Good afternoon Ladies and Gentlemen,
Many thanks to the President for inviting me again this year. Being the final speaker has both advantages and disadvantages: firstly, by now there’s not much meat left on the bone; but on the other hand, it also gives me the opportunity to support my arguments by referring not to what I have said, but to what other speakers before me have said. This is, after all, a more elegant method – especially if one wants to blow one’s own trumpet.
Well, Ladies and Gentlemen,
In earlier presentations you’ve seen chronological charts on the screen illustrating changes over time. These remind us that there are two things that politicians – including politicians dealing with economics – always need to worry about: time-based charts and maps. Let us thank God that we live in a time when we need to pore over time charts, and not maps. This is definitely good news, and we expect it to continue to be the case in the years ahead. As the people who have spoken before me are professional economists, what you’re probably expecting from me – and what you’ve every right to expect from me – is that I talk about the borderlands where politics and the economy meet. Sometimes I may say something that has been said before, but in every case I want to present it in a different light, or approach it from another angle and draw different conclusions from it. So judge what I have to say as a classic economic policy address focusing on the interaction between politics and the economy.
First of all, I agree with what has been said by those speaking before me – perhaps most emphatically by the Governor of the Central Bank – about the beginning of a new phase in 2020, which we are seeing the signs of. The situation was no different at the beginning of the previous ten-year period: that also started stormily, with a financial crisis, while the current 2020–30 phase is beginning with a global pandemic. I would like to say a few words about that at the end. In Hungary there’s no need to take fright, because we are fortunate. In Hungary governments are skilled in two areas: creating damage and repairing damage. We’re obviously biased, but our standard interpretation of Hungarian politics is as follows: there are problems, then people elect a national government instead of a left-wing government, and we solve those problems; and then when things are going well again, people vote a left-wing government back in, it ruins things again, and a government of the Right comes back. This is the standard scenario. The reason governments of the Right are not afraid of crises is that it is crises which most clearly reveal to people why we have a nationally-oriented government with such a navigational system. Think about how we started in 2010, with a financial crisis, then sudden flooding, if you remember, followed by the red mud disaster. Later there was a bigger flood, then migration, then Brexit happened, and now there’s a global pandemic. This is a rough, brief chronology of our governance. So, just as we have not been daunted by these events, I recommend that we do not flinch in response to what I have to say about the coronavirus and my comments after that – as bleak as they will be.
The Governor of the Central Bank has told us that we shouldn’t slap ourselves on the back – something which the Hungarian public generally disapproves of – when looking at the results for the 2010–20 period, but to see what we have achieved, in order to know exactly what to protect. He’s right to say that. If we don’t understand why we’ve been successful, we won’t be able to say why we can succeed in the next ten years. And if we cannot say what the key to success has been, we won’t know what elements of economic policy it is vital to protect. And I think the presentation by the Governor of the Central Bank has helped us a great deal. So we can safely say that the past decade has been the most successful ten-year period in the past one hundred years. Of course this statement can be ridiculed, because in an ex-communist country this is the easiest and cheapest line, since communism was famous for trumpeting bogus success; it’s easy to say that whoever talks about success is continuing that tradition. But I tend not to talk about this in a short-term context. You will see that this makes sense, and when I refer to the successes of the past ten years I want to talk about the most important thing.
I want to talk about the fact that I think there is no other nation, no other country in the world, that could have achieved a decade of success unparalleled in the world around it between the ninetieth and one hundredth years of a one-hundred-year catalogue of disaster such as the following: the loss of two thirds of its territory and 60 per cent of its population; then twenty years later being caught up in a world war during which the most vigorous and economically viable section of its population was exterminated; after that the eradication of the most important class in terms of preserving national instincts, the “kulaks” and the peasantry; and then in 1956 the flight of 200,000 well-educated people capable of relocation or emigration. So I’m talking about success in order to draw Hungarians’ attention to the fact that we’re not an ordinary nation, one of many, but a special country capable of extraordinary achievements. And the fact that we are here after that one hundred years and after that one hundred years we’re talking about what we have achieved over the past ten years must in itself prepare us for the future with strength, energy, optimism, dynamism and the capacity to act. So when I talk about success I do so to mobilise the energies in the country, rather than to encourage people to relax after the recognition of such successes. I think that success spurs us on to more success. So this is why I think that it’s important to say that we have just experienced the most successful ten-year period of the last one hundred years.
