What does the Brexit deal mean for Hungary from an economic point of view?

It has already been 4 and a half years since, with the Brexit referendum, the country decided to leave the European Union; moreover, the transition period ends with the last day of this year, so dealing with the issue has been quite urgent for a while now. A week ago it seemed impossible that the two parties would reach an agreement before we enter 2021, but a Christmas miracle happened when, on the 24^th, Boris Johnson announced on Twitter that “The deal is done.”

We already discussed that the United Kingdom and Hungary both aim to strengthen their ties in several sectors, such as security, education, and tourism. Details of the deal are extremely important as based on numbers, the UK is one of the most important economic partners of Hungary. So what will happen to British companies based in Hungary?

According to Péter Goreczky, a leading analyst of the Institute for Foreign Affairs and Trade (KK), 

“Even if there will be no comprehensive agreement on commerce between the EU and the UK, it is still very unlikely that British companies would leave Hungary. Nevertheless, without a doubt, there will be factors making the situation more complicated.”

Choosing Hungary as a destination to invest in was not solely based on the country’s EU membership. Accessibility to professionals, favourable operational costs, and the eco-system of industries all play an important role when it comes to a strategic decision of such magnitude. The investment itself is also influenced by the future role of the affiliate.
“For instance, if a British company supplies the whole EU market from a Hungarian station, there is no point in moving its distribution centre or the production to another member country,” Péter Goreczky told Index. 
To illustrate the example, he mentioned that the British pharmaceutical giant, GlaxoSmithKline (GSK), announced back in 2017 the extension of its factory in Gödöllő producing vaccine ingredients. This shows that when such a huge investment is carried out, there are years of preparational work and technological and business developments behind it, which make it complicated to move these projects to other countries.