Tisza Vows to Introduce the Euro—But Critics Warn It Could Amount to Economic Suicide

The issue of adopting the euro may serve as a political talking point for the Tisza Party—a symbolic policy aimed at signaling to voters that Hungary is firmly anchored on the Western shore rather than a 'ferrying' country between East and West, according to Zoltan Kiszelly. The political analysis director at Szazadveg argued that such messaging could also make it easier to sell an austerity package to the public. However, he warned that if the government led by Peter Magyar were to actually introduce the euro, it could amount to “economic suicide.”

Illustration (Pexels)

He argued that the euro remains a “half-finished, flawed product,” as it has yet to evolve into an optimal currency area (OCA). 

In practical terms, this means there is no unified fiscal and economic policy behind it, while productivity gaps persist, particularly in southern European countries.

He cited Italy as an example, noting that since adopting the euro in 2002, industrial output has declined significantly while public debt has surged. Similar trends, he said, can be observed in other countries, including Slovakia.

Economic Suicide?

Kiszelly further argued that the euro’s current structure distorts competition. If separate “northern” and “southern” euros existed, northern currencies—such as Germany’s—would be significantly stronger, while southern ones would be weaker. The single currency artificially levels these differences, giving more advanced economies a competitive edge while placing weaker ones at a disadvantage. 

He added that

southern countries used the benefits of low interest rates not for structural reforms but for consumption, ultimately leading to debt spirals.

In this context, Kiszelly warned that prematurely introducing the euro in Hungary could amount to “economic suicide.” With the disappearance of the forint, the country would lose control over exchange-rate policy and interest-rate setting, significantly limiting its economic flexibility. In such cases, only so-called “internal devaluation” remains—effectively meaning austerity measures.

Without structural reforms, he argued, euro adoption in Hungary could also lead to declining production and increased emigration, trends he said are already visible in countries like France and Italy.

A Political Messaging Tool

Kiszelly also argued that a significant part of Hungary’s economic sovereignty would disappear, since monetary decisions would be relocated to Frankfurt.

Overall, he believes the euro primarily benefits highly productive, innovative economies such as Germany and the Netherlands. For less competitive countries, however, it can pose serious risks—especially if the economy cannot adapt to the conditions required by a common currency.

“The issue of introducing the euro may serve as the Tisza Party’s political talking point, a symbolic product through which they can show their voters—and society at large—that Hungary is not some 'ferrying' country, but is firmly anchored on the Western shore,” he said.

He added that such a narrative would also make it easier to sell austerity measures. Just as the government of Ferenc Gyurcsany labeled its 2006 austerity package a “convergence program,” Kiszelly said, the Tisza Party could likewise justify the necessity for new sacrifices by arguing that Hungarians must tighten their belts in order to pave the way for euro adoption.

Cover photo: Illustration (Pexels)