The government commissioner of Budapest has told the city’s mayor, Gergely Karácsony, to comply with the law and desist from pushing through an “unlawful budget”.
Government commissioner calls on Karácsony
Botond Sára said in a video uploaded to Facebook that Karácsony should refrain from pressing ahead with his “next unlawful measure”, accusing him of working to push an “unlawful budget” through the city assembly, saying “he doesn’t want to pay the 50 billion forints” [EUR 121.3m] in solidarity tax “that poorer localities are entitled to”.
“This is no solution to the municipality’s plight, which is close to insolvency,” Sára said. He said Karácsony was “playing for time” and this would worsen the city’s already difficult situation. “Of course, we will challenge [any] unlawful decision.”
In response, Karácsony said in a post on Facebook that a government office challenge against the Budapest budget would put the municipality’s operations at risk.
“This means, no less, that the government wants to force the city into insolvency,” he said.
He said the government office was running afoul of a municipal court decision that said “over-taxing Budapest is tantamount to confiscation”. “The government insists on taxes which the Constitutional Court has said are contrary to the right of local authorities to financial autonomy enshrined in Hungary’s Fundamental Law,” he said.
National Economy Minister Márton Nagy said 2025 would be a “rebound” year of “economic recovery”, supported by a “peacetime budget”, testifying before parliament’s economy committee on Tuesday.
National Economy Minister expects economic recovery in 2025
Nagy said the government had responded successfully to the crises of the past five years: the pandemic, the energy crisis caused by the war and the economic downturn in Germany.
In light of the changed economic circumstances, the government has launched an economic policy action plan, founded on a policy of economic neutrality, that aims to aid the domestic recovery and lift GDP growth over 3pc from 2025, he added.
Nagy said that action plan would pump HUF 1,400bn into the business sector and leave households with more than HUF 2,800bn.
Nagy said tourism and retail data indicated a recovery of domestic consumption in 2024 that would continue in 2025. He added that real wages could grow 9pc this year, while the employment rate stood at 84pc, close to full employment.
Nagy said the construction sector would bounce back, with an order stock up 40pc and government measures set to lift the housing market. He added that home builds could double to 25,000 next year, still under the 40,000-unit potential of the local construction sector.
Nagy blamed Berlin’s overly disciplined fiscal policy and spending on ideologically important goals, rather than economic development, for the downturn in Germany. He added that the German government’s decision to roll back EV subsidies was also damaging.
Fielding questions, Nagy said dormitories with capacity for 13,000-20,000 students could be built in a student quarter in a brownfield area in the south of the capital. The government aims to keep the number of beds reserved for foreign students under 30pc, he added.
Nagy said the state would recoup the price it paid for a controlling stake in Liszt Ferenc operator Budapest Airport in 15 years.
The Budapest municipality is going against the Constitutional Court’s decision, which in October rejected Budapest’s proposal that the solidarity tax the municipality was called on to pay to support poorer localities was unconstitutional, a state secretary of the finance ministry said on Monday.
State secretary András Tállai said that this year, 848 “wealthier” localities paid a solidarity contribution to aid 1,250 localities in performing their tasks. “It is peculiar that it is the richest city of the country, the capital, that finds supporting poorer localities difficult,” Tallai said.
Tallai said government support for local authorities will increase to 1,266 billion forints (EUR 3bn) from 1,050 billion this year, and additional funds will flow into wage costs.
In reaction to Karácsony’s statement that the city would not pay some 50 billion forints in solidarity contribution, Tállai said,
“Everyone has to comply with the law.”
Last week, Budapest Mayor Gergely Karácsony said that in a bid “to retain the municipality’s self-determination and resources,” the city’s budget had been drafted on the assumption that
“Budapest will pay as much solidarity tax to the central budget as it receives from central coffers to finance its services.”
UPDATE
Karácsony: Budapest’s real problem is ‘no money’
Gergely Karácsony, the mayor of Budapest, told a conference on Monday that the capital’s “real problem” was that the municipality had “no money”.
Karácsony said at the Republikon Institute gathering that it was not especially the political gridlock in the assembly or the fact it had been impossible to appoint a deputy mayor that was holding the city back, but rather that it was in the midst of an economic crisis and had fallen victim to a government policy of blackmail.
He said the city assembly was a battleground between its biggest factions, Fidesz and the Tisza Party, both of which exploited Budapest affairs to position themselves ahead of the 2026 general election.
Recent months had shown that
“Fidesz votes no to everything”, so decisions can only be made with the ten-member Tisza faction.
