Hungary’s new beginning
Zsolt Darvas is a Senior Fellow at Bruegel
The victory of the TISZA Party, led by Péter Magyar, in the 12 April Hungarian election, has major implications that extend well beyond Hungary’s borders. While an official government programme is awaited, wide-ranging reforms can be expected across nearly all areas of state competence, judging from TISZA’s manifesto.
Priorities include restoring the lawful functioning of state institutions, investigating fraudulent use of public funds, restoring public media freedom and a broad push for better education, healthcare and social support, in the context of Hungary having, for example, the European Union’s lowest elderly life expectancy and second-highest rate of avoidable deaths.
On foreign policy, the programme reconfirms Hungary’s commitment to the EU, reaffirms its NATO obligations and signals an end to Russian influence. It envisages a break with the previous government’s largely unfounded demonisation of Ukraine. Nevertheless, the programme makes clear the new government will not support fast-tracked EU membership for Ukraine. A referendum would decide on Hungarian approval of Ukraine’s membership once accession negotiations are over.
TISZA’s higher spending and lower tax plans are ambitious. Hungary remains under an EU excessive deficit procedure (EDP) and the Hungarian Fiscal Council estimated in December 2025 that a 1.7% of GDP fiscal adjustment will be needed to comply with EU fiscal rules. Since that estimate, the budget situation has worsened: by February, the deficit had already reached around half of the full-year planned shortfall, partly because of extra pre-election spending.
EU fiscal-rule compliance is crucial for macroeconomic stability and also for access to EU funds. Even if rule-of-law deficiencies, which have held up disbursement of EU money, are addressed swiftly, failure to meet EDP requirements could still lead to suspension of EU funds. Other EU countries may grant some initial leeway, but it will be essential for the new government to set out a credible fiscal path.
In this respect, the TISZA programme outlines, but does not provide detail, on how additional resources could be found. A central pillar is expenditure savings, achieved by eliminating over-priced public procurement, ending waste and stopping unjustified prestige investments. The scope for savings is, in fact, substantial. In 2024, Hungarian general public services spending (excluding education, healthcare, defence, security social and environment protection, housing and culture) was 10% of GDP – roughly twice that of other central European countries.
TISZA’s commitment to euro area entry could significantly reduce Hungary’s risk premium and provide a credible inflation anchor
Hungary has also provided the EU’s highest state aid as a share of GDP on average over the past decade, often supporting foreign multinationals’ assembly plants. Reducing subsidies and redirecting support toward activities more conducive to productivity-driven growth would save resources and improve long-term prospects.
Further savings could come from lower interest costs (on which Hungary recorded the highest expenditure in the EU in 2025). TISZA claims that restoring investor confidence could reduce borrowing costs by around 0.2% of GDP in the short term, and by over 1% of GDP in some years.
TISZA’s commitment to euro area entry could significantly reduce Hungary’s risk premium and provide a credible inflation anchor. This is particularly relevant given Hungary’s negative record of the highest inflation rate – 26% – in early 2023, following the energy price shock.
TISZA also proposes a wealth tax on forint billionaires, expected to raise over 0.1% of GDP. This is reasonable in a country where wealth-based taxes are among the lowest in the OECD and large private fortunes may have been accumulated with limited or no taxation. Meanwhile, consumption taxes are very high, disproportionately burdening low-income households.
Finally, TISZA assumes revived growth, further bolstering budget revenues and helping reduce relative poverty in Hungary (which has the EU’s lowest median household income and the lowest per-capita household consumption).
However, growth alone will not put Hungary’s fiscal house in order. Savings from improved corruption control and streamlined public administration are unlikely to materialise quickly. Reductions in interest expenditure will come only later, as much of Hungary’s debt carries a high legacy interest burden. And it would be better to avoid postponing fiscal repair, as Poland’s prime minister Donald Tusk did after returning to office in 2023 – Tusk now faces growing imbalances less than two years before the next election.
Some politically unpopular measures therefore appear unavoidable. Political-economy experience suggests such measures are best implemented quickly, so the benefits of adjustment can materialise before the next election. Reforms could enhance fairness and efficiency by breaking with the Orbán government’s practice of universal support and by refocusing social spending on the most vulnerable.
The road ahead for TISZA will undoubtedly be difficult. Much will depend on the final government programme, its implementation and the extent to which incumbent appointees and vested interests hinder the transition. Still, for the first time in many years, Hungary has a chance to rebuild and to re-anchor itself firmly within Europe.
This article is based on a Bruegel First Glance.
