Hungary’s government has decided to extend the price caps on basic foodstuffs and fuel, the prime minister’s chief of staff said on Saturday. The freeze on retail mortgage rates, which was set to expire on Dec. 31, will also be extended by at least six months, Gergely Gulyás told a regular press briefing.
The government is doing everything in its power to ensure that the economic situation allows for these measures to be prolonged and for utility bills to be kept low, Gulyás said, calling the measures “Europe’s biggest family support scheme”. He also said that if the war ended or if the European Union were to lift the energy sanctions on Russia, the prices of oil and gas would “go down by half the next day”.
Gulyás said the war in Ukraine and the related sanctions had led to “a brutal rise in energy prices”, which had caused inflation, particularly in the price of food products. This has in turn led to soaring fuel prices in recent months, he added. He noted that the government had introduced measures as early as last autumn to shield Hungarian families from these price increases.
He said the government had decided to extend the price caps because “as long as the sanctions are in effect, there is no realistic chance of the situation improving”. Gulyás said the mortgage rate freeze helps tens of thousands of families and that the government trusted that it could also curb the fuel price increase. Hungary has the lowest fuel prices in Europe, he added.
The caps on utility bills will also remain in place up to average consumption levels, he said. The first energy bills issued under the amended utility price cap scheme indicate that there are more households that are considered lower-than-average energy consumers than originally thought, adding that many households had also started to save energy. The utility price cap scheme saves families 150,000-180,000 forints (EUR 369-443) a month, he said.
Marton Nagy, the minister for economic development, told the same press briefing that the government has approved a support scheme for energy-intensive small and medium-sized businesses. The scheme, which will run from Oct. 1 until the end of 2023, is aimed at supporting operating costs and investments, Nagy said. As regards the operating cost support, Nagy said the state will cover 50 percent of the increase in the electricity and gas bills of energy-intensive manufacturing SMEs.
The government is also launching a programme to support investments aimed at improving energy efficiency, Nagy said. SMEs will receive a maximum 15 percent subsidy on their own resources in order to maintain their long-term competitiveness, he said. Meanwhile, Nagy said SMEs are being asked to keep at least 90 percent of their staff employed until the end of 2023.
The minister said that the government had also discussed a scheme to save factories and a new job protection action plan. He added that both would be finalised over the coming weeks. The scheme will support investments aimed at improving energy efficiency in large energy-intensive factories, he said.
The job protection action plan is designed to prevent massive lay-offs by energy-intensive companies that would seek to offset higher energy prices by reducing their workforce, Nagy said, adding that the government gives priority to protecting jobs.
The minister said the programme may affect about 10,000 small or medium-sized enterprises in 116 energy-intensive sectors. The government seeks to help SMEs remain viable and competitive even after the energy crisis and retain their workforce, he said.
The minister said he had also supported the proposal for extending the price caps at the government session, even if he maintained the position that these measures are not normal interventions in the market. He added, however, that the current market conditions are far from normal either as Hungary is amidst an energy crisis aggravated by sanctions, with inflation imposing a growing burden on families.