Karácsony said it would be hard to overcome the gridlock if local politicians focused solely on the city’s affairs as even then “the lightning of national politics strikes above us”.
The Finance Ministry released preliminary data on Monday showing that Hungary’s cash flow-based general government deficit reached EUR 8bn (HUF 3,284.3bn) at the end of November.
At the end of the month, the central budget had a deficit of HUF 3,257.5bn, the social security funds were EUR 0.55bn(HUF 226.8bn) in the red, and separate state funds were HUF 200.0bn in the black.
Alone in November, the general government deficit came to HUF 233.8bn.
“The government has stabilised the fiscal balance this year while closely following the development of the deficit,” the ministry said. “The government remains committed to improving balance indicators while putting the economy on the sustainable growth path,” it added.
The ministry said interest expenditures reached HUF 3,412.7bn in January-November, climbing by HUF 798.1bn from the base period. It noted that the fall in forint interest rates started in 2023 was delayed in showing up in cash flow-based interest expenditures.
It added that accrual-based interest expenditures will decline substantially in 2025.
The ministry reaffirmed the government’s commitment to reducing the general government deficit to 4.5 percent in 2024, 3.7 percent in 2025, and under 3 percent in 2026.
Hungary’s fiscal strategy has drawn sharp criticism from the European Commission for lacking crucial details and relying on questionable data, as tensions grow between Budapest and Brussels over economic governance and compliance with EU rules.
Fiscal strategy under scrutiny
As Euronews reports, Hungary’s fiscal strategy has come under scrutiny for lacking crucial details and relying on questionable data, according to European Commissioner Valdis Dombrovskis’ letter sent to Finance Minister Mihály Varga. The letter, dated 5 December, highlights concerns over Hungary’s unrealistic economic forecasts submitted to Brussels, which are essential for evaluating its medium-term fiscal plans. Dombrovskis emphasised that key elements of the plan are either absent or require significant refinement, complicating the European Commission’s ability to complete its assessment.
European Commission, Brussels. Photo: Pixabay
Critique on Hungarian economic growth
The Commission also criticised discrepancies in Hungary’s data on economic growth, inflation, and interest expenditure, urging better alignment with EU methodologies. The analysis aims to detail how Prime Minister Viktor Orbán’s government intends to achieve fiscal balance after pandemic-induced spending relaxations. However, the EU’s evaluation may be delayed beyond the current 12 December deadline, potentially extending into January, due to the extensive gaps in the submitted information.
Photo: FB/Viktor Orbán
Strict debt and deficit limits
The EU imposes strict debt and deficit limits on member states under its Stability and Growth Pact, though enforcement has historically been lenient. These rules, aimed at preventing economic crises like Greece’s in 2007-8, were suspended during the pandemic and energy crisis but have been reinstated this year. Hungary’s delayed fiscal plan submission meant it missed November’s assessments, unlike most other member states. Exceptions were made for five nations, including Germany and Belgium, facing political disruptions. Of 21 assessed plans, only the Netherlands failed, criticised for its projected deficit increase driven by tax cuts and higher public investment.
Meeting Brussels’ fiscal demands often stirs domestic political tensions, as seen in France where Prime Minister Michel Barnier’s government collapsed over resistance to his deficit-reduction plan. Meanwhile, Hungary faces its own challenges after six contentious months chairing the EU Council. Budapest has blocked sanctions against Russia, defied EU court rulings on asylum rights, and faced suspended EU funds as a result of its actions.
Szeged may see Hungary’s second unstaffed 24/7 smart shop in 2025 if Coop can carry out its plans, János Kelemen, the CEO and President of the company, told Délmagyar. The first unstaffed Hungarian grocery store opened at the Fény utca market and is run by the Hungarian Charity Service of the Order of Malta. Therefore, it does not generate a profit. Consequently, the Szeged grocery store can become Hungary’s first profitable unstaffed shop.
Unstaffed 24/7 smart shop may open in 2025
According to Telex, the Coop unit in Szeged’s Szent István Square can become Hungary’s second unstaffed grocery store, which may be ready in 2025. The store has been revamped, and after its reopening, customers noticed that traditional cashier’s desks have been removed to give space for self-service desks. For now, those are staffed so customers can pay there just like they usually do. However, that may change soon.
János Kelemen, the CEO and President of Coopsaid that they would like to open the first unstaffed Coop unit by early 2025 in Szeged. Sharing more details on the issue would be unresponsible, he added.
Telex wrote that the unstaffed Coop grocery stores could be open 24/7, but the company did not share any information concerning the exact technology they would operate.