What we have heard here in historical comparison is also true. I don’t want to talk about how many growth periods there have been over the last one hundred years and how they compare with our ten or seven years. I’d rather just say that in terms of the length and speed of the process of eliminating Hungary’s relative economic disadvantage, there is no doubt that these ten years were the best ten years – and they should be appreciated. I repeat: this is not only about recognising one another’s success – although it would do no harm to do so sometimes, and there’s no great tradition of that in Hungarian culture; but the essence of the need to appreciate success is that it gives one energy for the future. I agree with both the Governor and the Minister of Finance that it is not enough to express success through growth indicators, because growth is only really worthwhile or success is only worthwhile if behind growth there is a sustainable structure. I think that this is a key issue. As far as I see the economic dimensions of this, I have noticed that when in Hungarian history economic and financial equilibrium has been disrupted, Hungary can produce temporary growth, but sooner or later we will always hit a ceiling. So growth that isn’t based on financial stability – economic policy in Hungary that targets growth without financial equilibrium – should not be pursued. I also agree on the areas in which we have reached a turning point. I only mention these perhaps to give them weight or emphasis.
We set our deficit target for 2012 at under 3 per cent, and have kept to that ever since. We have reduced state debt from 82 per cent to 66 per cent, and I think we will soon see it fall below 60 per cent. We have continuously reduced foreign currency debt as a proportion of government debt, we are moving towards zero, and as I see it zero is the best level for it. I will not rest until that goal is achieved. So we don’t need foreign currency debt: we must finance Hungarian state debt in forints. Who actually owns the government debt securities is a separate question. The question is not simply how much is in foreign currency, but who owns it. And zero is not only the right level for the proportion of foreign currency-denominated debt, but also the right level for foreign ownership. It would be good for Hungarian state debt to be entirely in the hands of Hungarians. If you want to control your own destiny, you have to control your own debt. So our aim is for the proportion of Hungarian government securities owned by Hungarian financial institutions, Hungarian companies and Hungarian families to be as high as possible, and in the end for it to be 100 per cent. The Governor of the Central Bank did not say the following because, as I said, in Hungary there is a general disapproval of talking about one’s own success. So I will do this on his behalf. Here it is definitely worth quoting that in 2019 our interest payments on state debt amounted to HUF 900 billion less than the equivalent figure for 2012. So due, if you like, to the policy of the Central Bank, monetary policy has contributed to economic success through a range of measures. One of the most important of these, which had an influence on the budget, was that for the seven to eight years between 2012 and 2019 monetary policy enabled the Hungarian government to save HUF 900 billion in the interest paid on state debt. The amounts that we were able to put into the economy – our demographic programmes and so forth – were specifically made possible by the Central Bank’s monetary policy. I would like to remind everyone that the finances of local governments have also been put in order, and excessive imbalances between supply and demand – known as inflation, if I’m not mistaken – have been prevented. Even a lawyer can appreciate that inflation results from imbalance between supply and demand. Hungary’s low rate of inflation clearly shows that this did not happen.
I believe it is important – as the Finance Minister pointed out, but also, I think, as a key element in reducing our vulnerability to external shocks – that we have regained balance in foreign trade: we had an export surplus, and now the balance has been restored. For ten years our current account balance showed a surplus, while last year there was a slight – and in my view tolerable – deficit. This means that we’ve managed to heal one of the Hungarian economy’s deepest wounds – one that I’ve seen in every budget ever since I became a Member of Parliament thirty years ago. Whenever we pondered how to create growth and promote it through governmental action, we also had to consider that the resultant growth in imports could upset the government budget balance, and this could in turn upset the foreign trade balance, or vice versa. But the most important thing is that the past decade has for the first time enabled us to say that inflation is under control, we have managed to stimulate economic growth, and the foreign trade and current account balances have remained stable.
