Hungarian PM Orban warns of ‘era of recession’ in Europe

BUDAPEST, May 16 (Reuters) – Hungarian Prime Minister Viktor Orban on Monday raised the specter of an “era of recession” in Europe as the continent grapples with soaring energy costs and rising demand. inflation due to the war in Ukraine.

Orban, taking the oath after being elected in April for a fourth consecutive term, took a typically bullish line towards Brussels, telling parliament he was “abusing his power day after day” by pushing back on member states’ sovereignty.

Nonetheless, he said Hungary’s place was in the European Union for the next decade.

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He also said Hungary would not block European Union sanctions against Russia for its invasion of Ukraine as long as they posed no risk to Hungary’s energy security.

Hungary, along with a few other member states, has so far rejected current proposed EU sanctions against Russian oil. Budapest says it wants hundreds of millions of euros from the bloc to mitigate the cost of abandoning Russian crude. The EU needs all 27 states to accept the embargo for it to be enforced.

He said his new government’s most important task would be to steer Hungary’s economy through a European economic crisis, championing tax breaks and benefits for families and defending capped household energy bills.

“The war, and the European sanctions policy in response, have created an energy crisis,” Orban said.

“The energy crisis and interest rate hikes in the United States have jointly brought about the era of high inflation. All of this will bring about the era of recession, where a decline in economic output, a stagnation and years of slight increases in production followed in Europe.”

Orban has clashed with the EU several times over policies, most recently over LGBTQ rights and rule of law issues, but said the importance for Hungary of being a member of the nato had never been so obvious as it is today.

He predicted that the war in neighboring Ukraine “would last a long time … and pose a permanent threat to the security of Hungary”.

He said the National Bank of Hungary and the government should coordinate measures to curb inflation.

“We will synchronize these steps…we will take careful but firm action to regulate prices,” Orban said in a speech. His government has already capped the prices of fuel, basic food and mortgage rates, as well as household energy bills.

Earlier today, the European Commission released its new economic forecast, in which it said Hungary’s GDP growth would slow to 3.6% this year from 7.1% in 2021, while inflation average would reach 9% this year.

“In 2022, the deficit is expected to remain elevated at 6.0% of GDP, reflecting the introduction of several expansionary measures and additional spending related to high energy prices,” he added.

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Reporting by Krisztina Than and Gergely Szakacs; Editing by Alison Williams

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Mary I. Bruner