In the Czech Republic, the first unstaffed Coop units were opened in 2022. Customers can shop there with a face-recognising app and cannot pay with cash. However, the system allows you to shop even on Sunday night or early morning on Friday since they are always open.
Lukáš Němčík said that 24/7 unstaffed grocery stores are especially popular in rural areas because they allow locals to purchase the essentials without driving to a supermarket. In case of emergency, customers can call the remote security officer.
Another unstaffed smart store in Budapest
According to an RTL Klub report, Hungary’s first unstaffed grocery shop opened at Budapest’s Fény utca market. The operator is the Hungarian Charity Service of the Order of Malta, and they sell the products of the charity service employees who work in the poorest Hungarian villages.
The charity service does not regard their grocery store as a business branch. Instead, they believe it is helping poorer families and buyers as well. Tamás Romhányi, the communications director of the charity, said their Fény utca market store does not generate profit.
The first unstaffed shop in Hungary. Photo: PrtScr/RTL Klub
This shop is still one-of-a-kind in Hungary, and its operation teaches lessons to everybody planning to copy the initiative. The shop sells various products, from handmade cheese to syrups. You can shop there with the help of an app. If you take a product from the shelf, the system automatically adds it to your basket. If you put it down, the product will be deleted. You can pay with your phone or debit card.
Here are some more photos of the Budapest shop:
The charity service plans to open such stores in poorer and smaller villages in rural Hungary, where people can buy essentials locally.
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National Economy Minister Márton Nagy met with a number of Albanian ministers and the governor of Albania’s central bank during a visit to Albania on Thursday, his minister said in statement on Friday.
Nagy met with Blendi Gonxhja, the minister for economy, culture and innovation; Petrit Malaj, the finance minister; Anila Denaj, the minister for agriculture and rural development; and Gent Sejko, the governor of the central bank.
The sides discussed bilateral economic ties, areas in which cooperation could be enhanced, and the state of Albania’s European Union integration.
Hungarian-Albanian ties are strong and there are over 20 state, intergovernmental or interministerial agreements between the two countries, the ministry said. Cooperation between the waterworks companies of Budapest and Tirana is “stable, fruitful and constructive”, it added.
Photo: MTI
The government offers 20 scholarships a year to Albanian students to enroll at Hungarian universities. The advancement of bilateral ties have also been supported by a direct Wizz Air flight between Budapest and Tirana launched with the support of the Hungarian government in 2021, the ministry said.
Last year, bilateral trade between Hungary and Albania reached EUR 130m. Hungarian-owned OTP Bank Albania is the country’s fifth-biggest credit institution in terms of total assets, while Hungary’s 4iG leads the mobile and fixed-line telecommunications markets.
Hungary backs the EU integration of Albania and the Western Balkans, Nagy said, adding that it was in the EU’s interest for those dynamically expanding economies to join as soon as possible.
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Orbán cabinet wants Albania to become an EU member – read more HERE
The German car manufacturer BMW has decided that one of the three models originally planned to be produced in Debrecen, the new 3 Series based on the Neue Klasse platform, will be built at the main plant in Munich instead of in Hungary. This decision may have an impact not only on production capacity but also on the plant’s economic contribution, particularly in terms of Hungary’s GDP.
The Debrecen BMW plant was originally designed to produce three different electric models from the Neue Klasse platform: the iX3, iX4 and 3 Series. However, as part of the restructuring decision, BMW management decided to build the new 3 Series in Munich instead. According to 24.hu, the reason for this change is the uncertainty in the industrial environment, which is affecting the European car industry in particular.
The decision allows the Debrecen plant to focus on the two remaining models, the iX3 and iX4. However, this means that the plant will be optimised to produce only two models instead of the three originally planned.
Source: Pixabay
Reduction in capacity
When the construction of the plant was announced in 2018, BMW set out ambitious plans to produce 150,000 cars a year in Debrecen. However, it now appears that this figure could be significantly reduced. According to industry sources, the maximum capacity of the plant could be limited to 80-90 thousand cars per year based on current plans.
The capacity reduction is due to the relocation of the new 3 Series to Munich. This model is expected to be a high-volume product and will be produced at the company’s flagship plant in Munich. Full capacity utilisation of the Debrecen plant will therefore remain uncertain towards the end of the decade.
The production start date has also been changed. The original target date of 2025 has been postponed by one year, and production is now expected to start in 2026. This shift is also due to the general uncertainty in the automotive industry.
The uptake of electric cars in Europe has been slower than manufacturers had previously expected. This slowdown has created spare capacity for several multinational carmakers, providing an opportunity to restructure and optimise production plans.
