, he scores points for the fact that he… Nepotism and self-enrichment of the Prime Minister.

Most recently he denounced a deal between the government and Orbán’s son-in-law Istvan Tiborcz an: The state is said to have bought an office complex from Tiborcz that would otherwise have been a huge loss-making deal. Tiborcz is now considered one of the richest Hungarians, alongside Orbán’s childhood friend Lőrinc Mészáros. “How can Orbán buy completely unnecessary office buildings from his son-in-law for 650 billion forints while the government announces a 130-point austerity program for the health system, education and culture?” denounced Magyar.

A question that more and more Hungarians are likely to ask themselves.