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Mr Orbán said the EU wants to keep Ukraine alive as a decision has been made – without Hungary’s involvement, but in a way that also has an impact on us – that Europe will finance the Ukrainian army which is 800,000 strong at present, but which will, according to the Ukrainian President’s intentions, have to be boosted to 1 million after the war. Additionally, he said in continuation, the EU will finance the functioning of the Ukrainian state, will simultaneously intend to rearm itself, and will also seek to admit Ukraine as an EU member in an accelerated process in order to compensate for the fact that they will not be admitted to NATO.
He said he is certain that this Brussels decision will destroy the European economy, and therefore this must not be allowed to happen. He drew attention to the fact that Hungary had a decisive say in Ukraine’s EU membership, while the other financial facilities could also be created without us.
He indicated that this was an issue of such gravity which could determine Hungary’s fate both in the medium term and in the long run, and therefore encouraged all members of the Chamber as well as their workers to take part in the related opinion vote.
At the event held in the Puskás Arena, the Prime Minister said the Chamber asked the government for tax simplification and red tape reduction, and saw the best way for tax reduction in tax simplification. “The Chamber could not have received a better partner than us, I think we can agree on this,” the Prime Minister said.
Mr Orbán stated that the Hungarian government was ready to conclude an agreement consisting of clear points that could be delivered with the new leadership of the Chamber – the same as they did with the previous ones.
“I suggest that what we will shortly agree on should be fulfilled already by 1 July, and this agreement should include tax simplification, tax reduction as well as red tape reduction,” the Prime Minister laid down, adding that on these matters the government is one hundred per cent at the disposal of the Chamber.
He recalled the earlier cooperation between the government and businesses. He highlighted that before the 2010 election, Fidesz – the later governing party – concluded an agreement with the realm of business; this agreement was carried off by entrepreneur Sándor Demján.
He added that the government had delivered four of its five pledges: they reduced the burdens of businesses, launched state capital and credit programmes, created one million new jobs in ten years and channelled fifty per cent of EU funds to small and medium-sized businesses.
“We promised to fulfil five points out of five, while you pledged to support us. I think if four businesses out of five support us, we’re even. I’m afraid this is not the situation yet,” he said.
Mr Orbán spoke about the fact that they had also concluded agreements during László Parragh’s presidency of the Chamber. He mentioned among the fulfilled pledges that the growth of the Hungarian economy should be above the EU average, while the investment rate above 25 per cent; unemployment “is hovering” at around 4 per cent, the government has a foreign investment policy and supports capital exportation.
Regarding the latter, he observed that he could only excuse those Hungarian businesses successful in Hungary of the “charge of enjoying the advantages of the government’s support” which went abroad and also proved themselves there.
The Prime Minister said they also honoured the point of the agreement about a significant corporation tax reduction: since 2010, the tax wedge has decreased by six per cent.
The Prime Minister reacted to the speech of the President of the Chamber. He said economic development projects such as the construction of the Puskás Arena were reasonable as the facility hosts far more cultural and economic events than sports events. “I must admit to one mistake, regrettably: observing the attendance numbers, it’s too small, we should have built a bigger one,” he observed.
He asked the Chamber for assistance in connection with the adoption of EU regulations, pointing out that the faster and more in-depth than necessary adoption of EU regulations can only be prevented if there is another player – namely, the Chamber – which has a vested interest in the reasonable and scheduled adoption of regulations to the extent necessary.
He also said “there will be no shortage” of attacking football; this is a year of breakthrough, and a breakthrough can only be achieved with attacking.
Mr Orbán said the philosophical foundations and most important elements of the Hungarian economic policy will not change; from the viewpoint of economic strategy and direction, everyone should continue to expect what they have become used to in the past fifteen years. “We are a government of tax reductions, and will remain that,” the Prime Minister stated.
He said in the rankings of the Tax Foundation, Hungary has the seventh most competitive tax regime among developed countries. “It’s a legitimate question why we’re not in the number one position, we must work on this,” he added.