The strategic role of the Munich Plant
Munich continues to play a key role in BMW’s global manufacturing strategy. The company chose to build the new 3 Series at this central plant because of its ability to manage the product portfolio accurately and efficiently. This decision is in line with the company’s priority of strategically positioning its highest-volume models.
Munich is also a good location because in the current economic climate, competition between production sites is fiercer than ever. It is becoming increasingly difficult for automotive companies to make long-term plans, especially for new models and plants.
Source: Pixabay
BMW’s possible impact on the Hungarian economy
The planned reduction in production at the Debrecen plant could have a direct impact on Hungary’s economic growth. The plant was originally expected to make a significant contribution to Hungary’s GDP but reduced capacity and delays in the start of production may reduce this expectation.
However, the plant could still be an important player in the Hungarian car industry, particularly with the production of two new electric models. The key question for the long-term outlook, however, is whether the plant will be able to reach full capacity and what new models are planned for the future.
Construction of the BMW plant in Debrecen (E Hungary) is “in full swing” and related plans are unchanged, the head of the new base told MTI on Friday.
Capacity has not been reduced and there has been no change regarding the production of the planned models, Hans-Peter Kemser said in a statement.
Pre-production is ongoing and serial production will start in 2025, according to plan, he added.
Serial production of the Neue Klasse’s fully electric X model Sports Activity Vehicle is set to start in Debrecen at the end of 2025. Preparations for production of the Neue Klasse sedan at BMW’splantin Munich are underway, in line with the original plan.
Kemser noted that the Debrecen plant was planned with a maximum annual capacity of 150,000 vehicles. As with all new models or new factories, capacity will be ramped up gradually, he added.
Illustration. Photo: FB/BMW Hungary
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Struggling German carmaking industry may ruin PM Orbán’s economic dreams and election chances – read more HERE
Fitch Ratings affirmed Hungary’s investment-grade sovereign rating and revised the outlook to stable from negative on Friday, the National Economy Ministry said in a statement.
Fitch affirms Hungary investment-grade rating, revises outlook to stable
The Fitchaction shows the underlying fundamentals of the Hungarian economy are stable, the ministry said. All three big rating agencies have recently affirmed Hungary’s investment-grade ratings, it added.
Hungary’s assessment on international money markets is favourable and the popularity of Hungarian government securities continues, the ministry said. Strong investor and market confidence is reflected in successful bond auctions and continuous FDI inflows, including big investments set to boost economic growth by companies such as CATL, BYD, BMW, SEMCORP and EcoPro, it added.
Hungary’s government has created fiscal balance and balanced growth, the ministry said. Hungary’s financing position is stable, while the government is committed to strict budget management and to reducing deficit and state debt levels. By laying the foundations for a lasting upturn, the 2025 peacetime budget will contribute to putting the Hungarian economy back on the path of sustainable, high-level growth, a course affirmed by Fitch’spositive assessment.
Hungary’s economy is stable and resilient, and the country’s economic fundamentals are performing well, the ministry said, pointing to high employment levels, increasing consumption, low inflation and rising real wages.
The government aims to boost Hungary’s GDP growth over 3pc in 2025 by adopting a policy of economic neutrality and rolling out a New Economic Policy Action Plan that will boost purchasing power, ensure affordable housing and scale up SMEs with the Demjan Sandor Programme, the ministry said. The action plan will mobilise HUF 4,000bn of resources, it added.
Last credit rating agency review of year a success
The last credit rating agency review of Hungary of the year was a success, Finance Minister Mihály Varga said in a video message on Facebook, after Fitch Ratings affirmed Hungary’s investment grade rating and revised the outlook to stable from negative. Varga noted that credit rating agencies had conducted reviews of Hungary on twelve occasions during the year and affirmed the country’s investment-grade sovereign ratings in spite of the deterioration in the external environment.
Photo: MTI
In recent weeks, S+P Global Ratings affirmed Hungary’s investment grade rating with a stable outlook, Moody’s affirmed its rating of the country, but revised the outlook to negative from stable, while Fitch Ratings revised the outlook on its rating to stable from negative, he added. Fitch acknowledged the stability of the Hungarian economy, the big reduction in inflation and growth of investments, Varga said. The rating agency’s analysts forecast accelerating economic growth and a narrowing budget deficit in the coming years, he added.
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The climate for doing business amid the current circumstances remains the most favourable for big companies, exporters, foreign-owned enterprises and those in the industrial sector, a gauge of sentiment by the the Economic Research Institute (GVI) of the Hungarian Chamber of Commerce and Industry (MKIK) shows. Meanwhile, the industrial output edged down 0.2pc in October. Adjusted for the number of workdays, output dropped 3.1pc.
