The EU cannot keep up with China and the US, says Minister Nagy in Geneva

In his speech, Nagy said a new economic order was taking shape in the world, and Europe needed to preserve its independence. To achieve that, he said Europe needed to boost its competitiveness, step up its innovative performance, and accelerate the green transition and the application of artificial intelligence.

While Asian economies, especially China and the United States, quickly adapt to new challenges and support their economies with all means, he said, noting Americans’ Inflation Reduction Act, the European Union has fallen behind in new branches of industry and has been slow to react to latest trends. He added that joint action was necessary as the EU’s competitiveness deteriorated unprecedentedly.

Not only has the EU failed to take steps to address the matter, but some of its measures have contributed to the formation of blocs and could pave the way for an “economic cold war,” he said, pointing to the EU decision to levy punitive tariffs on EVs manufactured in China. He added that five member states—Germany, Hungary, Slovakia, Slovenia, and Malta—had voted against the measure, while just ten had supported it.

He warned that punitive tariffs would be a “calamity” for the European automotive industry, especially vehicle manufacturing in Germany, and could result in retaliatory measures. He urged caution on the matter and said negotiations needed to continue to reach a mutually beneficial agreement.

Nagy said Hungary seeks cooperation based on mutual respect with all sides and makes its own decisions about economic partners. That principle is embodied in the policy of economic neutrality, which establishes the conditions for accelerated economic growth.

He said policy extended to neutrality in financing, investments, markets, energy, and technology. As a small, open economy, Hungary is committed to connectivity and wants to strengthen further its role as a “meeting point” for capital and technology from the East and the West, he added.

He said that if EU member states want to boost their competitiveness, they need to be prepared to temporarily run up higher budget deficits. Those bigger fiscal gaps wouldn’t result in imbalances, as the goal was to boost economic growth and strengthen competitiveness.

As we wrote yesterday, Hungary’s retail sales growth is modest, and the trade surplus is decreasing, but the ministry still celebrates; details are HERE.

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