The Prime Minister said recent announcements – in particular, the lifelong personal income tax exemption of mothers – demonstrated that the government had integrated into the system of taxation an element which would determine it in the longer term. “Meaning that you can’t jump in and out of this,” Mr Orbán observed.
Hungary will have a tax regime which will be based on a triple combination: it must motivate people to work, it must motivate families to have children, and all this must be achieved with low tax payments and tax benefits, the Prime Minister stressed.
He argued that with the family tax benefits, they had already set out in this direction, but with the introduction of the lifelong tax exemption, the structure of the taxation system would become unalterable as “you cannot take away” the lifelong tax benefit from those who had once earned it.
Also in the longer term, we should settle for this tax regime, the Prime Minister pointed out.
From the viewpoint of predictability, Mr Orbán described the creation of jobs as the number one priority. “Meaning that we are not reversing in the socialist direction,” we do not want to bring back the benefit-based social system which was based on the distribution of fiscal funds that did not exist, he said. He laid down that they were thinking in terms of a workfare system, and wanted to reward, acknowledge and appreciate hard work and performance. Therefore – according to his information – job creation will remain among the government’s most important goals.
The Prime Minister does not agree with those who claim that we have run out of Hungarian workforce; according to their analyses, there are around another 300,000 Hungarian nationals available for work. Naturally, this requires training courses, a territorially more balanced economic policy and much else, “but we have at least another 300,000 compatriots who appear to want to work, but have not yet found the opportunity,” he said.
Mr Orbán also highlighted that the third pillar of the government’s economic policy – which would be a constant one during the period ahead – was the promotion of businesses.
He mentioned – as a clear and major political resolution – that through the Széchenyi Card programme, they provided HUF 320 billion for businesses, and in order to illustrate the magnitude of this, he highlighted that the lifelong personal income tax exemption of mothers with three children cost the budget HUF 150 billion a year.
Mr Orbán said he is convinced that if businesses are not appreciated, acknowledged and supported and if it is not made absolutely clear that “as we live in a private economy, they operate the entire economy, rather than the state machinery and politics,” the country’s efficiency and economic strength will start diminishing.
Therefore, the government will continue to support businesses, and will regard the hard work of Hungarian entrepreneurs as a value to be cherished, the Prime Minister stressed.
He recalled that during the three years of the war, compared with 2021, they had “pumped” an extra HUF 400 billion into the economy, with a view to supporting businesses.
According to the government’s plans, this year’s breakthrough also applies to businesses; compared with 2024, they will channel HUF 1,730 billion more into the Hungarian economy through businesses, primarily, small and medium-sized enterprises. This is an almost fifty per cent increase, Mr Orbán pointed out.
He also mentioned that Hungary could not be successful if it failed to keep up with the technological changeover taking place in the world. Therefore, we must support those capital investments in Hungary which help the Hungarian economy with this technological changeover.
Speaking about the government’s financial responsibility, he said whatever happens in the world, the budget must remain in balance after the deduction of the debt service because if the primary deficit, too, goes into the negative range, it can cause financial instability in the country which we can ill afford.
The Prime Minister drew attention to the fact that in the past 15 years, the government had reduced the deficit of the budget in each election year. This clearly demonstrates that “we are committed to financial discipline.”
He also spoke about the document adopted by 26 Member States at the extraordinary EU summit on Thursday which Hungary alone did not sign. He stressed that he had had good reason to veto the document which was, in actual fact, about having to send even more weapons and money to Ukraine during the period ahead. He said Hungary has fought for three years to stay out of the war, and at the last minute when the Americans finally share our position, “it would have been more than a mistake, it would have been a sin” to give up this national position. For three years, we have fought against international attacks in order not to drift into the war. We have not sent weapons and have not given money, except for humanitarian purposes. Whatever pressure may weigh on us at the last minute, it would be a mistake to surrender this position, he pointed out.
The Prime Minister indicated that during the three years of the war so far, the Hungarian economy had lost EUR 20 billion. Therefore, if there is a country which has a truly vested interest in the war ending as soon as possible, it is Hungary.