GVI’ssurvey of 2,102 managers showed small companies, dependent on domestic sales and businesses in commerce and construction were most exposed to the impact of the economic crisis.
GVI’s confidence index stood at +22 points in October, unchanged from April but three points higher than twelve months earlier.
Industrial output edges down 0.2pc in October
Output of Hungary’s industrial sector inched down 0.2pc year-on-year in October, a first reading of data released by the Central Statistics Office (KSH) on Friday shows. Adjusted for the number of workdays, output dropped 3.1pc. Output of most manufacturing branches rose in October, KSH said. Among the biggest ones, output of the automotive and electrical equipment segments declined, while output of the computer, electronics and optical equipment and the food, beverage and tobacco segments increased, it added.
The inaugurated plant of Alstom in Mátranovák in April. Illustration. Photo: MTI
In a month-on-month comparison, output rose a seasonally- and workday-adjusted 2.0pc. For the period January-October, industrial output declined 3.9pc year-on-year. KSH will release detailed data on output of industrial sector branches on December 13.
German automotive industry is the reason
Commenting on the fresh data, the National Economy Ministry said the month-on-month increase in output was reassuring. It also pointed to the “hectic” international environment as several countries in Europe faced economic and political crises at the same time. German automotive industry companies are scaling back as demand falls, with Volkswagen even planning layoffs, it added. In addition to the impact of the war in Ukraine, the circumstances are impacting the output of Hungary’s export-oriented economy and industry, the ministry said. The performance of Hungary’s industrial sector will improve as big local investments by multinationals such as CATL, BYD, BMW, SEMCORP and EcoPro are completed, it added.
Photo: Facebook/ BYD
Fiscal financing position stable, Orbán government says
Hungary’s fiscal financing position for 2025 is stable and all resources necessary for the New Economic Policy Action Plan are available, Peter Beno Banai, the state secretary for the budget, said presenting the country’s 2025 financing plan on Friday.
All conditions are in place to step up Hungary’s economic growth, Banai said. He added that Hungary had preserved its stable financing in recent years and kept its investment-grade credit rating.
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Robert Bosch Automotive Steering Ltd inaugurated a HUF 46bn plant in Maklár (NE Hungary) on Friday. Furthermore, SK-Precíziós Szerszámgyártó inaugurates HUF 2.1bn production hall.
The investment was supported by HUF 10.5bn from the state, Minister of Foreign Affairs and Trade Péter Szijjártó said at the ceremony. He added that Hungary’s GDP growth was set to accelerate noticeably in 2025, in part because of automotive industry investments.
In two years, after manufacturing investments by Mercedes, BMW and BYD are completed, he said Hungary would be among five European countries that turn out an annual 1 million cars. Szijjártó noted that German-owned companies employed about 300,000 people in Hungary.
Robert Bosch Automotive Steering Kft managing director Michael Zink said the 37,000sqm multifunctional building would serve logistics purposes and house production of limited series products. The Bosch group in Hungary had net revenue of HUF 2,207bn in the 2023 business year.
SK-Precíziós Szerszámgyártó inaugurates HUF 2.1bn new production hall
German-owned precision tool maker SK-Precíziós Szerszámgyártó inaugurated a HUF 2.1bn production hall in Sárospatak (NE Hungary) on Friday. The state supported the investment, which created 50 jobs, with HUF 750m, Szijjártó said at the ceremony.
Photo: FB/Szijjártó
Photo: FB/Szijjártó
The plant is the German owner’s first abroad and creates an opportunity for local suppliers, he added. Last year, bilateral trade between Hungary and Germany reached EUR 70bn, he noted. Over the past ten years, German companies have invested HUF 3,800bn in Hungary, creating almost 40,000 jobs, he added.
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The Demján Sándor Capital Programme, an element of the Demján Sándor Programme for scaling up local SMEs, will launch with an allocation of HUF 100bn in February, the state secretary for SMEs announced on Wednesday.
The programme will make capital financing available to SMEs for expanding their range of business partners and joining new supply chains, Richárd Szabados said. The 8+1 point Demján Sándor Programme is a part of the government’s New Economic Policy Action Plan. Szabados said the Demján Sándor Capital Programme was drafted with the participation of National Capital Holding and would be implemented with the support of the Hungarian Chamber of Commerce and Industry (MKIK).
The details of three more elements of the Demján Sándor Programme will be announced in the coming two weeks, he added.
