And now what comes next?

The winners of the election promised that the economic policy will be continued, although their decisions will be influenced by the financial circumstances as well. Just as we are sure who holds the governing majority in the Parliament, so we are unsure which way Prime Minister Viktor Orbán will lead in the next four years.
Orbán was obviously relieved on election night, as if the extent of Fidesz’s victory over the left and the right opposition had surprised him. Next day he was already promising at an international press conference to continue the course set in 2010, since this was what the people had cast their votes for.
April 6 was a clear yes for the new economic policy. It’s a fact that the second Orbán government could stabilise the country, but they still have to prove that their strong state model can really keep the economy going forward in the long term.
The stars look lucky; Orbán foresees that Hungary is going to have an era of greatness. The economic results of the last months were in his opinion not temporary; he expects them to last. The government’s strategic partners (more than 40 “good” multinationals such as Audi, Daimler, Bosch, Knorr-Bremse and M-Telekom) will stand high in Orbán´s favour but the banks will not.
Orbán explained keeping the special tax by stating that the sector booked a profit in 2013 – unfortunately this is only another superficial misjudgement by the prime minister. Upon questioning he answered that this government does not want to lead Hungary out of the European community: the EU was a playfield, where conflicts between member states and EU institutions were natural.
The first analyses by experts agree almost completely that the future course of the economy is unsure. This is no wonder because the last years have been full of ad-hoc measures that brought major changes. It is possible that Fidesz planned to revise and restructure the legal system and that the extra taxes imposed upon specific industries were also planned in order to finance the transition to the flat rate of income tax. The “acquisition” of the private pension funds with a value of EUR 10 billion and the utility cost reduction introduced at the end of 2012, just like a Christmas present, are good examples to prove that Orbán does not want to be predictable at all.
This is the reason why the experts are not hoping for any peace and friendship, although the prime minister is repeatedly promising a consolidated policy. One example is the banking sector, where the major battle with OTP is yet to be fought – Orbán would like to see at least 50% of the sector not only in “Hungarian ownership” but owned by “friends”. The reprivatisation of Takarékbank, the top institute in the savings bank sector that was taken over by the state only last summer, was surely only the beginning of the process.
The decrease of income tax from the present 16% to (the next level) 9% was also openly promised before the elections. This would cost the state treasury about another HUF 500 billion that will hardly be offset at all by the income from the introduced extra taxes. The voters also have to count all the taxes and burdens introduced by former minister for national finance György Matolcsy in the long term, since they gave their blessing to these.
Péter Heim, president of the government-friendly economic research institute Századvég, expects a tendency of decentralisation, even if that possibility seems a paradox now. According to his “personal” opinion, the governmental intervention in the banking and energy sector will not be repeated, even if these sectors continue to be of strategic importance.
While the small and medium enterprises will be strengthening (there are HUF 4,000 billion EU subsidies available for this aim until 2020!), the state will decently draw back from the sectors above. The budget deficit will be kept under 3% of GDP consequently and thanks to the reducing of debts it will tend towards 2% by the end of 2015. As soon as there will be a strong trend of economic growth, the extra taxes that burden companies can slowly be reduced, however strategic partners and investors can expect reductions to happen with a higher probability.
However, Zoltán Ádám, the leading researcher of Kopint-Tárki, thinks that multinationals and banks will not be preferred by the economic policy of this government. He would sooner expect a “peace agreement” made in Brussels.
GKI, the MSZP-supporting economic research institute, is convinced that Fidesz will continue following its “visions” of a strong state and single income tax rate as preconditions for economic growth. Fidesz has no economic policy, only goals for power, according to deputy general director Gábor Karsai, and this is why it is rebuilding the economy considering only the interests of its own clientele.