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Zsolt Törőcsik: This week the Government submitted next year’s budget to Parliament. The document says that 2025 will be a year of a strengthening in the Hungarian economy. According to the draft, next year more money will be allocated for economic development, pay increases, home creation and family support. Prime Minister Viktor Orbán is our guest in the studio. Good morning.
Good morning.
These are the plans for next year, but the reality now – at least the reality in September – is that industrial production fell by 5.4 per cent and the construction industry contracted by 8.2 per cent. In light of this, what’s needed to achieve the 3.4 per cent growth planned for next year, and to have the money to achieve the targets I listed in my introduction?
What’s needed is for the war to end. It’s as simple as that. The problems in the Hungarian economy are exclusively the result of the war and its consequences. The war itself and the bad response to it – what we call sanctions – have been misguided and ill-considered. We didn’t impose them, so I’m not castigating myself, but the Brusselites. The sanctions led to an increase in energy prices, which led to inflation; and – across the whole economy – predictability, calm, planning, optimism, faith in progress, the search for opportunities, the spirit and the attitude focusing on how to grow and how to be better has been replaced by a defensive posture. Because in a war, what the hell do you do if you don’t defend yourself? Businesses thought that it was preferable not to go into decline, not to lose what they already had, and not to lose their market position, and so mentally there was a change of mood, a change of mindset, in terms of planning for the future. We’ve been living through this in 2022 and 2023, and 2024 is the third year. And if we can’t halt this, then whatever measures we try to put in place, the spirit, the vitality, the hope, the optimism and the planning for the future won’t come back into the economy. And without this, the numbers won’t look good financially and the opportunities won’t open up. The economy is also run by people: the owners of capital, entrepreneurs, and workers who see the sense in more work. There will be no economic development if they don’t believe in what they’re doing, but are content with what they already have, adopt a hedgehog-like posture, and see the whole world behaving in the same way. So to be successful again we need to end the war. Of course, every day for the last three years human and Christian considerations have been telling me that the war needs to be ended. Because, after all, thousands – even hundreds of thousands – of people are dying or being maimed there, and every day thousands of orphans and widows are being added to the populations of Ukraine and Russia. So there’s suffering, blood and sorrow everywhere; and of course this is the most important argument against the war. But there’s also another argument, and this is a Hungarian argument: that for us this war is a scourge in terms of our wallets, our economy, our incomes and our standard of living. This is why it will be good if we can put an end to it as soon as possible. Hungarian diplomacy and I myself have worked on this as hard as we can. With all the physical strength and power we have, we’ve achieved what we could and we’ve committed ourselves to every effort – sometimes bringing the wrath of others down on our heads. But what we needed was a protagonist who not only wants peace, but who is strong enough to be able to bring it about. This is why the US election was important. This is related to the budget in the sense that when thinking through the whole budget we had to apply two kinds of logic: of there being war, and of there being no war; of there being peace, and of there being no peace. And for various reasons, for quite a long time I was fairly sure – as sure as you can be about anything in an election, of course, but according to all human calculations and estimates – that President Trump would be returning. And so we have a very well-developed peace budget. I also had all the important calculations in the event of further war. I don’t want to cause heart attacks among the Hungarian listeners, so I’d rather not say what the year 2025 would be like if it were based on a continuation of the war. But instead of this we’ve developed a peace budget, we’ve submitted it, and it will be debated in Parliament. What you’ve quoted from the budget – indicating that there will be strong development – is, of course, framed in bureaucratic language. One doesn’t like to speak boringly, but a budget is a prosaic art form written by financial experts, and one must speak about it with restraint. But in fact I’d have preferred to see words like “fantastic”, “great”, or “unprecedented”; because things will indeed happen in Hungary in 2025 that have never happened before, for which the use of the word “fantastic” isn’t unjustified.
In a moment we’ll talk about how the war can end, but if we go back to the budget and the Hungarian situation, the war situation that you’ve just talked about has obviously not only cast its shadow over economies, but families, the public and businesses have also become more cautious. How can we restore their confidence when the war is over? How will they be better off under the 2025 budget?