National Capital Holding CEO Bence Katona said companies could apply for HUF 100m-200m in the framework of the Demján Sándor Capital Programme. The Hungarian Development Bank (MFB) will subscribe the investment fund units in the scheme and MKIKwill be in charge of managing the investment fund, he added.
The scheme will not focus on any particular branch of industry, but areas designated in the government’s policy action plan, such as green economy, digitalisation, healthcare, education and sustainable industry, will enjoy an advantage, he said. Purchases of real estate will be excluded from the scheme, but the capital may be used to upgrade or expand property already in use, he added.
The deadline for completing investment projects included in the scheme will be one year, with an option for a six-month extension if justified by the circumstances, he said. He added that the capital could be used for the self-financing requirement for other credit, paving the way for companies to access up to several hundred million forints.
The rate on the state-subsidised capital financing is 5pc. To comply with legal requirements, companies will exchange a token, 1pc equity stake for the financing that carries no right of control and may be repurchased at any time.
Companies with average annual revenue of at least HUF 300m and with at least two people on payroll may apply for the financing.
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In June 2024, Budapest Airport embarked on a transformative new chapter by becoming a majority Hungarian-owned company. This landmark change was made possible through a partnership between Corvinus Zrt. and Vinci Airports, with a clear focus on improving passenger traffic and infrastructure.
According to Index, the new ownership team is committed to modernising and expanding the airport, with Terminal 3 at the heart of their ambitious vision. It is important to note that the scope of these improvements extends beyond the terminal itself, as public and private investors collaborate to enhance the surrounding transport infrastructure.
Photo: BKK
Terminal 3
The cornerstone of Budapest Airport’s development plan is Terminal 3, which will enter a critical phase in the second half of 2025. According to Máté Lóga, President of Budapest Airport Ltd., the design phase is nearing completion, paving the way for construction to begin in early 2025. This multi-year endeavour is set to become one of the most significant infrastructure projects in Central Europe.
Terminal 3 is being designed to meet growing passenger demand, which is projected to reach 20–30 million annually within the next decade. By employing the latest technologies and sustainable solutions, the new terminal aims to provide an efficient, comfortable, and environmentally friendly travel experience.
A focus on seamless connectivity between transport modes
The airport’s transformation is not limited to its terminals. The Hungarian government is actively promoting the development of the surrounding transport infrastructure, including the expansion of motorway networks and rail connections. Intermodality, the seamless integration of different modes of transport, remains a top priority. These enhancements are expected to streamline travel between the airport and Budapest, increasing its attractiveness and boosting passenger numbers.
Photo: FB/Budapest Airport
In addition to Terminal 3, existing airport services are undergoing a technology-driven upgrade. Innovations such as automated border control gates and improved check-in counters are set to simplify passenger processes while increasing efficiency. These advancements not only enhance the user experience but also optimise the airport’s overall capacity.
The ambitious development programme is expected to yield returns sooner than initially anticipated. Máté Lóga suggests that the original 16.5-year payback period could be significantly shortened. Investor confidence is growing, underscoring the economic potential of the airport as passenger and freight volumes exceed forecasts.
Global expertise and local impact
According to Index, the development of Budapest Airport is being driven by a collaboration of world-class international and local expertise. Vinci Airports, with its extensive experience managing over 70 airports worldwide, is playing a key role in realising this vision. The partnership aims to position Budapest Airport as a premier travel hub, capable of meeting the growing demands of the region with excellence.
The acquisition of Budapest Airport marks a turning point for Hungarian aviation. From the construction of Terminal 3 to the modernisation of transport links and services, these investments promise to boost both capacity and the country’s economic prospects. The coming years will see this bold vision come to life, cementing Budapest Airport’s role as the gateway to Central Europe.
From 2025, the minimum wage in Hungary will increase by 9%, resulting in a net monthly income of HUF 193,300 (EUR 466). However, this remains far from sufficient to cover the cost of renting an independent apartment in Budapest or other urban centres.
In addition to housing, basic expenses such as food, utilities, and transport place a significant strain on budgets. Consequently, most minimum wage earners are left with options such as room rentals or living arrangements that involve substantial compromises.
Source: Pixabay
Renting in Budapest and minimum wages
Renting a single room in Budapest currently costs between HUF 45,000 (EUR 108) and HUF 130,000 (EUR 313), with the average hovering around HUF 98,000 before utilities are added. According to Pénzcentrum, with a budget of HUF 97,000 (EUR 233), renting a room is nearly the only viable option, while independent living is restricted to lower-quality or peripheral micro-rentals. In smaller cities, the situation is slightly better; modest apartments can be found within this price range, though they still require considerable compromises.
