Hungarian aspects of the EU budget – Received and not received

According to Viktor Orbán, "never ever so much money calculated per head" arrived to Hungary"; in the previous period, in seven years, each Hungarian received subsidies equivalent to HUF 660,000 from the common funds in Brussels. And now each of them will get HUF 712,000. This would correspond to the arrival of six railway wagons across the border, fully loaded with 20,000 bank-notes – if we were not living, for a long time, in the era of electronic payments. And he goes on listing statistics on the many ways we are on the top of the row and in which areas we will be better off than in the past eight, or more precisely, seven years.

According to the present "national development plan", the amount of the EU cohesion subsidies available to us in the period between 2007 to 2013 – at prices of 2004 – will be 22.41 billion EUR. At current prices (for 2007-2013) the same figure is 25.3 billion. According to the closing document published about yesterday's meeting of the European Council, the Union would spend 325 billion EUR in the forthcoming seven years on catch-up (cohesion) policy. From that, 20.5 billion EUR is due to Hungary. The figures were published at prices of 2011. Therefore, to compare any of the above data with any other would be a capital mistake in professional terms, or a rude misrepresentation. Prior to making any comparison, the data of seven years ago and the ones for today shall be brought to a common basis. According to the simplest calculation, the subsidies of 22.41 billion EUR in 2004, assuming a euro inflation rate of 2% p.a., i.e. roughly in the same way as the EU also calculated, was worth 25.74 billion in 2011. This figure of 25.74 billion EUR can be and shall be compared to the 20.5 billion EUR included in yesterday's bargain, measured at prices of 2011 again. The result is the following: the agreement concluded by the socialist-liberal government in 2005 was an amount exceeding the present one by 25.57%. This means that in real terms, the budget we received for the new period is one-fifth less than the previous one. No way to state that the bargain concluded by Viktor Orbán yesterday was even approximately as good as the one concluded by Ferenc Gyurcsány, seven years ago.

But then, what is it that prime minister Orbán is celebrating now? Is it a "net lie" what the PR people of the government presented to us? No, it isn't. It is rather a gross one. Mostly they listed real data, they only "forgot" to add that they were throwing figures representing non-comparable quantities. For instance, any economist who has some value gets an on-the-spot panic attack to hear the head of the government placing side by side some forint-denominated data of seven years ago with forint data as of now, announcing with a straight face that: in the coming seven years, we will receive fifty thousand forints more per capita from Brussels than earlier. Even without any specific calculations, we can see that what is less in euro terms, shall be less in forints as well. And this is what happens. If we convert the above figures at today's exchange rate into forints (and we do not spare ourselves from the hassle of using identical exchange rates for comparison of all financial data at the identical dates), the subsidies we received "per head" in the framework of the EU catch-up policy between 2007-2013 will be again 25 percent higher than the amounts to be expected from now on. The amount of the per capita subsidy decreases, also "per head", by a ratio of one-fifth.

On the one hand, we completed the very last round of the negotiations not too badly. Those 20.5 billion euros are about 643 billion forints better than the initial proposal last year. This can be respected, even if the last minute candies, allowances for honeying national bargains belong to the routine procedures of such summits. This is how, in addition to Hungary 14 EU member states (Bulgaria, Cyprus, the Czech Republic, Estonia, Greece, Ireland, Latvia, Lithuania, Malta, Germany, Portugal, Spain, Slovakia and Slovenia), out of the 27 countries, received "personalised" gifts. And of course, each of the net payer member states, with David Cameron on the top, who managed to achieve a reduction in the EU's common budget, even if the extent was slight. As could be expected: again, the EU paid attention to the fact that nobody should return home empty-handed. Not even Viktor Orbán. On the other hand: we cannot disregard the fact that in real terms, funds available to us will be at least one-fifth less than in the present seven-year planning period. At today's prices, the loss is around 1533 billion HUF. And that is much, really much. Especially painful will be that the region of Central Hungary, with 3 million inhabitants, is going to lose almost 80% of its subsidies amounting to 2 billion EUR, and actually, this might do harm for the companies here, and harm to growth. But the schools, universities, public institutions will also miss that. According to all signs, my prophecy of November also comes true, whereas Hungary would be one of the main losers of the budget bargain. Our minus of 5 billion EUR is the fourth largest among the member states. Meanwhile, from among our neighbours, Romania, Poland and Slovakia could significantly increase their participation. As the saying goes, we cannot decorate our windows with that. And last, but not least: we shall take note that in the planning period of 2014-2020, the EU will raise much harder conditions in respect of Hungary, in exchange for the subsidies. To sum it up: What happened in Brussels this week is basically what we could expect. As compared to the initial proposal of the EU, although the situation improved somewhat, but the negotiating delegation was not able to prevent a serious financial loss. From the Hungarian point of view, the glass is half empty and half full. Viktor Orbán "has received and not received". In Europe, times are really hard. Therefore, after all, both for the Union and Hungary, the most important thing is that an agreement was made. For celebration, we surely have no reasons. But a sigh of relief is justified.