In the months leading up to the elections, Orban could not resist handing out election gifts to young and old. For example, residents under the age of 25 failed to pay income tax, retirees received a 13th pension, and families received a tax refund.
Seemingly astute, Orban also waged a fight against inflation. So he had prices frozen, for example, for gasoline. A liter of fuel in Hungary costs 480 fixed forints and therefore 1.30 euros, which means that the country has the lowest price of gasoline in Europe. The politician also slashed prices on a handful of groceries and interest rates on adjustable-rate mortgages.
During the election campaign, Orban presented himself not only as a politician who takes care of people’s economic concerns, but also as a guarantor of peace and security. He accused his opponents of wanting to lure the country into war in Ukraine.
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Obviously, Orban bet on the right issues, otherwise his victory wouldn’t have been so clear. After all, the Fidesz party will occupy two-thirds of the parliamentary seats and will thus be able to change the constitution as it sees fit.
election campaign costs
It’s hard to figure out which arguments were more popular with voters, politicians or economics. However, Orban will have to pay close attention to the economy in the coming period, because the costs of his election campaign could be overwhelming.
The politician must have hoped that the inflation would only be temporary and that the economy would quickly pick up again. But it doesn’t seem like it: economic disruptions are often more persistent than politicians fixated on short-term electoral success realize.
Inflation is more stubborn than Orban may have thought, and the country’s vital auto industry has deteriorated. You are missing parts such as chips and electrical harnesses. This will weigh on the country’s exports and affect the state budget.
Especially since election gifts also weigh on the budget. Hungarian Finance Minister Mihaly Varga has already announced that the budget will have to be adjusted to likely lower growth rates.
Orban is also faced with the question of how to undo the temporary interventions in the price structure. For example, interest rates on variable mortgages were set at the level of last October, and the measure is set to expire at the end of June.
>>Read more: Why EU funds are not enough to slow down Orban and Kaczynski
Home loans can then be converted into fixed rate mortgages. But at what rate should this happen? Interest rates are likely to be even higher in July than they currently are, especially as the Hungarian central bank is fighting inflation with tight monetary policy. Homeowners need to brace for a shock – or banks for losses.
fight against corruption
After coming to power for the second time in 2010, Orban boosted Hungary economically. As of 2015, in particular, the country has benefited from the recovery of the global economy and financial support from the EU.
Orban’s Fidesz Party Wins Hungarian Election
Not only is the economy weakening today, but the EU is also not making any moves to release money from the Corona recovery fund. And as it became known on Tuesday night, the country must also prepare for a procedure to cut EU funds.
Ursula von der Leyen, the President of the European Commission, announced at the European Parliament in Strasbourg that her authority would initiate the first step of the so-called rule of law mechanism. The European Commission informed the Hungarian authorities about this on Tuesday.
Von der Leyen said: “With Hungary, we made it very clear that the problem is corruption.” The Commission and Hungary were unable to find a consensus on this issue.
Ursula von der Leyen
The President of the European Commission sees the problem of corruption in Hungary.
(Photo: AP)
Orban has gathered a circle of 10 to 15 entrepreneurs around him in recent years. Istvan Janos Toth of the Budapest Corruption Research Center describes this system as favoritism. An impressive number of public contracts, at least partially funded by the EU, have been awarded to people in this circle.
They now dominate much of the national industry, such as the construction or tourism sector. The best-known figures in this circle include Lörinc Meszaros, a former gas installer from Orban’s hometown of Felcsut, and Istvan Tiborcz, the prime minister’s son-in-law.
For Hungary to actually have cuts in EU funds, at least 15 EU countries with 65% of the population must agree to the measure. Before that, the Hungarian government can comment on the allegations several times. Orban may have claimed a Pyrrhic victory over the weekend.
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