Sharing the cost of renting an apartment is becoming increasingly common. For instance, a two-room apartment in the outer districts of Budapest can cost around HUF 200,000 (EUR 482) per month, meaning two people could pay less than HUF 100,000 (EUR 241) each. However, this arrangement is far less affordable in the inner districts or more desirable neighbourhoods, where similar apartments command significantly higher rents.
Couples earning the minimum wage may find larger apartments slightly more attainable, though they still need to compromise on size or location in Budapest. Two people earning around HUF 190,000 (EUR 458) each can primarily afford to rent on the outskirts of the capital. In rural areas, two-room flats are more accessible and provide a slightly easier route to decent housing.
Those earning the guaranteed minimum wage (requiring at least secondary education) of HUF 232,000 (EUR 559) net have slightly more options, though these are still limited. In Budapest, the average monthly rent for a one-bedroom apartment is approximately HUF 178,000 (EUR 429), leaving just enough for utilities. In smaller cities, the situation improves somewhat: one-bedroom flats in regional centres often rent for around HUF 126,000 (EUR 303), allowing greater financial flexibility.
Source: depositphotos.com
Trends in the rental market
Rental prices are expected to rise by 5–10% in the coming year, further restricting options for those on minimum or guaranteed minimum wages. The supply of affordable housing on the national rental market is already minimal, with most options concentrated in Budapest and county cities. While smaller towns offer lower prices, the limited availability of housing presents a significant challenge.
Most tenants seek furnished, equipped apartments of at least 40 square metres. Flats in the HUF 200,000 (EUR 482) range remain the most popular at the upper end of the market, while those on tighter budgets are largely limited to renting rooms or shared flats.
Despite increases in minimum and guaranteed minimum wages, the housing affordability crisis remains unresolved. Rising rents and limited supply will continue to burden low-income earners, particularly in Budapest and larger cities. For many, shared accommodation or cheaper rentals in smaller municipalities will remain the only practical solutions.
Hungary’s GDP contracted 0.7pc year-on-year in the third quarter, adjusted for seasonal and calendar year effects, a second reading of data released by the Central Statistics Office (KSH) on Tuesday shows.
According to KSH, without adjustments, GDP fell 0.8pc.
Services’ performance and the balance of product taxes and subsidies mitigated the decline by 0.8pp and 0.3pp, respectively. Industry contributed 1.1pp, agriculture 0.6pp, and the construction sector 0.2pp to the decline.
On the consumption side, investments contributed 2.1pp and the trade balance 0.9pp to the decline. Final consumption mitigated the drop by 2.1pp.
In a quarter-on-quarter comparison, GDP dropped a seasonally- and calendar year-adjusted 0.7pc.
In Q1-Q3, GDP rose an unadjusted 0.6pc and an adjusted 0.7pc.
Production approach
The industry reduced its performance by 4.4%, while manufacturing grew by 6.2% compared to the same period of the previous year. Among manufacturing branches, the largest contributors to the decrease were the manufacture of motor vehicles, trailers and semi-trailers and the manufacture of electrical equipment, while the manufacture of rubber and plastic products and the manufacture of food products, beverages and tobacco products slowed the fall in industry the most. The value added of construction was 4.0% and that of agriculture (as a consequence of the drought) 14.9% lower than in the corresponding period of the previous year.
The gross value added of services increased by 1.9% in total. The highest increase (5.9%) occurred in arts, recreation and other service activities. The value added of education was up by 3.8%, that of transportation and storage by 2.8% and the value added of information and communication by 2.6%. The performance of both accommodation and food service activities and financial and insurance activities increased by 2.4%. The value added of human health and social work activities grew by 2.3% and that of real estate activities by 1.2%. The performance of professional, scientific, technical and administrative activities became 0.9%, that of wholesale and retail trade 0.8% and the performance of public administration 0.4% larger.
The 0.8% decrease in gross domestic product in the 3rd quarter of 2024 was reduced by services (by 0.8 percentage point) and the balance of taxes and subsidies on products (by 0.3 percentage point). Industry lowered the performance of the economy by 1.1, agriculture by 0.6 and construction by 0.2 percentage point. Within services, all sections contributed to a similar extent to offsetting the decrease in GDP.
The actual final consumption of households was up by 4.2% compared to the same period of the previous year. Household final consumption expenditure, representing the largest proportion of the components of the actual final consumption of households, rose by 4.5%. The (domestic) consumption expenditure of households realised on the territory of Hungary became 4.1% higher. The volume of domestic consumption expenditure increased in all durability groups: by 1.6% in the case of durable goods, by 4.6% for semi-durable goods, by 4.8% in the case of non-durable goods and by 4.0% for services.
