Hungary Slashes Taxes Amid Economic Challenges

Hungary's parliament approved Prime Minister Viktor Orban's 2026 election budget, featuring significant tax cuts for families. This move comes despite stagnant economic growth and high inflation. The new budget faces challenges, including potential U.S. tariffs and a suspension of EU funds, complicating Hungary's economic recovery efforts.

In a major policy shift, Hungary's parliament has passed Prime Minister Viktor Orban's 2026 election year budget, featuring substantial tax cuts for families. This decision aligns with Orban's strategy to solidify support from key voter demographics, primarily catering to the right-wing Fidesz party's base.

The Hungarian economy faces headwinds, with zero growth in the first quarter and soaring inflation rates, complicating Orban's bid for re-election in 2026. The threat of American tariffs and a diplomatic standoff with Brussels halting EU funding further exacerbate economic challenges.

Despite these hurdles, the government aims to reduce the country's debt from 73.1% to 72.3% by 2026 while projecting a narrower budget deficit of 3.7% of GDP next year. These measures, although ambitious, have been scrutinized by the Fiscal Council due to ongoing economic uncertainties.

(With inputs from agencies.)