What I try to tell everyone is that this budget is a budget for a new economic policy. So we’re really bringing to a close one phase, closing this gruelling period of difficulty, of survival, of suffering, of “just getting by”. And we’re opening up prospects, hope and opportunities, and focusing mostly on the smallest players – first of all on families, because we’re doubling the family tax credit. At the same time we’re in serious wage negotiations with employers and trade unions, because we want to increase wages, because of the inflation we’ve had recently – price increases, in other words. And the only help a government can give people against price rises is to create opportunities for them to earn more money, because prices are more bearable when people earn more. This is why it’s very important that we set a very high, very ambitious, multi-year target to reach an average income of one million forints in Hungary. Housing is the next big package or action plan. There are a number of measures that aim to make the cost of home ownership and housing affordable in Hungary, and we’re trying something that hasn’t been done before. I have high hopes. For employees under 35 years of age, employers can give a discounted housing allowance of up to 150,000 forints per month, so multiplying that gives somewhere around 1.8 million forints. An employee under 35 can use this to pay rent or, if he or she buys his or her own home, to pay a mortgage. For a long time we’ve been thinking that we shouldn’t go in the direction of building public rental housing, because then the whole culture of the State Property Management Corporation would return. Instead we should put the private sector in a position where it’s incentivised to support housing for its young employees. I think this will be very attractive. Those companies that can offer such support will have a competitive advantage in the battle for young people with good skills, because in Hungary there are more jobs than there are people of working age, and in particular there’s a shortage of young people with ambition; there’s a lot of competition for them, and anyone who can offer housing support of 150,000 forints a month as an extra payment on top of a basic salary will, in my opinion, gain access to a good workforce. And there’s another big package of programmes to support small businesses: the Sándor Demján package. In this we’re trying to help small businesses to move up a level, to become stronger, and so we’re trying this with a capital provision programme that’s never been done before. So the reason I say we can have a great year ahead is because we’re introducing measures that have never been part of Hungarian economic policy before. And this is quite apart from the workers’ credit scheme, which is perhaps closest to the hearts of many of us in the Government. Through this we’ll finally be able to help not only young people in education who undoubtedly deserve support, but also young people who are working. We’ll be able to give them a chance for a start in life. What we’re saying is that work should be valued – and we’re not just saying it in words, but we’re giving young people tangible support: the possibility of a one-off interest-free loan of 4 million forints, repayable over ten years, or non-repayable if they commit to having children. They’ll be able to decide what to do with the money.
You also mentioned just now that the feasibility of next year’s budget is linked to peace. By the way, at an event last night Donald Trump again said that one of the main goals of his administration will be to achieve peace in the Russo–Ukrainian war. And now we’re getting to know ever more members of the next Trump administration. How do you see the chances for peace now?
We’re in a lull. Up to now the ship has been racing ahead, the wind has been blowing, and the campaign itself was a hurricane. So the pro-peace ship has been moving ahead at high speed, because every day the future US president has been saying that there will be peace, there will be peace, there will be peace. And because there isn’t peace, and his opponent – the American Democrats – were pro-war, this struggle between the pro-peace and the pro-war camps was on the agenda: we heard about it almost every day, and one had the feeling that every day we were getting one step closer to peace. Now the pro-peace presidential candidate has won, and we’re waiting for peace. We’re in this calm period, however, because he’ll only take office on 20 January. And I see that there’s a debate in America. It’s not my place to judge it, but a peculiarity of their constitutional system is that the President is elected in November, but only takes office on 20 January. The question is this: What will happen between those two dates? This isn’t usually a very high-stakes question. But if the incumbent US government is pro-war, and whoever wins the election is pro-peace, then the stakes of that question suddenly rise. The question is whether the Americans – I mean the American leaders – will take note of the decision of the American people which gave victory to the pro-peace president. So in fact if there’s democracy, if there’s fairness, if there’s justice, if there’s honour, then they should no longer step up their war efforts or their commitment to war, but should give the new pro-peace president the opportunity to implement his programme as easily as possible, because that’s the programme that America has chosen. The man who’s been elected is in this strange position, as he’s not yet president. To act without yet being president is a risky business under US law. And as they’re constantly trying to lock Donald Trump up, I suppose he’ll think several times about what he can and cannot do in this dead space, during this dead time. So now, suddenly, the huge winds of the campaign have dropped, and our sailboat is also becalmed, the sailboat of peace is becalmed, and the question is what happens next. We’re facing a very difficult, tense and complicated two months. We don’t have to solve the problems of the Americans; it’s enough for us to understand them, because they affect us here. There’s only one thing we have to do: we have to work to effect change in Brussels. Just because our brother-in-arms in America has won – our brother-in-arms for peace has won – doesn’t mean that there’s been a change in Brussels. This is really our job, because we’re members of the European Union. We have to keep pushing for a pro-peace turnaround in Brussels, so that there’s no chance of the idea taking root that we can continue this war without the Americans. There are advocates for this, and they must be pushed back and forced into a sensible dialogue in which they tell us how we can support Ukraine without the Americans, and without destroying our own economies. Because it’s certain that without America there isn’t enough money in Europe to finance this war. So now in Brussels Hungary must continue its struggle for peace, with a great American success behind us that raises expectations. This is what the cause of peace looks like. On the whole, despite the battle still raging in Brussels on war versus peace, I saw it as possible and within the logic of government responsibility for us to present a pro-peace budget.
