Marton Nagy: Brussels Is Banking on Toppling of Hungarian Government

The strong economic growth figures projected earlier were not pulled out of thin air, economy minister says.

Marton Nagy, Hungary's National Economy Minister (Photo: Zoltan Kocsis Source: MTI Photo Editorial Office)

In an interview for Index.hu, National Economy Minister Marton Nagy stressed that the previously forecast 3–6 percent economic growth and the anticipated “flying start” were entirely realistic. “The Hungarian economy is capable of this,” he said. Under normal circumstances in 2025, domestic demand alone would have added roughly two percentage points to GDP growth. Had the German economy not been in recession, external demand could have contributed another two percentage points—bringing total growth close to four percent, he added.

Hungary's National Economy Minister Marton Nagy (Photo: MTI/Zoltan Kocsis)

The situation, however, has since changed. Consumption is still delivering its two percentage points, but Germany’s economic slowdown, delayed investments, and excess capacity are together retracting roughly two percentage points from growth. As a result, overall expansion now stands at between zero and one percent.

“If the government were not protecting households through real wage increases, we wouldn’t be slightly in the black—we’d be in the red,” Nagy said.

According to the minister, two major dependencies have clearly emerged in the Hungarian economy: one on Germany, and the other on the automotive industry. “There’s no point denying this,” he said. Eastern investments—primarily from China and South Korea—have not reduced this exposure but have actually reinforced it. Battery plants, after all, ultimately serve German car manufacturers, and even BYD is producing not for the Hungarian market but largely for Germany.

Between 2010 and 2020, however, this dependency posed no problem, Nagy noted. The automotive sector was one of the main engines of the Hungarian economy, and Germany’s strong performance translated into robust growth and rapid convergence for Hungary. When the automotive industry began its transition to electric vehicles, abandoning the sector was never an option. The battery industry, he emphasized, is not a standalone sector but a supplier to electric vehicle manufacturing.

Relocating battery plants to Hungary was therefore a deliberate and sound decision aimed at preserving this key industry. “The real problem,” Nagy added, “is that it’s not enough to stand on just one leg—even if that leg is strong.” The task now, he said, is to build additional pillars: in services, logistics, the food and pharmaceutical industries, and the defense sector.

At the same time, Hungary must address the issue of its dual economy—namely, the excessive gap between large multinational corporations and domestic small and medium-sized enterprises.

Asked whether it is risky for the state budget to be repeatedly based on growth assumptions that fail to materialize, Nagy responded that this would only be dangerous if lower growth automatically created a large budget hole. “That’s not what’s happening now,” he said. What matters from a budgetary standpoint is the source of the weaker growth. The 2025 budget was planned with 3.4 percent growth in mind, while the actual figure may come in closer to 0.5 percent—but the revenue shortfall is not proportional to that difference. This is because the slowdown is primarily due to postponed investments, not a collapse in consumption.

“The big question,” Nagy emphasized, “is whether we should reduce our dependence on the German economy.” The reality, he said, is that this dependence has not weakened in recent years but has actually grown stronger. Despite the diversification of foreign direct investment—with more capital coming from the East—integration has ultimately increased. “My position is that dependence on Germany has existed, exists, and will continue to exist,” he said, adding that Hungary must nonetheless work to expand its range of trading partners and broaden its markets.

Nagy recently visited the United States as part of the prime minister’s delegation. He explained that the so-called “protective shield” was agreed upon by the Hungarian prime minister and the president of the United States. This is not a single instrument, but a multi-element framework.

It includes the issue of a free customs alliance, but more importantly, development financing—such as cooperation between Hungary’s EXIM Bank and its American counterpart. 

The goal is for every major procurement from the United States, whether in defense or energy, to be backed by cheap financing. The possibility of establishing a swap line is also under review.

The question inevitably arises whether Hungary would be better off reaching an agreement with the European Union over funds it is entitled to receive. Nagy underscored that in the 2021–2027 budget cycle, Hungary was allocated approximately €28 billion in EU funds: €22 billion under operational programs and €6.5 billion in non-repayable grants from the Recovery and Resilience Facility.

Let’s be clear once again: this is our money. We are entitled to it. Brussels is imposing financial sanctions on Hungary by freezing EU funds on political grounds—making this a political, not a technical, issue.

“Brussels today is playing a political game and is clearly working to bring down the Hungarian government,” Nagy said. “I am partly a politician and partly a professional, but even as a professional I can see that when the European Union demands the abolition of utility price caps, the 13th-month pension, and the admission of migrants, this is not a debate of expertise. It is blackmail.” He likened the conditions to telling a country to “cut off your leg and then you’ll get the money—or rather, cut off both.”