Hungary's governing Fidesz party stormed to its third win this year, as it was confirmed to have overwhelmingly won local elections held on October 12. Handed a clear mandate until 2018, Prime Minister Viktor Orban moved quickly to pledge "nation-based" policies and more trouble for the banks.
Fidesz won in 22 out of Hungary’s 23 major cities in the municipal vote, including Budapest, though opposition parties and analysts said that changes to election and media laws have handed the governing party an unfair advantage. Following up landslide victories in April's general election - which handed Fidesz a second constitutional majority - and the European parliamentary election in May, Orban now has a clear run until the next scheduled election in 2018.
The PM welcomed the victory as soon as the first preliminary results came in. “With our success in the local elections, we have our third win,” the PM said, according to MTI.
The leftwing opposition continues to present little challenge, leaving the extreme right Jobbik to confirm its role as Hungary's second political force. It followed up its strong progress in April to come second in 17 out of 19 counties in the October 12 vote. Winning in nine towns - up from three in 2010 - Jobbik's success only serves to encourage Orban's nationalist and statist instincts.
With the scale of the victory confirmed on October 13, Orban suggested to the country's parliament that the local election win leaves Fidesz free to follow up his vision of an "illiberal" democracy that he outlined in the summer. Claiming Fidesz will now further strengthen unity in the country, the victory has confirmed that the governing parties must continue to pursue policies which are "nation-based", and follow ideas of a "people's party" in the upcoming years, Orban told lawmakers, according to MTI. "It is time to leave an era of ideologies and 'isms' behind," he continued.
Trouble in store?
He also had another warning for the banks, which have been hammered since the PM took office in 2010. Orban emphasised repeatedly that the banks - which are facing continued huge losses because of high sectoral taxes and a government scheme to provide relief to forex borrowers - will be “held to account”.
The Eurozone banking groups that control much of the market have pledged to remain. However, Orban wants greater domestic control of the sector, and the heavy handed approach to lenders looks to be part of a drive to force them to sell at bargain prices.
The PM's clear run and bullish words do not bode well as the government prepares the next set of legislation on forex loans. That will establish the rate at which the banks will be forced to scrap the remainder of forex loans in the country.
Meanwhile, analysts and opposition parties warn that the punishment handed out to lenders, and the continued uncertainty hanging over them, will hold back the economy. While Hungarian growth has been better than forecast this year, the worry is that it is overwhelmingly state driven. Without a return of investment and lending, the mid-term prospects are questionable.
Lajos Bokros, a former finance minister who was the left’s candidate for mayor of Budapest, told the Financial Times the government’s approach to banks would hinder growth. “The government is making every effort to punish the banks and destroy their capital base. It’s unrealistic to expect lending in these conditions, and without that you cannot have growth,” he said.
However, Orban suggested otherwise, claiming his mandate means he has a chance to banish unemployment. If the "unity" in the country is used well, he said, full employment can be reached. While four years ago 3.6m people were in employment and 1.8m paid taxes, today these numbers are 4m each, he claimed.
Veering back towards the tone adopted by the non-mainstream parties gaining traction around the EU, the PM said the vote confirmed the idea that welfare societies in Europe are crumbling, "as it transpires that welfare cannot be the basis of things, it is at best a consequence of nothing other than work".
bne IntelliNews - The Visegrad states raised a chorus of objection on November 10 as the UK prime minister demanded his country's welfare system be allowed to discriminate between EU citizens. The ... more
bne IntelliNews - Hungary will breach its February agreement with Erste Group if it makes the planned reduction in the bank tax conditional on increased lending, the Austrian lender's CEO ... more
bne IntelliNews - Erste Group Bank saw the continuing economic recovery across Central and Eastern Europe push its January-September financial results back into net profit of €764.2mn, the ... more