This European debate on the possible continued sole financing of the war is also interesting in light of a recent analysis which appeared yesterday in [the Hungarian online financial journal] Portfolio, which shows that if the EU were a US state it would be the third poorest state in the US. This is also a good indication of its competitiveness problems. Just a week ago the EU heads of state and government met in Budapest and, under the leadership of the Hungarian Presidency, agreed on a competitiveness pact. What results can we expect to see from this package, and when?
I’ll try to quote exact figures. So, about ten or fifteen years ago, the United States and Europe were neck and neck in terms of economic development. And if I look at the last ten or more years, the European economy has grown by about 15 per cent, while the American economy has grown by 65 per cent: 15 versus 65. This means that the Americans have left us behind. Now I’m only talking about America, and not China and the emerging economies in Asia – which have sped past Europe. So they’ve left us behind. And since we belong to the same cultural sphere and started from the same level of development just over ten years ago, this is the question that has to be asked: What are we doing wrong? We’re doing something wrong. And the Americans are doing something right. This is a question that needs to be answered, and the responsibility for answering it falls on someone. After all, European economic policy is managed by someone: there’s a Commission, and there’s a President. There are 30,000 bureaucrats over there; I don’t know exactly what they’re doing, but they’re certainly not doing it properly, otherwise we’d have grown by 65 per cent. So that’s where decisions are taken: decisions on trade policy, decisions on price regulation, decisions on sanctions, decisions on energy price regulation, decisions on the green transition. These were obviously bad decisions, because if they hadn’t been bad, we’d be at least where the Americans are. So the European institutions need to engage in very serious self-examination, because they’ve clearly made a mess of the last five to ten years. Hungary has escaped the effects of this reasonably well. Those Hungarians who spend less time in the West perhaps don’t see as clearly as I do that we’ve got off quite lightly, because we’ve slowed down or fallen behind the pace of development far less than other European countries have. The countries that are richer than us – and which are still richer, of course – have had a terrible time of things recently. If you talk to a German or a French person – I mean a normal person who has a family and their own home – and ask them what their family’s monthly budget structure looks like, how much they spend on what, you’ll see people expressing their horror. You’ll see opinions and figures backing this up, because there have been no reductions in household utility bills, and the increases in energy prices have eaten up a considerable part of family incomes. Of course this still leaves them richer than us, because they didn’t have communism, and so on and so on, and there was no planned economy, and there was no Soviet Union, and there was no Comecon. So they have a historical advantage, but compared to their own past, everyone there is complaining. And there are understandable reasons for this. So in answer to your question, what I’m trying to say is that there’s no time left – that’s the thing we don’t have. President Macron has said that if the European Union doesn’t change its strategy within a matter of moments, then in two or three years it will die – I think he used that expression. Coming from the French president, who represents the second strongest economy in Europe, this sounds more than alarming. What I’m saying is that if we don’t take certain decisions within the next six months, if we can’t get certain decisions passed in Brussels, then there will be no way of preventing what the French president is talking about from happening: in two or three years’ time we’ll be making the sign of the cross, putting on our hats and coats, and shutting up shop. What should be done in the next six months? First of all, energy prices need to come down. So there can be no competition when the Americans are paying a quarter of what the Europeans are paying for electricity and gas. We can’t be the winners rather than them. So we cannot win that way. We can’t compensate for a competitive disadvantage like that, whatever we do – if we stand on our heads, whatever stunt we pull, whatever rabbit we pull out of the hat. We will lose. So we have to bring energy prices down. This means that we have to review the sanctions, because energy prices won’t come down with a sanctions policy like this. It will be painful for those who argued for sanctions, but not for us, because we’ll see it as a victory. But the other camp must change, because otherwise it will destroy the European economy. What’s not easy for them is to admit that they made a mistake in the past, and they have to return to a logic that they’ve been refusing to accept. So it’s not a simple political struggle, but we must keep pushing them. And an anti-bureaucratic revolution must be declared, because the second biggest problem in the Union is that there are so many idiotic rules: unrealistic rules, rules that are unworkable and that are killing the economy. In the next six months we must realise these two achievements, these two results.
What are the chances of this? Because we know how the EU bureaucracy works, and it usually takes longer than six months for a piece of legislation or a plan to be implemented in practice.