The volume of social transfers in kind from the government went up by 3.3%, while that of the actual final consumption of the government diminished by 1.4%. The volume of social transfers in kind from non-profit institutions serving households (NPISHs) grew by 1.2%.
As a result of the above trends, actual final consumption increased by 3.2%.
Gross fixed capital formation fell by 14.0% in the 3rd quarter compared to the corresponding period of the previous year. Both the volume of investments in construction and that of investments in machinery and equipment went down.
Gross capital formation decreased by 4.9% compared to the same period of the previous year.
As a result of the trends of consumption and of capital formation, domestic use as a whole grew by 0.3% in the 3rd quarter.
The Hungarian forint has plummeted to a two-year low against the British pound, with HUF 501.5 required to purchase a single GBP on Monday morning. This is just shy of the all-time record of HUF 502.9, illustrating the domestic currency’s sustained weakness. The euro-forint exchange rate has also breached new lows, with the common European currency trading above HUF 415, marking its weakest performance in two years.
Weakening: Regional and global factors in play
The Hungarian forint’s poor performance extends beyond major currencies, as it also hit unprecedented lows against the Polish złoty and the Czech koruna, Világgazdaság reports. Analysts point to several key factors driving the depreciation. Chief among them is Moody’s recent downgrade of Hungary’s credit rating outlook from stable to negative. This shift, announced late last Friday, has shaken investor confidence, prompting a reassessment of regional holdings.
The downgrade reflects concerns over Hungary’s governance and its potential loss of EU funds, exacerbating fears about the country’s fiscal stability. Simultaneously, global market trends have added to the pressure, with the US dollar gaining strength. The dollar index (DXY), which measures the greenback against a basket of currencies, climbed 0.47%, signalling broad-based demand for safer assets.
Policy dilemma: Balancing rates and stability
Economic experts like Viktor Zsiday, portfolio manager at Citadella Fund, highlight deeper systemic issues. In Portfolio’s article, Zsiday argues that Hungary’s current interest rate policies are insufficient to stabilise the currency. Despite recent rate cuts aimed at stimulating growth, these adjustments have inadvertently fueled the Hungarian forint’s slide.
Zsiday outlines two potential paths forward: continued rate cuts, which risk further depreciation and heightened inflation, or raising rates to attract investors and stabilise the forint. However, both options come with significant economic trade-offs. He also underscores that the root cause of investor apprehension lies in Hungary’s economic policies and political risks, which only the government can address.
Hungarian forint: creator of challenging environments
The weak forint creates a challenging environment for businesses and consumers alike. With Hungary heavily reliant on imports, the currency’s depreciation inflates the cost of goods, fueling domestic inflation. This, coupled with high interest rates, creates a precarious economic environment. Hungary’s monetary policymakers face mounting pressure to restore investor confidence while balancing domestic economic needs. Yet without significant reforms or shifts in fiscal policy, stabilising the forint may remain a distant goal.
At 5 PM, the EUR/HUF exchange rate was above the 415 level with one euro costing HUF 415.07. The GBP/HUF rate had not improved too much by 5 PM, with one pound costing HUF 500.62 at the time of writing this piece. As for the US dollar, one greenback cost HUF 396.73 at 5 PM on Monday.
The state secretary for employment policy said on Monday that the number of jobseekers in Hungary stood at 224,914 in November, 1,200 fewer than in the same month a year earlier, citing data from the National Employment Service (NFSZ).
The November figure was the lowest for the month in more than three decades, Sándor Czomba said. The number was down 1,300 from the previous month, he added.
He said the government aims to boost the employment rate by tapping the 300,000-strong labour market reserve. Around 23,000 job seekers have found work as a result of recently launched European Union-funded government placement programmes.
The Minister of State for Employment Policy added that in addition to further employment growth, the government’s priority is to increase the purchasing power of incomes. The government has fulfilled the first point of the New Economic Policy Action Plan, which consists of 21 measures. As a result, the minimum wage will rise by 40 percent by 2027, by 9 percent to 290,800 forints in 2025, by 13 percent to 328,600 forints in 2026, and by 14 percent to 374,600 forints in 2027, setting the stage for a fourfold increase compared to 2010. Related article: Three-year minimum wage agreement set to impact everyone’s pay in Hungary
The government will help employers who employ workers on the minimum wage to secure a wage agreement. They will have to pay the increased social contribution tax “on a sliding scale”, i.e. in 2025 they will have to pay the 2024 rate in 2025, in 2026 the 2025 rate and in 2027 the 2026 rate.