I believe that balance is also important in the labour market. Perhaps there’s no need to talk about this at length, but in summary it is true that there is balance in Hungary’s factors of economic growth, and this is true of almost every area of the national economy.
Well, if these balances constitute the most important assets, the question is how to protect the balanced results of the past ten years in a dramatically changing environment between 2020 and 2030. We’ve now arrived at a very exciting question related to the link between politics and economics: Why have we been successful over the past ten years? There are quite a few answers to this question, including some superficial ones which I will only briefly mention.
The first important factor underlying the achievements of the past ten years is that the electorate has given us a strong mandate to make changes. I’m not saying that voters were thrilled to give us this mandate, but as the previous government had wrecked the economy in 2008–09, voters had little choice but to give us a large mandate. This is called a two-thirds majority. This is what we received, and so everything that we’ve done has received a mandate from the electorate. Even the boldest and most radical changes have had a mandate from the electorate.
The second explanation for the results of the past ten years is that our goals were clear.
The third factor is that in 2010 we were not standing at the helm for the first time: we already had experience from earlier, we had governmental knowledge and vision, and we knew what we needed to change in order for the system to change. Hungarian economic policy decision-makers were courageous, because we accepted risks which we knew would naturally provoke enormous reactions. But we also believed that we would be able to withstand these counter-measures and reactions. We believed that we would be able to withstand the pressure from international money markets and political players – if you think back to 2010 – which Hungary would be subjected to after the launch of our unorthodox crisis management policy. We had to assess these risks, and determine whether we would be able to withstand the pressure. We thought we would. And we did. An important part of this, that others here have already mentioned, is the question of our marriage to the IMF – or rather our divorce from it. In 2011, when it said that what we were doing was unacceptable, we had two options: either accept what they were saying, and then everything we have spoken about today would not have happened; or say to them “Thank you very much, this is very good advice, very useful advice, we’re sure it works elsewhere in the world, but unfortunately there’s no appetite for it here.” I had to say this in person to Mr. Rosenberg, who packed his bag, told us it would cause huge trouble, and then left. And so the IMF left Hungary. This is interesting in itself, but sending the IMF packing in this way is not a big deal. Telling a guest to go home and showing them the door doesn’t need great talent. The great talent showed itself two years later when we sent their money after them. We had to pay the IMF loan back, because if we’d sent them away without being able to repay their loan, you yourselves – coming from the world of finance – have a rough idea of what the consequences would have been. So first we sent them home, and two years later – in August 2013 – we sent the money we’d borrowed after them: we repaid the loan. So we withstood all that.
Another important element of the past ten years is that I think we’ve managed to regain the trust of economic players – both domestic and foreign. It’s impossible to carry out large-scale reforms in an economy without economic players believing that: A, the reforms make sense; and B, the political leadership will be able to see them through. I believe that there were doubts in 2010, and perhaps also in 2011; but after two years these passed, and eventually players in the Hungarian economy – that’s you – saw that we meant what we said, because we were doing what we said we would. Indeed after another few months you also had reason to hope that, if we were able to implement it, this economic policy would yield tangible results that could be backed up by numbers. We didn’t gain the trust of economic players immediately, however, but slowly, step by step. There were some whose trust we’d already gained before the election. There was Sándor Demján, God rest his soul. I’d like to mention his name now that we’re here. By 2009 he had already said that the players in the Hungarian economy must stand up for change, and place their trust in those preparing to enter office as a new government. He stood by that view, and then others joined him. I believe the Chamber also played a very important role in restoring trust between the political leadership and economic players – something which has been one of the most important preconditions for success in the past ten years. And the other precondition relates to Péter Szijjártó. He’s not here now, although he is also responsible for a certain section of economic policy: it was he – first as a minister of state and later as the Minister for Foreign Affairs and Trade – who was able to convince foreign investors that what we were doing made sense, and that it was worth their while coming here. You’ve just seen the figures: there are investments in the pipeline – investments in the pipeline worth billions of euros – which are the result of a proactive Hungarian foreign trade and investment policy, a policy that seeks to take the initiative. So I believe that regaining the trust of economic players was key to the success of the past ten years.
