Hungary PM’s Euro Pledge to Test Public Appetite for Reform – And His Popularity

Hungary’s new government hasn’t shied away from making symbolic gestures since it was elected on April 12. Flying the EU flag over the Parliament Building, opening up Viktor Orban’s former office to the public and appointing a visually impaired person as social affairs minister all generated big headlines and boosted its popularity. But its pledge to take Hungary into the eurozone will likely require sacrifices that neither the government nor the public is ready for. “The euro introduction is like a marathon run: you don’t fight your rival, you fight yourself,” is how one expert, speaking on a podcast by Concorde Group, Hungary’s leading investment and private banking company, compared it to recently. “Are you willing to go for a run even in minus degrees in the winter, or would you opt for some mulled wine at home?” The new government now has the herculean task of convincing Hungarian people to take up running instead of quaffing wine. In its governing program, Peter Magyar’s Tisza party clearly formulated its intention to fulfil the conditions for joining the European single currency by 2030, allowing for adoption around 2032-33 at the earliest. Public trust in the euro is historically high in Hungary at 75 per cent. This is far higher than in Czechia, whose new government has recently decided to no longer even produce its annual report on readiness to adopt the euro given its opposition to joining it, and Poland, where just 46 per cent in a poll last year said they were in favour of joining. In fact, 41 per cent of the Hungarian population would like to adopt the single currency as soon as possible, even though 72 per cent admitted the country is not yet ready to join. Much of the reason behind such a high level of support can be explained by the decades of macroeconomic and financial mismanagement by successive governments, which has undermined faith in the Hungarian currency, the forint, and led many to associate the euro with rising living standards and a “European way of life”. However, experts are quick to point out that the euro itself is not a miracle cure for Hungary’s woes. There would be a long road ahead, at least four or five years of preparation and prudent fiscal policies, which could easily and quickly erode public support. “Hungarian society has always wanted to have the euro – just not the work which is necessary to reach it,” the analysts at Concorde concluded. Hungarian PM Peter Magyar addresses a press conference following a meeting with European Commission President Ursula von der Leyen at the Commission’s headquarters in Brussels, Belgium, 29 May 2026. EPA/OLIVIER MATTHYS Golden opportunity Dora Gyorffy, an economics professor at Corvinus University of Budapest, is a longtime advocate of euro adoption. She believes that although the process of joining may be extremely arduous, the Tisza government now has a rare opportunity to put the country on a path to healthy and sustainable economic growth. “The euro is like a straitjacket for an economy. It is uncomfortable but I believe Hungary needs it,” Gyorffy tells BIRN. Under the Maastricht criteria, countries wishing to become part of the eurozone need to meet strict conditions. Inflation cannot exceed by 1.5 percentage points the best three data in the eurozone; state debt needs to be under 60 per cent of annual GDP; and the budget deficit should be kept under 3 per cent. Hungary does not meet any of those criteria. Inflation might be on track at 2.1 per cent, but it is expected to hit 3.2-3.8 per cent by the end of the year; national debt stands at 75 per cent; and the budget deficit is expected to reach around 7 per cent this year. “The main problem is the [budget] deficit, the others can be managed,” Gyorffy believes. Hungary runs a structural deficit of 5 per cent, and this year’s 7 per cent is seen as an inheritance of the profligacy of the previous Fidesz government. Reducing it below 3 per cent would take years and require significant spending cuts and possibly tax hikes as well. Yet the Tisza government has promised just the opposite: further tax cuts for average Hungarians and increased spending on health, education, social affairs and transport. A recently floated billionaire tax would not compensate for the extra spending, though by adopting the euro, Hungary – a heavily export-oriented economy – could save up to 1 per cent of GDP currently lost to currency conversion and exchange-rate costs. “You can always restructure the budget, but the fact is that society has enormous demands for public spending,” Győrffy warns. The government was quick to reassure voters that it would keep prices for fuels and basic foodstuff capped, as well as maintain Fidesz’s signature low utility price policy for private consumers. All these measures require budgetary compensation. Tisza’s finance minister, Andras Karman, has already acknowledged that many of these capped prices are not compatible with free market rules, but said it would be too early to revoke them. “In Hungary, we are always four years away from introducing the euro,” jokes Gyorffy. “But now would finally be the time to start the process and put this enormous task behind us.” Hungarian PM Peter Magyar (L) is welcomed by European Commission President Ursula von der Leyen (R) ahead of a meeting at the European Commission headquarters in Brussels, Belgium, 29 May 2026. EPA/OLIVIER HOSLET Not the time for budget cuts Others remain more cautious if not outright opposed. Economist Zoltan Pogatsa, associate