The Facebook protest group Milla, now an officially registered organisation, plans to hold a huge anti-government demonstration next Tuesday, a public holiday. In the wake of the government’s latest package of austerity measures, many will be looking for signs that Hungarians are ready to join the European backlash.
With petrol bombs flying in Athens and the peaceful occupations by the indignados giving way to violent protest in Lisbon and Madrid, Hungary – which has been subject to enforced austerity for longer than Greece, Portugal or Spain – remains oddly calm.
Sliding since 2006
Hungarians have been living with falling benefits and rising taxes on and off, but mostly on, since their government ran up the EU’s highest pre-crisis deficit in 2006. There were violent protests that year, but they were largely a reaction to a leaked recording of the Socialist prime minister of the time haranguing his party over lying to voters.
It is easy for residents of the capital to overlook the fact that relatively affluent Budapest is not Hungary, and Hungary as a whole is not in the same economic league as even the Mediterranean fringe of the eurozone. Greece’s gross national income per capita, at USD 25,000 is still double that of Hungary.
Yet there is reason to fear that Hungary might be condemned to the same fate of economic stagnation. Even the quixotically upbeat National Economy Minister György Matolcsy has trimmed his growth forecast to 0.9 per cent for next year, down from one per cent on 5 October and 1.6 before that.
Blame outside borders
Some will blame Matolcsy and the “unorthodox” economy policy that is now giving way, under duress, to orthodoxy. Others will, as the government does, blame Brussels and its “double standards”.
Since Hungary’s current course of austerity treatment began in 2006, voters have booted out the Socialists and been rewarded with Hungary’s most powerful government since the end of the communist dictatorship, along with one of the most influential extreme right-wing parties in Europe.
Prime Minister Viktor Orbán’s conservative Fidesz-Christian Democrat alliance promised in 2010 an end to austerity. It began its deficit control with genuinely popular measures such as taxes on banks and multinationals. But many, especially lower wage earners, have seen little or no benefit from the flat rate of income tax, or a scheme that allowed borrowers to escape from mushrooming foreign currency mortgage debt.
Hungarians pay Europe’s highest rate of VAT at 27 per cent and the country has one of Europe’s lowest rates of labour market participation. Many analysts quoted on Wednesday predicted that Matolcsy’s latest austerity package could scotch any prospects for growth next year.
Rallies next Tuesday
Both opposition groups and the government (by proxy) plan to hold large rallies on 23 October, when Hungary marks the anniversary of the 1956 Uprising and the founding of the democratic Third Republic in 1989. The atmosphere on the streets will be telling.