We also needed self-confidence. I don’t want to talk about this much now, because we’re not often accused of lacking self-confidence. Self-confidence, however, is certainly not simple braggadocio or political self-confidence, but something of a much more intellectual nature. It is more difficult than simply daring to believe that when there’s a crisis, in which many countries richer and luckier than us are seeking answers to the challenge it presents, that you have formulated something different from what everyone else has formulated. Very often it occurs to me also that in times like this perhaps the natural order of the world isn’t that we see the right solution and others don’t. In times like this one tends to put one’s own concept back in the drawer, saying that while it might look good on paper, we shouldn’t experiment with it if it didn’t occur to others who are larger and cleverer than us. This is quite a natural conservative instinct. But there are moments when one has to say that it might not have occurred to others, but if we try to understand why they’ve come to a different conclusion, we could launch ourselves into implementing a crisis management model which no one else has tried; and we might find that the right strategy was driving on the motorway against the traffic flow, and not driving with the flow. This is also possible. So there’s no doubt that self-confidence, in an intellectual sense, is useful in situations like this.
And here, speaking about self-confidence, it was also important that, once we had started, players in the economy didn’t abandon the economic and political decision-makers. I clearly remember a number of discussions with Sándor Csányi about the banking tax. Understandably, of course, this is something that every bank chairman hates. But once we had started, he continuously advised us on how to use the resultant additional revenue to incentivise economic players, improve employment and reinvest it in the economy in all sorts of ways so that in the end the banking sector could also say that, although we had lived through a difficult three years, we had endured it, we seen it through, and three years on we could see the results in the indicators. And if we look at the indicators for the banking sector, this story appears to have come true. It may well be that when setting out on economic crisis management it was difficult to join forces and difficult for the banking sector to bear part of the burden. However, if we look at the indicators and the banking sector’s situation today – which, of course, relates to the Governor of the Central Bank’s earlier experience as Minister of the Economy – we see that, after a very difficult economic management phase which imposed heavy burdens on the banking sector, on the whole it’s a highly successful sector in the Hungarian economy today; so much so that its success is not only confined to Hungary, but it will be increasingly dominant and successful across the entire region.
Well, perhaps that’s enough about the surface layer of success in economic crisis management, which is all about economics. But where does politics come into this? In the end, politics distils all the economic policy ingredients that I’ve spoken about so far, which – as you tend to say here – will cure the patient and strengthen his weakened constitution. And what I’m now talking about is the great secret of politics. Everyone continually asks and wants to know what makes things tick. What makes an economic policy concept successful in one country, but unsuccessful in another? Which particular economic policy can be successful in a given country, and why would another be unsuccessful? Especially after one reaches a certain age, one tries to trace all knowledge – which is a complex set of information in one’s head – back to a single factor, or a single number. An age-old dream of football coaches is to find out whether there’s a single indicator for players which makes it possible to concentrate knowledge of all the elements of the sport; if we had that, if we had such a number, then we could immediately and effortlessly select the best national team in the world – even here in Hungary. Everyone is searching for that single factor. The same is true in politics: we too are looking for the single answer to what works and what doesn’t work. History, of course, will decide whether or not we found it. But I believe that one of the important reasons – or perhaps the most influential reason – behind the success of the past ten years is that we had an idea about the operation of this single number, this single coefficient, this ultimate explanation, this fundamental root. In politics this is essentially about how you see your own people, the community that you lead. How do you see them? What do you think about them? What do they want? What is it that inspires them to produce achievements, and what is it that provokes resistance in them? This is what you somehow have to find. Naturally liberals tend to mock this, as they believe that there’s no such thing: there are no national characteristics. They ridicule such things, but I’m convinced that the essence of successful governance lies in understanding the very thing that they deny – the character of the nation – and harmonising sector-specific policies with it.
