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Time for a U-turn?

August 24th, 2011

A pro-government commentator has urged the country’s top leadership to admit the failure of their economic policies, and to put the national economy on an “ultra-liberal” track, to avoid lasting stagnation.

In an editorial in Magyar Hírlap, a daily rarely critical of government policies, Csaba Szajlai says the latest data indicating a substantial slow-down in economic growth should prompt a thorough revision of policy targets and tools.

Left wing analysts have often criticised the flat income tax introduced by the government following its sweeping electoral victory last year, but this is the first time a right-wing commentator has joined them.

Szajlai reminds readers that the present hardships are part of the legacy of eight years of left wing rule, but admits that the ‘cure’ has been insufficient thus far. He argues that the flat tax cannot be expected to accelerate growth or increase employment levels, and urges decision makers “at the highest level” to admit that. This is an interesting suggestion, especially in the light of the most recent statement made by the Prime Minister on economic matters. Viktor Orbán summoned a press conference last week, when it turned out that GDP growth  will probably not exceed 2 per cent either this year, or in 2012. Whatever happens, Hungary will keep its public deficit under the promised mark of three per cent of GDP, Mr Orbán promised. He insisted, however, that his government would stick to its flat tax policy.

The criticism in Magyar Hírlap is also remarkable in that it took issue with another ‘sacred cow’ in the right wing stable –mistrust of multinationals. Rather than “opening new and unnecessary fronts,” Csaba Szajlai suggests, “Hungary should cooperate with multinational enterprises,” who produce most of the maximum 3 per cent growth the country is capable of at present.

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