Last week, attention turned to an issue that will have important impact on Hungary’s economy: the European Union’s excessive debt procedure with Hungary.
"The EU will make a decision on November 7th about whether they will continue a procedure that has stretched out over eight years. Recently, the European Commission has said that it is still not convinced whether Hungary will be able to hold the budget deficit under the threshold. (...)
Hungary joined the EU in 2004, under a Socialist-led government. The Socialists were never able to meet the three percent target. In fact, the last time during the previous decade, that Hungary got close was in 2000, under the first Orbán Government, when the deficit was cut to 3.5 percent.
Since becoming a member state, the first year that Hungary brought the budget deficit below three percent was in 2011, in the middle of a financial crisis and the first full year of the current Orbán Government. The Government remains dedicated to keeping the deficit low, but it’s not an easy task given the high debt that it inherited (which it is paying down) and the low economic growth plaguing most of Europe these days. But, as Prime Minister Orbán said: if the European Commission thinks further steps are needed, then they will be taken. (...)
Maria Fekter, Austrian finance minister, said: 'Bashing Hungary is not appropriate. Hungary was attempting to remain competitive and bring in investment. Time will tell if the model of low income taxes, but high financial transaction taxes is successful in attracting investment or whether it drives it away.' Given that Austrian banks are among the bigger players in Hungary’s financial sector, statements like this from Minister Fekter mean something."