What did we see, or what did we bet on? Because if one succeeds in launching an economic policy which meets with what we might call a people’s or a nation’s cultural and anthropological characteristics, then it will work, with the people buying into it. But if you don’t pursue an economic policy with which they feel comfortable and which they regard as right and just, then they will resist. An economic policy may well look good on one’s desk and in textbooks on liberal economics, but it will never work if it meets with resistance from the most important player: the people. And thus we arrive at what in my view is the most important question for the post-2010 era: With what kind of economic policy and what kind of social policy do the Hungarians feel comfortable? Because in contradiction to the liberal conception, not all peoples feel comfortable with the same things. There are similarities, of course – everyone needs freedom, for instance. But that is only a small feature of existence; life consists of far more – for example the family, the relationship between the individual and the community, and so on. What we thought about Hungary – and what I still think – is that while every nation needs to feel comfortable in its own skin, and every nation’s skin will be different from all others, we must – over the next ten years, in changed circumstances – find the formula, and by communicating it inspire people to produce further achievements. I think we can say that fundamentally in their lives the Hungarians want to be proud. This is the key to everything. Hungarians want to be proud. I don’t know when and how this was encoded in us, but I believe this is the key to everything. Personally we want to be proud of what we do. We don’t just want to be good people – we want that at least, of course – but we also want to be proud of what we do – individually and also collectively. We want to be proud of our own achievements, the achievements of our family, and also the achievements of our country. This is our target. This in itself would be simple, but Hungarians are a complicated breed, and they don’t want to be proud in any ordinary way. They don’t like brashness. If they’re told to be proud, they’ll refuse, out of spite. They don’t like brashness, and there’s another thing they don’t like: exhibitionism. They want to be proud without having to show off, because in their fundamental instincts Hungarians are shy creatures. The note we had to strike here was a combination of pride and reserve. And somehow we had to address these national instincts through economic policy. I think that we succeeded. I can confidently say that between 2010 and 2020 Hungary has had an economic policy based on the recognition and combination of these two very important elements of the Hungarian character: that Hungarians want to be successful and proud, and at the same time reserved. They want their achievements to be recognised without having to advertise them personally. They expect their prime minister to advertise them, and I talk about the achievements of the past ten years because the Hungarian people will never do so themselves – we know them better than that. Naturally, many people see this as failure to value success, but I don’t: I know full well that the Hungarians value this success, but they don’t see it as their job to talk about it. They expect acknowledgement from others, however: they expect it from their neighbours, colleagues and leaders. I think this combination forms what we might call the cultural anthropological basis of our entire economic policy, and it is something that either one has or doesn’t have: knowledge of one’s own people. On the whole, what I wanted to tell you is that this is the big secret: unlike some other countries which profess a philosophy resting on the foundations of modest effort and a modest life, the Hungarian people made the commitment to implement this economic policy because they believed and declared the philosophy of serious effort and a proud life. And this is the direction we’re heading in. I’m not saying that everyone already has that attitude, that it applies to everyone, and that it is operating in every single part of the country; I’m not saying that at all. But I’m absolutely sure that the country is heading in that direction: major achievements and a proud life. And in the next election – though this is not why we’re here today – the stakes will be whether or not we continue with this.
This is why I believe communism was a scourge. This isn’t why we’re here today either – that’s a topic for another speech. But communism was a scourge not only because it destroyed the country economically, but because it sought to operate a system that created negative incentives. You couldn’t be proud as a nation, because that would be nationalism; and you couldn’t stand out as an individual either, because then you would be slapped down. So it was a scourge. Naturally the Nazis were also a scourge for us, because there the problem was that they discredited pride by linking it to race. And pride is not an issue of race, and likewise national identity is not an issue of race. That political ideology unquestionably prioritised national pride, but developed it on an unacceptable basis, and eventually discredited the feeling of national pride itself. So for the Hungarian people the great question is which they should hate more: communism or Nazism. But it’s best if one hates both equally, because then one won’t go far wrong. It’s best for us to stand on the soil of moderate national pride, from which achievements can grow.
