PM Orbán sets out Hungary’s position on euro adoption

A strong middle class will be “the key issue” in the coming 15-20 years, Prime Minister Viktor Orbán said at the Lamfalussy Conference organised by the National Bank of Hungary (NBH) in Budapest on Monday.

Orbán said the value of stability and security was also appreciating and pointed to the importance of foreign policy based on connectivity and efficient state organisation for the future.

Addressing the conference, dubbed The Age of Geoeconomics: Evolution of Central Banking, Orbán said a sovereigntist epoch will replace the era of liberalism. He said Hungary had been building sovereigntism for 15 years as the only country in the western world, adding that “the first important experience is stability and security”. He noted the special importance of security in future, and said “those that cannot protect themselves are not partners, nor even allies, the most they could be is subordinates.” “Retaining the capability of self defence will be crucial for each nation,” he said. The focus, he said, would not be so much on the Russian-Ukrainian war but “on migration and its mathematically predictable consequences.”
According to Orbán the next era will be one of “competition between state organisation models”, adding that “the neo-liberal models are now failing”. “This has already happened in America and will happen in Europe, too, and the question is what other models will emerge from other national cultures, arising from different national characteristics.”

Orbán spoke about Hungary’s “connectivity-based” foreign policy, and said

“countries unwilling to link up with other major players cannot be successful; those, however, that are ready to cooperate with others will benefit from an increased weight.”

The prime minister said that “Hungary is usually portrayed by its liberal opponents as an isolated country, however, in the whole of Europe, Hungary nurtures the best ties with the new Republican administration in the United States, and with China and Russia.” “Hungary is not isolated but the European Union, which had a quarrel with the new US administration, cut itself off from China through launching a customs war as well as from Russia, with which it is at war,” he added. “We are walking the main avenue of history, while the EU stumbles away in muddy side streets,” he said.

Meanwhile, Orbán noted the necessity of a strong middle class and augured serious social upheaval in the coming decades and said only those countries in which those problems would not cause political instability, in which the middle class was an “unshakable” foundation for the social order, could be successful.

He said Hungary had not allowed a liberal model of the state organization to weaken the middle class as in the West. Since 2010, he added, Hungary’s government has worked to create a strong middle class, boosting the number of employed by 1 million. The rate of employment among active-age Hungarians has gone up from 64 percent to 81 percent during the period, he said, adding that households’ financial assets had quadrupled, to 90,000 billion forints, the 13th highest amount in the EU. He said that accumulation had been the result of the government’s “middle class policy” rather than “accumulation through generations because that was impossible under the communist regime”.

Orbán said 9 out of 10 Hungarians lived in properties of their own, and small ventures had doubled their revenues in a period of ten years, reaching 20,000 billion forints. The Hungarian government strengthened the country’s middle class “amid financial sanctions imposed by Brussels’ bureaucracy over Hungary’s strong ties with US Republicans” and the Hungarian economy “losing out on 19.5 billion euros in three years due to the Russia-Ukraine war”. The prime minister said 60-70 percent of employees had benefitted from higher real wages “each year since 2010 with the exception of 2023, when real wages decreased because of the war”. Putting an end to the war and “the success of efforts taken by the new US administration is in a … crucial, everyday, economic interest of Hungary.”

The Hungarian government hopes that “there will be peace and world politics will turn into a sovereigntist direction, and a great US-Hungary economic deal could be signed, which will then give momentum to the Hungarian economy,”

Orbán said. Each country “may consider itself as the centre of the universe”, Orbán said, adding that all nations, including Hungary “need to find ways to ensure survival and prosperity in this new world.” “There are good chances that Hungary will find its own place in a new, evolving global economy,” he added.

The euro, in its current form, benefits strong and competitive economies, but does not contribute to strengthening emerging economies, Orbán said. He added that Hungary had not adopted the euro on the advice of Lámfalussy, the “father of the euro,” who said

joining the eurozone in an unprepared state “would be murder.”

He said that Lámfalussy had foreseen the emergence of a common fiscal policy parallel with the rollout of the euro, but added that even Lámfalussy himself could not say how much time was necessary for the common fiscal policy to be established. Since the introduction of the euro, the productivity and competitiveness of the United States have outpaced that of the eurozone, he said. Since 2000, US GDP has grown by around 170 percent, while that of the eurozone has risen by 140 percent, he added.

Orbán said that a “proactive liberal journalist” had once asked Lámfalussy if he was a Christian, to which he replied “I try, but I don’t always succeed”. He added that the anecdote was a reminder that Christianity was not a theory but a practice, one that could have a place in finance policy, too.

As we wrote, will the long-awaited adoption of the euro in Hungary remain a dream? Details HERE

Orbán said the world had changed so much in the past ten years, since he first addressed the Lámfalussy Conference, that it had become “nearly unrecognisable”. Orbán praised the work of György Matolcsy, whose mandate as central bank governor will end soon, and said his more than ten years at the helm of the NBH had put him among the greatest of his predecessors.

Orbán also acknowledged the efforts of the US economist Jeffrey Sachs, a keynote speaker at the conference, to advance the convergence of central European economies. Orbán said there had long been a consensus on the need for connectivity among Hungarians. He added that the same “globalists” who had once pressed for the opening of borders now advocated blocs, isolation and war, with “Geroge Soros in the lead”.

He said “globalists” who had “earned a living” with the spread of neoliberal principles 30 years earlier were now making money with war.

Professor Sachs, he added, always took the stand that mutually beneficial free trade, cooperation and connectivity could make the world a better more peaceful place. “Over the past 30 years, we have come from the discord of Washington to the Budapest consensus,” he said, referring to the end of the “liberal Washington consensus” started years earlier and now finalised with the victory of Donald Trump.

Also we wrote earlier: Is the EUR/HUF 500 exchange rate approaching in Hungary? – Here’s what the experts say