Does Hungary Adopt the Euro and What It Means

Hungary has been a member of the European Union since 2004, but it has not adopted the Euro as its official currency. This is because Hungary has not met the necessary economic criteria to join the Eurozone.

One of the main reasons Hungary has not adopted the Euro is that it does not meet the Maastricht criteria, which includes a maximum inflation rate of 2% and a budget deficit of no more than 3% of GDP.

The Hungarian government has stated that it plans to adopt the Euro by 2025, but this timeline is ambitious and it remains to be seen whether it will be achieved.

The Fidesz government's stance on the Euro is a topic of interest, especially given the country's existing connections to the currency. Viktor Orban's current setup is likely to be influenced by the practical implications of adopting the Euro.

Hungary's neighboring countries, Austria, Slovakia, and Slovenia, have already adopted the Euro, with Slovakia having a significant number of indigenous Hungarian individuals, estimated to be around 450,000. This has led to a situation where many Hungarians in these countries use the Euro daily.

Economist Zoltan Pogatsa suggests that bringing the Euro into Hungary as a parallel currency could be beneficial, citing the economy's current state as a factor.

The Fidesz government's stance on Euro adoption is a topic of interest, especially considering Hungary's neighboring countries have already adopted the currency. Austria brought the Euro in all the way back in 1999.

Hungary has a significant number of communities that utilize the Euro on a daily basis, including the Sopron area where people use the currency without hesitation. This has led some to wonder whether bringing the Euro in officially is a practical concept for the city of Budapest.

Zoltan Pogatsa, a widely known economist from Hungary, suggests that bringing the Euro into Hungary as a designated parallel currency may be beneficial. He points out that the Hungarian forint has no issues at this moment in time.

Hungary's economy makes the national currency less powerful, which may be due to the country's reliance on energy and its insignificant foreign currency reserve. This is a crucial factor to consider when evaluating the feasibility of Euro adoption.

Interestingly, the Baltic nations dealt with rising inflation even after bringing in the Euro, which suggests that inflation is not directly related to the specific currency used. This is an important consideration for the Fidesz government as they weigh the pros and cons of Euro adoption.

The Fidesz government's push for Hungary to adopt the Euro has had a significant impact on the country's economy. The introduction of the Euro could lead to a 10% increase in prices, as Hungary's currency, the Forint, would no longer be pegged to a weaker currency.

One of the main concerns is that the Eurozone's strict fiscal rules could limit Hungary's ability to implement policies that benefit the economy. The European Union's Stability and Growth Pact, for example, restricts member states from running large budget deficits.

The Fidesz government has also been criticized for its handling of the economy, with some arguing that its policies have led to a decline in economic growth. Between 2010 and 2018, Hungary's GDP growth rate averaged just 2.4%, lower than the EU average.

The introduction of the Euro could also lead to a reduction in Hungary's competitiveness, as the country's wages and prices would need to adjust to the Eurozone's standards. This could make Hungarian products less competitive in the global market.

Additional reading: Euro Introduction

Hungarians have been asked about adopting the euro since 2005, with the first recorded poll showing 56% in favor of adopting the euro, while 35% were against it.

Since then, opinions have shifted, with a 2018 poll showing 59% in favor and 32% against.

The trend suggests that more Hungarians are in favor of adopting the euro than not.

Here's a breakdown of the polls:

In 2024, 76% of Hungarians polled were in favor of adopting the euro, while 20% were against it.

The overwhelming majority of Hungarians have been in favor of adopting the euro since 2014, with 64% in favor and 30% against.

In contrast, some polls have shown a significant number of undecided or unsure respondents, such as the 2011 poll where 54% were in favor, 36% against, and 10% undecided.

The percentage of Hungarians in favor of adopting the euro has been steadily increasing over the years, with some fluctuations.

Hungary has a unique relationship with the Euro, with hundreds of thousands of individuals using the currency despite not all residing in the country permanently.

Austria, Slovakia, and Slovenia have already adopted the Euro, with Slovakia having a significant population of indigenous Hungarian individuals, numbering at least 450,000.

In the Sopron area, locals use the Euro day-to-day without hesitation, and many businesses display Euro price tags for Austrian customers.

Zoltan Pogatsa, a Hungarian economist, suggests that bringing the Euro into Hungary as a designated parallel currency could be beneficial, citing the economy's reliance on energy and the country's insignificant foreign currency reserve.

On a similar theme: Euro Country List

To join the Eurozone, a country must meet certain requirements.

A country must have a stable economy and be a member of the European Union (EU) for at least two years.

The country's inflation rate must be close to the EU average, and its budget deficit cannot exceed 3% of its GDP.

The country's interest rates must be in line with the EU average, and its exchange rate must be fixed to the Euro.

A country must also have a stable banking system and be able to implement the Euro's monetary policy.

The European Central Bank (ECB) must also agree that the country is ready to join the Eurozone.

Hungary already has a significant number of individuals using the Euro, with hundreds of thousands of people utilizing the currency, although not all reside in the country permanently.

The Euro is already widely accepted in the Sopron area, where people use it day-to-day without hesitation.

Hungarians who work in Austria receive payment in Euros, making it a common currency for many.

Austrians also frequently shop in Hungary, which is why you'll often see products with Euro price tags.

This simplifies business matters significantly, making it easier for people to conduct transactions.

Zoltan Pogatsa, a Hungarian economist, suggests that bringing the Euro into Hungary as a parallel currency could be beneficial, citing the fact that the Hungarian forint has no issues at the moment.

However, Pogatsa also notes that the economy in Hungary makes the national currency less powerful, which may be due to the country's reliance on energy and its insignificant foreign currency reserve.

Interestingly, Pogatsa points out that inflation doesn't rely on the specific currency used, as seen in the Baltic nations that experienced rising inflation even after adopting the Euro.