The debate surrounding the National Curriculum is also about this. It’s not about specialist educational issues, although I’m sure there is that side to it. The question is who we are raising our children to be. Do we want to bring them up oriented towards pride, towards achievement, towards their own personal, family and national pride? Or should we teach them about lost wars? The latter is no doubt useful information, but it cannot form the core of the curriculum. To conclude this section of my speech, the core of the curriculum is that after a hundred years, after having lost two thirds of our territory and 60 per cent of our population, we’re still here, and talking about how over the next ten years we can protect our achievements. This, fundamentally, is what we must teach them – whilst naturally not denying our failures.
Returning to the essence of my message, what follows from this? What I think follows from this is that everything we can identify as factors of the success achieved over the past ten years must be protected in the next ten years. I believe that the Governor of the Central Bank also spoke about this. He said that we must preserve the balanced conditions we have achieved, and operate the engine for growth and for narrowing the economic gap with richer countries. In politics, of course, how one evaluates performance is always a problem. Given that we can expect a slowdown in the global economy, I suggest that at this point we shouldn’t evaluate our performance as a growth percentage, in terms of maintaining our present speed of growth, but in terms of maintaining a higher speed than other countries. So what matters today is not the growth percentage the Hungarian economy will achieve – of course that’s not irrelevant, but it’s not decisive either: what matters is whether we can maintain the speed at which we are narrowing the gap with others, our speed advantage over them. Here we have two options. The Finance Minister is more cautious, talking about a growth advantage of 2 per cent. I also have my feet on the ground, so I think this would be a fine achievement. But the Governor of the Central Bank, whose duty it is to inspire us, talks about 3 per cent growth. I learnt from him when he was a minister back in 2000–01 that those who have no goals in the realm of the impossible cannot achieve their goals in the realm of the possible either. This was more or less what he said. So a 3 per cent target isn’t a bad idea, but it’s good to agree in advance that we would be very happy to achieve 2 per cent.
What does this mean now, Ladies and Gentlemen? Now this means – and this is the less cheerful part of my address – that we must prepare for brutal changes. I saw the chart presented to you here by the Finance Minister: “Potential consequences of coronavirus, scenarios A, B and C”. A day or two ago I also received this from the heads of large Hungarian businesses, in more or less the same form. I think we can discount A and B, as they don’t exist; the only possible scenario is C. This means that we must prepare for a global pandemic. We must understand the nature of a global pandemic, and the consequences it will have for us. Although you haven’t invited me here to give advice, I’d like to say that everyone should prepare to be forced to leave their comfort zone. We’ve had these ten fine years, we’ve done well, and on the whole things looks good. But if over the next ten years we only do as much as we’ve done over the past ten years, and do it in the same way, you will go bankrupt. The national economy will be in trouble, as will you individually; believe me, you will go under. So over the next ten years we will definitely have to do a great many things differently – and in this what will motivate us the most will be the coronavirus. Now already, in the short term, we must leave our comfort zones. My assumption is that there will be a global pandemic. Yesterday I called a meeting of our scientists, or those who are responsible for science – there were quite a few of us, including the President of the Academy of Sciences, Minister Palkovics, the Rector of the Medical University, and so on – and we had to acknowledge that there won’t be a vaccine. Or if a vaccine were discovered tomorrow morning, or even today, its introduction for containment of the disease would take at least one year. One year! So we must prepare for a situation in which the psychological uncertainty caused by the lack of a vaccine will not subside or fade away, because the root cause of the problem will remain. It may well be true that every year more people die from influenza than those who will probably die from the coronavirus, and those who say this are right. But we have a vaccine for influenza. This gives us a sense of security that if there’s a big problem, science is already able to offer us some help. With this disease – and this also affects your businesses – the problem is that we’re vulnerable, we’re defenceless: there’s no vaccine, and if there is trouble we have nowhere to turn to. Of course there are some medicines which scientists say – and I heard this myself yesterday – could be of some help in severe cases; but there’s no vaccine specifically developed to target this virus. The sense of insecurity – that there could be trouble, and if there’s trouble I’ll be unable to protect myself – will remain with us over the coming months. And I think that this is what primarily affects business activities. It has more effect than how many people are at work and how many aren’t, although clearly that’s also relevant – as is the fact that supply chains are breaking down, causing all