3. DECLINE INSTEAD OF ECONOMIC CONVERGENCE

For half a decade now, Hungary’s economy has been unable to move forward – largely due to irresponsible government policy, political improvisation, and an arbitrary economic strategy that ignores actual circumstances. Until recently, it appeared that repeated errors and misleading promises had no political consequences. Yet people are struggling more and more to get by: the cost of living and housing has risen alarmingly for most Hungarian families, while food prices have soared, too. The government noisily declared that in 2025 the economy would finally “take off” and “by 2030 we shall catch up with Austria”, but instead Hungary has slipped to the bottom of the EU tables in many respects. The failure cannot be blamed on economic actors or on external circumstances: we must face the fact that the bleak statistics reflect the consequences of a corrupt, heavy-handed and incompetent Orbán regime.

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The responsibility and duty of governance is to ensure that the national economy grows in a sustainable manner, and that state instruments and financial resources serve not merely the enrichment of a narrow circle but the benefit of society as a whole. The Market economy must be restored and reorganised in Hungary along the following principles:

A GENUINE MARKET ECONOMY AND FAIR COMPETITION
The economy cannot develop without eliminating state corruption and ensuring fair competition. The conditions for a real market economy are transparency in public procurement, legal certainty for businesses, a competition-friendly economic policy, and reduced state intervention. European examples show that the key to combating corruption is the restoration of judicial independence and the establishment of an independent anti-corruption prosecution service.

ACCESS TO AND EFFECTIVE USE OF EU FUNDS 
The development and modernisation of the Hungarian economy depend heavily on EU funding and participation in common European programmes. Yet these resources are currently restricted because of state corruption. The Orbán government treats domestic and external criticism of its corrupt system as a political attack, and refuses to take the corrective measures needed to guarantee the transparent use of EU funds. As a result, Hungary has already lost billions of Euros in non-repayable development grants and preferential loans. Restoring the rule of law and the functioning of democratic institutions is a prerequisite for regaining access to EU funds. This is both a national interest and the basis for future development.

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A HIGHER ADDED VALUE ECONOMY
After a decade and a half of Orbán’s rule, Hungary’s economy has been flooded by foreign factories, supported with massive state subsidies, i.e. taxpayers’ money, carrying out relatively low value-added assembly work. Such plants do not require many skilled workers, nor do they offer decent wages, while their material and energy needs pose serious environmental and economic sustainability consequences. This too is a dead-end track. The modernisation of the Hungarian economy requires state support for innovation, development and research, the promotion of digitalisation, and encouragement of industries and activities demanding high levels of knowledge.

SUPPORT FOR SMALL AND MEDIUM-SIZED ENTERPRISES
Hungarian small and medium-sized enterprises (SMEs) not linked to NER are currently disadvantaged in public procurement and state support, although they are key players in the economy. To boost the competitiveness of the SME sector, the proven range of support tools must finally be mobilised: reducing administrative burdens, removing barriers to access to both domestic and international markets, and supporting professional training programmes.

WAGE CONVERGENCE, ATTRACTIVE DOMESTIC WAGES
Hungarian wage levels are low, partly because misguided government development policy has left the economy with a disproportionately high share of low- and medium-value-added activities. In theory, a single income tax rate applies to earnings, but the Orbán government has introduced a series of politically motivated exemptions from personal income tax, while imposing record levels of tax burden on consumption paid from taxed wages. The long-term objective must be to increase the proportion of higher value-added, i.e. more productive jobs, thereby getting closer to EU wage levels. Such a policy would mean fewer families emigrate and would encourage some of those working abroad to return home. In the shorter term, earnings at the lowest levels (around the minimum wage) should be tax-free. Alongside a fairer tax system, it is essential to strengthen workplace rights. In the public sector, predictable pay systems must be established in cooperation with trade unions. Social dialogue between employees, employers’ organisations and the government must be restored.

SECURE SUPPLY AND SAVING OF ENERGY, PROMOTING THE GREEN TRANSITION
Plans for economic development must be aligned with energy security and energy supply strategies, to ensure the necessary energy for industry and services. Improving the energy efficiency of buildings can significantly reduce energy consumption, and thus waste. A diversified and secure energy supply will prevent the country from being at the mercy of energy policy games of Russia – or of anyone else.