We should be happy, he added, that finally, a great power with a weight that significantly exceeds ours, the United States, says the same things as we do, and “we should resist the European siren voice” demanding that we send weapons and money, but “should protect ourselves, should stay out of this.”
Regarding the expected situation after the war, he highlighted: we need not worry about Hungarian security because there will be NATO also after the war, and Hungary is a member of NATO. In fact, the owners of NATO’s two largest armies – the United States and Turkey – are Hungary’s two closest allies.
The second thing that will surely be after the war is a strategic alliance between the United States and Hungary. This has already come into being politically, we are in the process of shaping its economic form, Mr Orbán said, indicating that there will be a Hungarian-US economic cooperation package which will be significant help for the Hungarian economy. This will be good for us even if a tariffs war starts in the interim on which Hungary – the same as all countries of the European Union – will lose.
Mr Orbán pointed out that in the European Union there was a need for change on a scale which had been unprecedented for 20 to 30 years: instead of fiscal conservatism, the EU should change over to the logic of a developmental state.
He added that criticisms regarding the EU’s leadership may well be justified, but “for the sake of fairness” they should bear in mind that the European Union should now be doing something that is contrary to its operating logic to date. And we cannot be sure at all whether it will be capable of this changeover, he observed.
He said the essence of the problem is that so far, the European Union’s most important rule has been that Member States are required to keep the deficit of the budget below 3 per cent, despite the fact that its competitors have not done that for decades. The moment has come when the EU must face the consequences of this, he warned.
He highlighted that Germany as the EU’s strongest state dominantly determines the European Union’s economic philosophy, and in actual fact, the coalition patterns adopted in Germany are usually copied in Brussels, too.
The Germans are facing a grave decision: they are about to surrender the policy of conventional German financial discipline. What will happen is that they will create a national economy package worth EUR 800 billion which they will spend on infrastructure development and the enhancement of their military capabilities, he indicated.
Regarding the political aspects of the decision, Mr Orbán pointed out that with this, Germany’s rearmament would start in the middle of Europe. There will be a German army, and that will be the largest in the whole of Europe. And the industrial basis behind it which they want to create from this sum of money, too, will be far bigger than anyone else’s. We have not seen anything like this since World War II, he stated.
He added that at this point in time, there was no answer yet to whether the Americans and the Russians would allow this to happen. The Russians have no means to prevent this. The Americans do, primarily through the manipulation of the dollar-euro exchange rate, he explained.
Returning to the German package worth EUR 800 billion, he highlighted that this was not Brussels money “because the Brussels figures are never true.” The Germans are talking about real money which can then be turned into credit, collateral and other things, meaning that the sum that will actually be channelled into the German economy will be not EUR 800 billion, but much more through the multiplying effect of financial instruments, he pointed out.
With a view to this, Germany will abandon the rule of the debt brake because this money is not available, it must be raised in the form of credit, he observed, asking the question: Will this be good for Germany and will this be good for Hungary in the medium term?
In his view, this is impossible to tell as yet because there are both opportunities and threats on the table; however, in the short term, it will be very good. “In the short term, there could be no better news for the Hungarian economy,” he said.
If money is channelled into the German economy, and economic growth and prosperity kick in again, through a swift transmission system, it almost immediately spirals into the Hungarian economy as well and boosts the performance of the Hungarian economy, he explained.
However, he also drew attention to the fact that the lifting of the German debt rule required a two-thirds majority in the German Parliament. There were elections in Germany last week, but they are planning to do away with the debt brake by convening “the already voted-out, failed German Parliament that no longer exists” for a last sitting where a parliament already voted out by German electors decides on the lifting of the debt brake.
“This is legal because according to the German Constitution, this is possible. And we don’t want to interfere with this, but they had better hold their tongues when it comes to the rule of law and Hungary,” he pointed out.
He highlighted, however, that this would have the consequence for the European Union that the EU, too, would alter its rule relating to the 3 per cent deficit, he stated.