sorts of difficulties, especially in production plants operating with “just-in-time” systems. But the fact that we all believe that we are defenceless is an ever more serious problem. We now know that the virus only attacks certain population groups, but we don’t know what the situation will be tomorrow and the day after tomorrow. People are worried – primarily, of course, for their children. Today they’re happy that the coronavirus has spared them so far, but we don’t know whether that will remain the case. So this sense of uncertainty, which induces a viscerally defensive attitude, will not go away; this more cautious attitude will remain. The buccaneering mood and willingness to grasp every opportunity that is required for economic prosperity is so far removed from present reality that I can’t express it in words for you. And this situation will persist. If we see China as a country that appears to be successfully containing the infection that originated there – and everyone says that they seem to have done so – and then do your calculations, you will see that it took them five to six months from the appearance of the virus until its containment. The end of the graph is pointing downwards, but it’s not over yet. Here five or six months will take us to June, when the epidemic would start to abate after having reached its peak. Until June! So this year’s tourist season is finished. We must write all that off. Everyone in any way linked to logistics and tourism, or more dependent than average on people’s mobility and willingness to travel in general, must expect major financial losses. It’s best to prepare for this, and to make calculations. Before we came here, late last night after the meeting with the scientists, I conferred with the Governor of the Central Bank and the Finance Minister, so that we could draw the conclusions for the economy from what I’m telling you now. Although there were several of us, by the end we weren’t any the wiser. This isn’t our fault, however: the situation is to blame.
According to our calculations, by the middle or end of April you will be able to tell the Government the specific magnitude of losses you will have suffered in each sector. In this the Chamber will have to play an extremely active role. As you can see, at the moment we’re just feeling our way, just looking for the general contours. We have macroeconomic figures, but when it comes to your hopes for assistance from our economic policy I don’t know what to do with them. We’re ready to help, because the Government is there to help you through difficult periods. But you’ll have to be able to tell us precisely how each sector can be helped through these difficult moments. You will have to tell us that: the Finance Minister will not be able to figure that out on his own. On this we need down-to-earth feedback. The Chamber can supply that, because you have the knowledge required. It’s the middle of March now, and as I believe you can’t yet foresee the precise consequences at this point in time, by the middle or the end of April I expect the Chamber to prepare and send to the Government a document determining the extent of losses sustained in each sector, and the type of assistance you’d like to receive for management of the situation. Naturally I will help you, the Government will help you, and the Governor of the Central Bank and the Finance Minister will help you. All I want to say is that macroeconomic measures will not be able to remedy the consequences of the current phenomenon; that will require targeted, sector-specific programmes. So I need to know, and decision-makers need to know, precisely what the problems are – say, in tourism. We need to know the extent of the problem and how it can be remedied – if it can be remedied at all. The same will be true in infrastructure, in the energy sector, and so on. We’ll have to look at all of these, and I think we’ll create the necessary financial conditions. I’d note in parenthesis that obviously we’ll have to redesign the 2020 and 2021 budgets. The 2020 budget is already under way in its entirety, and we’ll have to redesign the 2021 budget. This is inevitable, because we will have to create funding of billions of euros for economic stimulus, assistance and correction. This will not be easy at all. This will require contributions of some kind from everyone; we’ll discuss how much of a contribution and in what form when we arrive at that point. No one – not local governments, nor sector-specific areas – will be left out of this, because a solution must be found to ensure that economic recession doesn’t reach the depths experienced in 2008–09, but is at most limited to a level which enables Hungary to preserve its advantage of speed of growth compared with the European Union. Because – and it’s no accident that I’ve spoken about this at length – we will not give up on that goal. So the Hungarian economy will have to grow by at least 2 per cent – but if possible, as the Governor of the Central Bank has said, 3 per cent – faster than the European Union average. This will require targeted crisis management and bridging solutions broken down by sector. We shall make the necessary financial resources available. It won’t be easy, but we shall. But, Dear László, in the period ahead the Chamber will have to act as an active shaper of Hungary’s economic policy, in order to make the utilisation of funding rational, to target the sectors in which its needed, to use the necessary methods and to avoid simply pumping money indiscriminately into the economy. And we also expect you to provide us with the knowledge needed for the Government’s decisions.
