Life After EU Funds. The Solution is in Supporting the Local Economy.

The Hungarian economy needs to transition to an existence without EU funds, Minister of Economic Development Márton Nagy told the VG.hu economic portal.

According to the minister, foreign direct investment (FDI) is better than EU sources. “Both are foreign currency and non-reimbursable sources. When capital comes in and builds a factory, sooner or later it has to be developed again and again, the value stays here, it is not like tomorrow I take the factory, dismantle it and then move it to another country,” Márton Nagy said, adding that “in terms of impact, foreign direct investment is better, the market allocates the capital, so it knows exactly what it has to do”.

“The allocation of EU funds is done by the government, it is up to us, and of course, we try to do it right. But I think that if the market allocates the resources to itself, it is always more efficient than redistribution by the state,” he noted.

It is true that EU funds are missing from the Hungarian economy, but at the same time, as I said, they are not dominant in financing the economy. It is an easily replaceable resource,”

Márton Nagy stressed. According to the minister, in the medium to long term, Hungary will operate without EU funding anyway because, above a certain level of development, it will become a net contributor by default.

Either way, the Hungarian economy will have to make the transition to a situation without EU funding. Of course, this means not only FDI, but also credit and capital, Nagy added.

The minister also said that the three big fundamental causes of inflation have been resolved: one is the price of energy, where we have seen a significant fall; the second is the forint exchange rate, which has stabilized; and the third, which has also driven up inflation, is the price-profit spiral experienced by companies, which we are also seeing the end of.

Featured photo via the European Commission