Hungarian government to spend more despite budget constraints, using EU loophole
The government has decided to activate a national escape clause, allowing an increase in fiscal expenditures while remaining within European Union budget rules, the National Economy Ministry said on Thursday.
By activating the clause, Hungary’s budget expenditures may rise, over thresholds set jointly with the EU, to a degree level with the increase in defence spending from a 2021 base, up to 1.5pc of GDP, the ministry said.
As Hungary has raised its defence spending significantly over the past five years, in line with a commitment to NATO, the increase in expenditures allowed under the national escape clause may apply to both defence and non-defence expenditures, it added.
The government has renamed a “Defence Reserves” item in the 2026 budget to the “Economic Development Framework” and will activate it, allowing additional, targeted expenditures that are not contained in the current budget act, the ministry said.
In addition to topping up and tapping the Economic Development Framework, the government remains committed to reducing the budget deficit and cutting state debt levels, it added.
As well as preserving fiscal stability and maintaining strict fiscal discipline, the government aims to achieve the highest possible degree of economic growth, the ministry said.
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