In this regard, he mentioned two probable breakthrough points: one of them is that defence expenditures will, up to a certain limit, not be included in the deficit of the budget, while the other one is that the EU will want to take out enormous loans and will – after the increased German debt rate – also indebt the whole EU. He indicated that the Hungarian Constitution did not allow them to support this, borrowing on such a scale required Parliament’s two-thirds approval.
Mr Orbán confirmed that according to their plans, this year was a year of breakthrough. He added that there was an enormous amount of money in the Hungarian economy with businesses and in households, while banks had enormous lending capacities.
“The only task in hand is to mobilise these funds this year, and to put them at the service of economic growth and productivity in a reasonable fashion. This is possible. We have the right people for this, we have the right programmes,” he stated.
Mr Orbán spoke about the preservation of economic neutrality as one of the elements of the Hungarian strategy for the period to come, stressing that Hungary must not agree to any kind of isolation. “It doesn’t matter which way the wind is blowing and how the waves are crashing,” the Hungarian economy has a vested interest in maintaining the best possible relations with the United States, China, the European Union and Russia all at once, and in this regard we must not accept any ideological or political restriction because in the very midst of a tariffs war, we will find ourselves stuck in situations which we will not find a way out of, he explained.
He took the view that today the European Union was an isolated player of the Hungarian economy; however, Hungary was not a part of this.
He argued that the EU was at war or at least in a serious political dispute with the United States of America, had engaged in an open conflict with the United States on the issue of the war, was isolating itself from China after a series of tax and customs initiatives, and ever since the beginning of the war, had isolated itself from Russia with the sanctions, in particular, the energy sanctions.
By contrast, he stressed, Hungary has the best possible relations equally with the United States, the Russians and China. “Therefore, when it comes to isolation, it’s true of the EU, but not of Hungary,” he stated.
In his view, elements of the Hungarian strategy further include peace, tax reduction, the Demján Sándor Programme and the receipt of EU funds.
He said “we need peace,” “we cannot endure another three years causing the Hungarian economy a loss of 20 billion euros.” As a third element of the strategy, he spoke about “concreting” the Hungarian tax regime which combines family, work and tax reductions.
He asked for the Chamber’s assistance with the implementation of the fourth pillar of the strategy, the Demján Sándor Programme.
He also pointed out that we would have access to every last penny of the EU funds we were entitled to. EU funds – agricultural funds and cohesion grants – will be forthcoming, they are already forthcoming, he added. He observed that they had developed the Hungarian negotiating positions for drawing down further sums.
He also said at present in Hungary 4,682 state projects worth HUF 12,500 billion are in progress, while there are 2,949 construction projects under way to the value of almost HUF 6,000 billion. He added that another 1,733 projects were in the planning phase. 13 priority building construction projects as well as 10 major road development projects worth HUF 1,270 billion are in progress, while there are 29 railway development projects under way, in addition to the Budapest-Belgrade railway line, to the value of HUF 754 billion.
The government will not give up on the development of Budapest as Budapest represents a determining weight from the viewpoint of the national economy, but the earlier proportions cannot be maintained in the future, he pointed out.
He said Budapest currently stands at 165 to 167 per cent of the EU’s state of development. There are enormous projects under way in the capital also at present. He mentioned the southern bypass railway project, the project of the Pázmány Péter University, the reconstruction works in Buda Castle and the intertwined tram lines as examples.
The Prime Minister said they are unable to start new major development programmes in Budapest in addition to those now in progress. The government must channel the available development funds mainly to developments in the countryside and must mobilise them with a view to helping rural areas to catch up, he pointed out.
Mr Orbán added that these were enormous sums of money. It is his hope that the same as they succeeded in launching the country’s eastern part – which will soon catch up with the country’s most advanced western regions – on a robust and dynamic course with industrial innovation in its focus, they will be able to accomplish the same job also in the country’s southern parts where there are the biggest problems, both in the Transdanubia region and the Great Plain region.
