Saxo Bank has featured Hungary in their annual Outrageous Predictions, which include 10 shocking predictions for the coming year. This list consists of stories that are unlikely to happen but would have a huge impact on the market. Saxo’s chief economist wrote a story about Hungary, as he believes Hungary could take steps towards leaving the European Union by the end of 2020 since the arguments with Brussels will likely increase, and EU-money will be reduced.
“EURHUF will spike to 375,” according to star economist Steen Jakobsen, “as Hungary’s leadership and the EU fight over Hungary’s place in the union,” reported Portfolio.
Some of the more important messages of Jakobsen’s story:
- Although Hungary has achieved great economic successes since joining the EU in 2004, their relationship is now at stake. The European Parliament started an Article 7 procedure against Hungary’s strict control over media, judges, and academics, as well as minorities and legal organisations. In the eyes of the EU, these actions weaken democracy and are not in sync with the Union’s values. “A divorce is increasingly likely, and we could see Hungary take steps to follow the UK out of the EU by the end of 2020.”
- According to Jakobsen, this is quite ironic as the boost in Hungary’s economic success in the past 15 years is mainly tied to EU capital transfers. Despite the minimum of 3% Hungarian GDP growth connected to EU membership, according to a KPGM estimate, the country forever seems to be seeking conflict with Brussels.
- The Hungarian government’s answer to all this is that they are only protecting the country, its culture, and itself from immigrants, as well as upholding their right to decide about the country’s own fate. An open economy with a closed-off government, immigration, and control over the media lead to an impossible situation. It will be tough for both parties to find common ground, especially with the Article 7 procedure in motion.
- PM Orbán’s comments about Hungary being a “blood brother” of Turkey rather than a part of the EU have not gone unnoticed.
- This attitude will play into EU transfers disappearing over the next two years and lead to the forint dropping drastically, to 375 in EURHUF terms, to be exact.
Portfolio would not bet on Hungary leaving the EU. The portal believes that the point of the annual Outrageous Predictions is to call attention to these – unlikely – possibilities. The role of the dramatic tone of these predictions is to draw sufficient public and media attention to it.
As for Hungary leaving the EU? Portfolio notes PM Orbán’s alleged private comments about making Hungary a more independent party in the EU, such as Austria, for example. The Prime Minister also has plans to make Hungary one of the top five countries in the EU by 2030, so if the country were to leave the Union, those plans would be completely abandoned.
The content of this year’s issue of Outrageous Predictions:
The article and its caricature: