Mujtaba Rahman is the head of Eurasia Group’s Europe practice. He tweets at @Mij_Europe.
One of the biggest concerns among Europe’s leaders today is that U.S. President Donald Trump’s return to the White House will bolster the EU’s populists.
Many believe Hungarian Prime Minister Viktor Orbán — the bloc’s biggest disruptor — will be the chief beneficiary of Trump’s second term, and that he could become the U.S. president’s most important instrument to divide the bloc from within.
2025 could see Orbán further wield his veto to undermine EU policy on Ukraine, the bloc’s united stance against Russia and the imposition of retaliatory tariffs against Trump. It could even prevent the EU from generating the fiscal resources needed now that America’s commitment to its security no longer seems ironclad. He already threatened to end sanctions against Russia just last week — though his bluster was short-lived.
Yet, often overlooked is the fact that the Hungarian leader is now facing his most difficult year at home since first coming to power in 2010. And his ability to take advantage of Trump’s presidency may well be exaggerated.
Although neither Orbán nor his closest ministers are showing it publicly, Hungary’s leader is extremely worried about the continued rise of opposition leader Péter Magyar and his Tisza Party. The latest reliable polling from November showed Tisza with 35 to 45 percent support among decided voters — that’s about 4 to 6 percentage points ahead of Orbán’s Fidesz.
The government has thus begun initiating policy moves in response, and relentlessly attacking Magyar’s credibility to undermine his momentum.
First came amendments to electoral law, reducing the number of parliamentary seats in the city of Budapest from 18 to 16, justified by population changes. The move was immediately denounced by opposition MPs as gerrymandering, the capital being the very center of opposition support.
Meanwhile, as part of its 2025 budget, the government is planning more subsidies for small- and medium-sized enterprises, increased support and tax breaks for families, mortgage caps and interest-free loans for young people already in employment. These are all designed to win the hearts and minds of those under 40, a demographic where Fidesz support is especially weak.
However, policy moves like this come at a cost, and right now, Hungary’s economy is struggling. Growth in 2024 was undermined by weak manufacturing orders, and is looking set to expand by a mere 0.5 to 0.7 percent. This is in stark contrast to the government’s original target of 4 percent and its recent prediction of 1.5 percent.
Moreover, inflation looks set to rise further, and the forint continues to slip — albeit with bouts of some recovery in the last three months — with added inflationary implications. These concerns have constrained the central bank from reducing its base rate below the 6.5 percent first reached in September.
In his public rhetoric, Orbán continues to blame the war in Ukraine for dampening current demand in the EU, and thus causing Hungary’s economic stagnation. But rather than looking at the current gloom, he’s betting on a significant upturn in 2025.
Orbán believes that having Trump back in the White House will be a catalyst for global economic growth, in large part because the U.S. president will rapidly stop hostilities in Ukraine. And he expects the resultant drop in military spending to be redirected toward consumption — a scenario that ignores Trump’s threat to slap tariffs on U.S. imports from the EU.
The Hungarian prime minister is also betting on numerous investments in the automotive sector — notably, Chinese-owned electric vehicle battery plants — coming online in 2025 and acting as a driving force to boost exports.
However, most independent analyses are less sanguine, with the European Commission putting 2025 growth between 2 to 2.5 percent.
Despite finally receiving Commission approval for its four-year fiscal plan, all of this raises concerns about Hungary’s ability to reach its budget deficit target of 3.7 percent of GDP for this year, despite austerity measures to curb government spending.
Assuming no breakthrough in the moribund EU funding talks — the government just lost €1 billion in cohesion funds at the turn of the year —2025’s deficit looks to be heading more toward 4 to 4.5 percent, a situation the EU is gently exploiting by withholding funds.
These conditions are also causing Orbán to be more financially dependent on China, putting him at odds with one of Trump’s geopolitical priorities.
For their part, the government-controlled media are relentlessly emphasizing Orbán’s international and diplomatic importance through his relationships with Trump, Russian President Vladimir Putin and Chinese President Xi Jinping. They’ve been touting his “wise” peace efforts in the Ukraine war, as well as the great diplomatic achievements of Hungary’s EU presidency — notably, Romania’s and Bulgaria’s admittance into the Schengen area.
But the reality is that the economic difficulties Orbán is faced with will further undermine his ability to hijack — let alone drive — the EU’s agenda as the bloc’s preeminent populist leader.
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