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2012-03-14

The budget deficits haunt the Hungarian government

With their profligate ways, many governments have sown the seeds of potential penalties from Brussels on account of excessive budget deficits, but the Orbán-government is now most likely to reap the dire consequences.
The budget deficits haunt the Hungarian government

With their profligate ways, many governments have sown the seeds of potential penalties from Brussels on account of excessive budget deficits, but the Orbán-government is now most likely to reap the dire consequences. The European Commission threatens to withhold half a billion euros in Cohesion Funds from Hungary – this would be a first not only in Hungarian, but in European history – unless the budget deficit is brought under control, i.e. persistently 3% or less. While the government insists that it has done precisely that, the Commission is sceptical, arguing that Viktor Orbán’s Cabinet has manoeuvred mostly based on one-off revenue items that do not guarantee long-term budget sustainability. The government still has the chance to avert an outcome whereby Hungary loses funds, and the question is whether it will grasp this opportunity. Another crucial question is whether in response to the current conundrum it will seek to portray the European Commission as a hostile force.

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Policy Solutions is a progressive political research institute based in Budapest. It was founded in 2008 and it is committed to the values of liberal democracy, solidarity, equal opportunity and European integration. The focus of Policy Solutions’ work is on understanding political processes in Hungary and the European Union. Among the pre-eminent areas of our research are the investigation of how the quality of democracy evolves, the analysis of factors driving euroscepticism, populism and the far-right, and election research. 

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