professor at Sopron University, argues that the government first needs to invest in the ailing health, transport, housing and education sectors. “The next four years should focus on investment in human capital, which was neglected by the Orban government. In Hungary’s current state, embarking on the course of euro adoption would come at a very high cost – it is practically unfeasible,” Pogatsa tells BIRN. He believes many economists irresponsibly present the euro adoption as some kind of panacea for Hungary’s economic problems while failing to mention the sacrifices it would involve. “We need to spend 6,000 billion forints (about 15 billion euros) just on the railroads; increase the health budget from the current 4.9 per cent of GDP to 8.5 per cent; overhaul the entire water management system; and subsidise pensions. This is not the time for budget cuts,” he says. Part of those investments could be financed through the unfrozen EU funds that Magyar secured  recently in Brussels, but the devil, as always, is in the details. To access the full 16.4 billion euros (4.4 billion euros in cohesion funds, 2 billion for university funding and 10 billion from the post-pandemic recovery fund), Hungary still needs to deliver on the anti-corruption and rule-of-law milestones set out by the European Commission. Some of the money has already been earmarked for specific projects, but there would be considerable extra funding available for transport and energy. According to Pogatsa, Hungary could achieve long-term economic stability even without adopting the euro if it followed a predictable economic policy. Since the change of government, the forint has strengthened considerably and is trading at around 350–360 forints to the euro compared with 400 forints before the election. “This reduces our interest payments, one of the major burdens on the Hungarian economy,” he mentions. Hungary currently spends around 5 per cent of its GDP on interest payments alone, the highest in the EU, although there are countries with much higher debt-to-GDP ratios. The average debt-to-GDP ratio in the EU is around 85 per cent of GDP, yet the average interest payment on debt is only 1.8 per cent, much lower than the rate Hungary pays, he explains. Pogatsa also argues that Hungary suffers from a deeper productivity problem that should be addressed before joining the euro. “Slovakia has not been a success story in this regard. It has the euro, but productivity growth has weakened. We should not fall into the same trap,” he warns. Recently inaugurated Governor of the Hungarian National Bank (MNB) Mihaly Varga speaks during a ceremony, during which he symbolically signed a large representation of a 20,000 forint banknote in the MNB headquarters in Budapest, Hungary, 12 March 2025. EPA/Zoltan Mathe The euro as an anchor Advocates say that adopting the euro is not just an economic issue, but rather a political statement about anchoring Hungary in the EU. “With the euro, any speculation about a possible ‘Huxit’ would disappear,” professor Gyorffy counters, arguing that a consequent euro adoption strategy could strengthen investor confidence and attract additional investment. “Hungary has already demonstrated that its governments struggle to maintain prudent fiscal policies. This differs from countries such as Czechia and Poland, where public finances remain relatively stable even without the euro,” Gyorffy says, highlighting one of the main reasons why Hungarian society has mostly lost faith in the forint, because successive governments attempted to compensate for productivity shortcomings by allowing the forint to depreciate. That strategy, she says, has reached its limits. “You cannot spend without consequences. There is confidence now, but it can evaporate quickly. Politically, the government must declare that euro adoption is its primary strategic objective, and subordinate all other objectives,” she believes, although admits to not being entirely convinced the Magyar government would be really willing to pay the price if its popularity starts to evaporate. A lot might depend on the narrative and how Tisza – which appears stunningly effective at storytelling both in its election campaign and since being elected – can create a national mythos around the euro, and take society with it on this difficult path. Paradoxically, a natural ally on this road could be the governor of the central bank, Mihaly Varga, a former Fidesz finance minister. Varga, who was Fidesz’s finance minister in 2001, was actually the one who first presented the euro banknotes to the Hungarian public, promising to take the country into the eurozone soon. But Orban’s first government was defeated in 2002, and the subsequent Socialist–Liberal administrations embarked on a period of expansive public spending before being hit hard by the global financial crisis in 2008. As a result, euro adoption was pushed into the distant future. Although Hungary’s economic position during Orban’s second term, particularly after 2014, could have allowed for a serious discussion about joining the euro, the increasingly Eurosceptic prime minister quickly abandoned those plans. His government amended the constitution in 2012 to cement the forint as Hungary’s national currency. Last October, Orban declared in an interview that if it were up to him, Hungary would never adopt the euro – despite the country’s commitment to do so under the terms of its accession to the EU in 2004. Now it’s no longer up to Orban, but to his successor, Peter Magyar. Does he have the political courage to fulfil his campaign promise?