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Thirty per cent. I think the chance is 30 per cent, and so it’s very important not to wait for Brussels to act. So I believe in rebellion, and we must rebel. When Brussels wants to impose something on us that’s bad for Hungarian families, we must quite simply resist and rebel – not in a sneaky, underhand way, but openly and directly, as we did in the case of migration. Our budget is an open rebellion. It includes cuts in household energy bills, we’re launching housing subsidies, and we’re launching small business support programmes. If I remember correctly, in 2025 we’ll be launching over 300 new investments, totalling more than 8,000 billion forints in investment. We’ll pay out 480 billion of this in the next year. Then in the next year about 500 investments will be completed. We’re launching huge rail investments, we’re renovating and building motorways, we’re also building a university, and perhaps we’ll finally be able to get the Heim Pál Children’s Hospital up and running. So serious, big projects are being set in motion that are in stark contrast to everything Brussels is doing and thinking about.
Incidentally, if we look at last week’s summit from a political point of view, many people expected it to be a kind of protest forum for those who disagree with the Hungarian government’s policies. There were those who said that they wouldn’t come. In contrast with this, we saw a unity among the EU institutions and the leaders of the Member States that we hadn’t seen for a long time. What could be the reason for this?
The reason is called Mario Draghi. So I’d be happy to take credit for having created some kind of full agreement, even for only two days, but that’s not the case. Hungary contributed to this, yet the decisive factor wasn’t us, but the fact that the former President of the European Central Bank – at the request of Brussels, by the way – produced a study on the state of the European economy. And he presented it here in Budapest to the prime ministers and heads of state. And it’s so stunning, so devastating, that it makes your spine tingle when you read it. The liberal media in Hungary says that we shouldn’t say that in the West things are going badly. They constantly try to portray this as some kind of civilisational struggle, because a considerable section of opinion-formers in Hungary somehow regard this as an ideological issue, and if someone talks about the decline of the Western economy, then instantly that person is described as some kind of Eastern dictator. So in Hungary there’s no meaningful dialogue on this issue. But what President Draghi has described isn’t a decline, but free fall. So the path that Europe is on is tantamount to suicide. And I think this stunned the European leaders. Because although they talk about such things in their own language, I always say that the language of Brussels politics is similar to the language of the French royal courts in the Middle Ages, where each courtier competed with the others to see who could say better and finer things about the King. This is how Brussels is designed. Of course we Hungarians are left out of this competition, because we don’t like it, but – instead of facing up to the real problems – the others compete to see who can come up with softer, silkier, more melodious songs about European unity, European values and European institutions than these modern-day minstrels. But there was no opportunity to do that here in Budapest – not because of me or because of Hungary, but because of President Draghi, who put this paper on the table, with seventy charts and annexes, and said, “Folks, this is how it is.” I think that this created the atmosphere, the moment when everyone agreed that if this really is the situation, and this is what Mario Draghi – former President of the Central Bank, who’s respected by the Union, by everyone in the Union – is saying, then now we must take this seriously, we must take decisions and we must set off down the path of implementation. This is how the Budapest consensus and the Budapest declaration – the Budapest Declaration on Competitiveness – came about, which we were able to get all the Member States to agree to in an unexpectedly smooth way.
We don’t have much time left, but let’s come to one more issue, because there’s also a national consultation on the new economic policy, which you said is precisely aimed at strengthening the Government on important issues. But you’ve also said that on important issues we’re no longer alone, as we have the whole of America with us. What’s the need for a consultation if America is with us?
Consultations always have two purposes. One is that you need ammunition for the battles in Brussels. It’s not a war there, but a series of political battles, in which we’re not fighting with bullets, machine guns and mortars, but with political arguments. In a democracy, the strongest political argument is the people itself: the will of the people. If that’s on your side, then you can fight; if it’s not, then it’s more than risky. The other purpose of the consultation is for those who are willing to think about the future of Hungary, and there are always one or one and a half million people who, if the Government asks them, will be willing to take a few minutes to think about the future of Hungary. So here are a few questions to help and inspire them to think, and we want the opinions of the one or one and a half million people who are willing to think about the future of the country, about important issues, and even to express their opinion. Not everyone in our population of ten million is willing to do so, because they’re not used to it, they live differently, they don’t have the time, and they have more important things to do. So we know what everyday life is like. But if someone is willing to do this, then they’ll certainly also talk to someone else about it. And maybe there are more of them. A national consultation is a way for millions of people to exchange at least a few words on issues that affect the future of us all. In this sense, the national consultation is also a way of communally addressing the political dilemmas and big questions for the country’s future. This is why it’s worth sending it out everywhere, and why I’d ask everyone to fill it in, to take a few minutes to say what they think, and then to take a few minutes to talk to others about what they think, to hear if others have ideas. Thus the country will be stronger spiritually, intellectually and politically, and will also be more united.
Among the topics I’ve been asking Prime Minister Viktor Orbán about were next year’s budget, the chances for peace, and the results of last week’s EU summit.
