Central Europe Activ

Hungarian pessimism

According to the latest Eurobarometer surveys the Hungarians are the most pessimistic in the European Union about their economic and personal prospects. A referendum rejected the initiatives of the government by an almost four-fifth majority, the public deficit has been well above 5 per cent for years and for the first time since 1989 Hungary has a minority government.

Personal prospects for 2008Although the people in Romania and Bulgaria are less satisfied with their lives than Hungarians, they look at the prospects of this year with optimism. In late 2007 only 8 per cent of the Hungarians had a positive outlook on the economy and on unemployment, and just a mere 15 per cent had hopes for a positive turn in fortunes in 2008. These are the lowest figures in the EU (see map taken from the Eurobarometer 68 – full pdf donwload here).

The latest Economist article on the Hungarian economy and politics, A Magyar mess was widely quoted in Hungary as an outsider’s perfect snapshot. “Once the local wonder child, Hungary is limping, its government outmanoeuvred by the opposition, its economy sclerotic and its population resentful. Earlier this month voters hammered the government in a referendum, when over 80% rejected charges for doctors’ visits, hospital stays and tuition fees in higher education. … Not all the news is bad: the budget deficit is likely to drop from 9.4% in 2006 to 5.6% in 2007, and it may fall again this year. But the referendum has dashed hopes of more reforms, and Fidesz has the initiative”.

Hungarians have developed a deep mistrust for their national institutions: not only have they rejected by an almost 80% majority the co-payment initiatives of the government, but only a mere 21% trust the national parliament and the national government. This is striking contrast with a 60% trust for the EU institutions, which is well above the 48% European average. The Hungarian public is rather fatalistic in this respect: 56% has a positive outlook on the European economy, but only a third or less of the electorate believes that the EU takes the Hungarian national interest into account, or that Hungary’s voice counts at all in EU decisions. (A Hungarian article has more on this).

Businesspeople are not much more optimistic than the population. The general pessimism has led into an unprecedented political instability in Hungary’s new democracy: today the smaller Liberal party has left the six-years-long coalition with the Socialist Party behind, and Hungary has a minority government for the first time in her democratic history. After the reintroduction of democracy in 1990 had probably the most stable party system in the former Communist countries. (The national assembly consist of deputies of five parties. Only one party has dropped out from the Parliament since 1990, the small rural Smallholder’s Party. Hungary had only one far-right party in the Parliament between 1998-2002 and the far-left has not met the threshold since 1990. There were no early elections, and most prime ministers served their full term). The sudden change made the investors very nervous: the prices fell on the Hungarian stock exchange and the money markets, too, and the central bank has raised the interest rate by 0,5%.

All in all, Hungary is in a pretty nervous mood these days.

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