Another economic program in Hungar

Hungary’s economic performance in the third quarter of 2024 has fallen short of expectations. Although inflation is decreasing, consumption and foreign trade data are not meeting the targets set in the budget. To stimulate the economy and maintain growth, the government has developed a new action plan aimed at achieving improved results in 2025.

Main pillars of the action plan:

 Increasing domestic purchasing power:

Wage agreement: A three-year wage agreement with employee and employer representatives, resulting in an increase in the average wage and the minimum wage. This step aims to increase the disposable income of the population, which could stimulate consumption and economic growth.

Worker loan program: A worker loan program for young professionals starting their careers, which will be converted into a non-repayable grant if they have three children. This program could encourage young people to enter the workforce and alleviate the shortage of skilled labor, as well as contribute to improving the demographic situation.

Family tax benefits: Doubling the personal income tax benefits for families compared to the current level. This improves the financial situation of families, encourages childbirth, and increases consumption.

Ensuring affordable housing:

Regulation of private accommodation services: Tightening the conditions for private accommodation services (e.g., Airbnb) in Budapest to reduce housing prices and increase the supply in the long-term rental market.

Regulation of rental fees: Regulating rental fees and contractual terms to protect tenants and ensure predictable housing.

Expansion of dormitory places: Increasing the number and quality of dormitory places in higher education institutions to alleviate the housing problems of students coming from rural areas.

Reducing VAT on new apartments: Reducing the VAT rate on new apartments to 5% nationwide to stimulate the construction industry and encourage home purchases.

Use of pension savings for housing purposes: Allowing the use of voluntary pension savings for housing purposes to facilitate the financing of home purchases.

 Supporting small businesses: We wrote about small entrepreneurs here.

Digitalization: Improving the digital coverage of small businesses to increase their competitiveness and efficiency.

Access to credit: Easier access to credit for small businesses with favorable conditions and low-interest rates to finance their investments, development, and expansion.

The measures included in the action plan are expected to contribute to stimulating economic growth, expanding employment, increasing incomes, and providing affordable housing. Supporting families and small businesses strengthens the internal engine of the economy and can contribute to sustainable growth.

In addition to the successful implementation of the action plan, it is important to monitor the external economic environment, energy prices, and inflation trends. It may be necessary to continuously review and adjust the action plan to adapt to changing circumstances.

The action plan developed by the government contains targeted measures to stimulate the economy and maintain growth. The plan focuses on increasing domestic purchasing power, ensuring affordable housing, and supporting small businesses. The implementation of these measures can contribute to improving economic performance and increasing social well-being.