As if this wasn’t enough, distracting our thoughts from short-term crisis management, we’re also confronted by the industrial policy consequences of Brexit. But let me just say a few words about that. Its consequences will be in industrial rather than economic policy. While we were quietly sitting here and you were patiently listening to us, for which we’re grateful, at noon the European Union released its new industrial policy concept. Well, there’s not much to thank them for. It already reflects the fact that Britain has left the European Union. It contains terms such as “fair taxation”, and I could list quite a few other things: everything that affects – and adversely affects – our competitive advantage. Or at least that was true of the version before last. I’ll only get the chance to read this one this afternoon. I just want to tell you that with Britain leaving the European Union we have lost a very important partner committed to competitiveness, growth and development within the EU, and an effective counterbalance to socialistic – or even socialist – approaches: a nation with a healthy, market-oriented mentality which has perhaps the most effective approach to economic affairs in the whole world, belonging as it does to the Anglo-Saxon world. I’m afraid we’ll see this reflected in industrial policy. So Brexit will have indirect effects, rather than direct economic effects: within the EU the camp of countries committed to competitiveness has weakened, and there has been a change in their ratio in relation to nations with economic policies focusing on state redistribution and socialistic ideas. The balance has changed, and for us this is not good news. We will have to rethink everything. Furthermore, with Britain leaving the EU, we see the restoration of an earlier geopolitical world order: instead of thinking in terms of continents, as we did only the day before yesterday, with the major players being China, the United States of America and Europe, we now have the English-speaking countries, our continent with its dominant country, and the Asians. This will bring about a completely new configuration, which will be a major intellectual challenge for politicians. This is not the topic of today’s address, but I’d merely like to point out that we have to interpret what we will do not only in the context of the coronavirus infection and political shifts within the EU, but also while facing a transformation in the entire world order. What you are most able to do to help yourselves and the country is to assess the current situation of your own businesses and sectors, try to estimate the ensuing consequences, and through the Chamber send your forecasts to the Government, so that these can be integrated into the Government’s crisis management plans.
Clearly we will have to launch an economy protection action plan; I believe we’ll be able to do that. As I’ve mentioned, we shouldn’t fear complicated situations. Some of my observations about the worst-case scenario sounded somewhat dramatic. By way of boosting your self-confidence slightly, I’d remind you that those of my generation who like the sport of boxing grew up in two camps. The Hungarian heavyweight championship final was always the event we looked forward to all year long. At that time there were two great heroes: one of them was called Somodi, as I remember, from Honvéd [sports club]; the other one was Edőcs, from Újpest. Somodi was two metres tall, a big, strong man with a powerful jab. Meanwhile Edőcs was a shorter boxer who seemed a little overweight, but was extremely smart and very good at fighting his way out of tricky situations. I always rooted for Edőcs. This is what should give us encouragement for the period ahead. The Government will find a way out of this tricky situation. I ask you to act as our seconds and assist us in this work.
Thank you for your attention.
