Prime Minister Viktor Orbán (l) and German Chancellor Olaf Scholz in Berlin - Photo: PMO

Hungary must continue to provide most competitive investment environment in Europe, foreign minister says

Orbán in Berlin: Hungary has emerged stronger from every crisis since 2010

Since 2010, Hungary has emerged stronger from every crisis it has experienced, Prime Minister Viktor Orbán told an economic forum in Berlin on Monday, citing the global economic crisis of 2008, the migration crisis and the coronavirus pandemic.

The prime minister met German Chancellor Olaf Scholz before the forum focusing on Hungarian-German economic relations. He said he had held “fruitful talks” with Scholz, adding that “every difficult and complicated issue” had been discussed during the two-hour meeting, and that “everyone can be satisfied” with its outcome.

Orbán noted that he visited the chancellor and representatives of the German business community every two years.

Orbán said there were political reasons for why Hungary had emerged stronger from every crisis it had experienced since 2010

He said the global economic crisis in Europe had been about whether the crisis had been a structural or a cyclical one. Most European countries saw it as a cyclical crisis, he said, adding that “I never accepted this interpretation.”

The prime minister said he had considered the crisis to be structural in nature and one which had signalled that Europe would continually lose ground to Asia, including in terms of GDP, markets and the technological competition unless it changed course.

He said the answer to such a crisis was a deep structural reform, adding that his government had reformed the Hungarian economy accordingly after 2010.

The Hungarian model is conservative when it comes to social policy and harkens back to the era of former German chancellor Helmut Kohl, he said. The Hungarian government envisages a labour-based society at the centre of which is the family, he said. Hungary spends the most relative to GDP on supporting families, he said, adding that the government financed families through work. Whereas in 2010 the employment rate in Hungary barely reached 50 percent, it is now around 75 percent, Orbán added.

The government also builds on national pride and wants it to be based increasingly on performance, he said.

“There’s no multiculturalism in Hungary,” Orbán said.

He said a low tax rate was a key element of the economic foundation of the Hungarian model. Hungary is the only country in the world with a flat personal income tax rate, there is no inheritance tax and the corporate tax rate is 9 percent, he said. Orbán said that when it came to equality, it was education and jobs where people needed to be given equal chances. “But when it comes to the output, or performance, we tend to favour differences,” he added.

Meanwhile, Orbán also said that if Hungary did not protect its borders, the European Union’s single market could collapse. As Hungary is an open country, border defence should be an integral part of its economic policy, he said.

The prime minister said that in the period to come there would be a pressing need for political security, energy security and physical security. Political security is guaranteed by the government’s stability, physical security by a number of factors, including the country remaining an island of peace, and energy security by Hungary’s gas reserves being sufficient for six months, Orbán said.

“Those who cooperate with us will benefit from it,” he said.

Addressing German investors, Orbán said Hungary’s economy held no surprises and the government had its medium and long-term plans mapped out for each sector. The Hungarian government has agreements in place with several German companies on cooperation in areas like telecommunications, digitalisation and the green transition, Orbán said.

He said the foundations of Hungarian-German economic cooperation were not economic but cultural in nature. He said there was a “positive prejudice” towards Germany in Hungary, partly for historical reasons and partly because of Germany’s cultural performance. The fundamentals of bilateral cooperation cannot be torn down by any kind of political campaign or economic disagreement, Orbán said.

He noted that there are 6,000 German companies doing business in Hungary employing some 300,000 people. Hungary has the world’s fifth most high-tech economy and ranks higher in terms of exports than the size of its population would suggest. Hungary is also among the world’s ten most open economies in terms of exports relative to GDP and is one of the ten most complex economies, he said.

Orbán said the biggest challenge today was the threat of recession in Europe partly because of rising energy prices. The main question, he said, was whether Hungary could weather the downturn on its own if the continent were to slip into a recession. Orbán said that to this end, Hungary needed to focus on developments, investments and innovation. It was because of this effort, he said, that the Hungarian economy is growing by 5-6 percent this year after expanding by 7 percent in 2021.

Szijjarto: Hungary must continue to provide most competitive investment environment in Europe

Hungary must continue to provide the most competitive environment for investors in Europe, Peter Szijjarto, the minister of foreign affairs and trade, told a forum on German-Hungarian economic relations in Berlin on Monday.

Although Europe is facing the threat of economic recession, the Hungarian government is not giving up its goal of maintaining the most competitive investment climate in Europe in taxation and other fields, Szijjarto told the forum held on the occasion of Prime Minister Viktor Orbán’s visit to Berlin.

In this spirit, the Hungarian government continues to reject the idea of the global corporate minimum tax, whose introduction would bring about a 6 percentage point increase in Hungary’s corporate tax rate, he said.

Minister of Technology and Industry Laszlo Palkovics said that the government “really dislikes” the extra profit taxes and introduced them only out of necessity. He added that these taxes do not discriminate against foreign-owned companies and would be phased out as soon as possible.

Leave a Reply