Good Day, Ladies and Gentlemen. Dear Presidents, Dear Lidike, Dear Entrepreneurs,
Thank you very much for inviting me. It is always exciting for me as a politician to meet entrepreneurs, together with some of my fellow ministers. This is because I agree with the two speakers who have just spoken before me, who drew attention to the need for cooperation between government and the business sector. I would like to say a few words about the fact that this is not too simple, because these are two different worlds. A certain intellectual conviction and a certain basic attitude needs to develop – certainly on the political side. I’m not speaking about entrepreneurs, because I can’t speak for them, but on the political side a basic intellectual attitude has to develop in order to be able to establish cooperation with the business world. After all, entrepreneurs are motivated by profit, and in order to generate profit they need to engage in business transactions, from which they expect personal profit. And this is good – it’s called the market and private property. By contrast, the politician approaches the world of economics from a different angle. Our motivation is that the functioning of the economy as a whole should benefit the entire community: the country, the nation. This is why we do not deal with business considerations, but with national economic considerations; and this is true even if we are both looking at the same issue. For example, it is clear that taking back the airport is a business consideration for entrepreneurs and a national economic consideration for the Government. It is our job and the job of government, Ladies and Gentlemen, to ensure that the private interests of you, the business sector, are pursued in such a way that the public good is served, and that private benefits accumulate in a way that also serves the public good. The question is this: Is this possible? The question of whether it is possible – or whether it is the case – that private profit and public profit, private interest and public interest are necessarily opposed to each other is one that has intrigued people for centuries. According to communist economics, they are necessarily opposed to each other, and this is the source of the fine little class struggle, after which there could be the introduction of the state economy and communism. According to civic economics, however, they are not opposed to each other, but are conditional on each other. In fact, civic economics says that public benefit can only come about through private benefit and public profit can only come about through private profit. This will lead to cooperation and hence class peace, instead of class struggle – to use the language of the other side.
Well, Ladies and Gentlemen, your private interests and your business affairs, your private profits, contribute to the public interest in four ways. The first is that you give people jobs. There is no greater public interest than that everyone who has the ability to find work should do so. If you don’t do business, people will not have jobs. Therefore, through your own private benefit, the most important contribution you can make to the country’s public interest is to give people work. The second contribution that I must thank you for is that you pay taxes. This is a fine and worthy custom. The Finance Minister has specifically asked me to remind you to uphold this good custom towards the end of the year, because there are shared expenses. And you can easily see that you too are better off if you pay taxes and, let’s say, a good police force guarantees public order – rather than you needing to maintain your own private army to provide for your own private security. The third way you contribute through your own interest to the country’s public interest is your capital. You have capital, and with this amount of money, of assets, with the amount of financial resources that you have, you are able to stabilise the operation of the Hungarian economy. Capital strength is important, and if it has capital strength, if it has weight of capital, an economy is better able to withstand the strong winds of a crisis than if it does not. In my view, the success of the management of the COVID crisis and the current war crisis differ from the failure of the management of the 2008–09 financial crisis not only because the government back then – which I will not evaluate now – was different from the government now; it was also because in 2008–09 the brunt of the crisis was borne by an economy with lower capital strength. The current economy was hit by COVID and has been hit by the war, sanctions and inflation; but, in terms of capital strength, this economy in 2023 bears no comparison to the economy that tried to overcome the difficulties of 2008–09. And finally, there is a fourth way in which you contribute to the Hungarian public good. This is that if you did not run businesses, someone else would. Those people would mostly be foreign, and then most of the profits from the value generated here would leave the country. The reason it does not leave is that you are the entrepreneurs, and you are Hungarians: you are Hungarian entrepreneurs, and you keep these profits here. We should not fall for the fairy tale which says that money has no smell. Because its owner does. And it is also true that money has no nationality – but its owners do. Therefore it is by no means irrelevant who owns the money, the capital, the capital assets. In 2008–09 I learned something about money, which supposedly has no smell and no home: as soon as the banks in Europe started to run dry, foreign banks immediately started to take their funds from Hungary in order to finance their businesses at home – leaving us with none. From this we have concluded that 50 per cent of the Hungarian banking system must always be in Hungarian hands, otherwise we will be unable to avert crises like this one, just as we were unable to avert the crisis in 2008–09. So in summary, Ladies and Gentlemen, when I say that I wish all Hungarian entrepreneurs every personal success I am not being polite, I am not being disingenuous, but I am being sincere. Your private successes are the preconditions for the public success of the country. This is why the Government and its members are not jealous of your capital and what it brings with it – and it brings not only good things, but also plenty of problems. On the contrary, the Hungarian government and its members wish you all even greater success, even greater business profits and ever-increasing capital. I hope that you have such years ahead of you. If you are successful, all of this will lead to the rise of the country: to the growth of the common good. It is our responsibility – the responsibility and the work of political leaders – to manage this so that your private successes become the success of the whole country. And we have a government that believes that a rising tide lifts all boats.
Ladies and Gentlemen,
If we were at a meeting of another party, I would ask, “Do I have anything more I need to say, Ildikó?” We are not there, but here, and together with members of a generation who understand the meaning of that sentence; I would not risk saying it to younger people. But of course I do have a few more things to say – mainly because of Sándor Demján. When I was preparing to come here to you I glanced at the calendar, and saw that less than two days ago it was exactly a year since we gathered to celebrate the twentieth birthday of the Széchenyi Card. And back then we also mentioned Sándor Demján, the heroic figure of great heroic times with whom we invented the Széchenyi Card twenty-one years ago. It was he who launched Entrepreneurs’ Day, twenty-four years ago. How time flies: he has not been among us for five years! Everyone has a personal story about Sándor Demján. This is also how, as President Parragh mentioned, you know that we are talking about a serious man. I learned two things from him – because everyone learned something from him, or from observing him. I will spare you the personal stories for now, especially because they have a rather provincial flavour, given that we both came from the countryside – he from Etyek and I from Alcsútdoboz by birth. So I shall not bore you with personal stories, but tell you that I learned and observed two things from him – as probably many others learned from him. One thing I learned is that there is no Hungarian success without national self-respect. President László Parragh’s story was about precisely that. And something follows from this, because in terms of his political philosophy Sándor Demján was widely known to be a man of left-wing, social democratic sentiments: it was through him that I learned that there is such a thing as left-wing patriotism. And if there is left-wing patriotism, then the Right, which by definition considers itself patriotic, can find cooperation with left-wing patriots in the interests of the nation – provided that there is agreement on important issues, as there often was with Sándor Demján. The other thing I learned from him, and this is also the story that President Parragh told earlier, is that it is only worth undertaking to do the impossible. This is not a stupid phrase, because “impossible” does not mean what is physically impossible; but it means undertaking to do what others think is impossible. That is true enterprise. These are two things we learned from Sándor Demján, and if you look at the way the current government operates, the Government regularly undertakes “impossible” things: things that seem impossible. To look back: in 2010, when we had to plan the crisis response, and I spoke to the President, we agreed that we had to simultaneously increase the size of the Hungarian economy, achieve higher employment, reduce public debt and lower the tax burden. All textbooks on liberal economics say that these things are all possible separately, but not together. Sándor Demján always stood up for the Government and said, yes, we may not be able to cite many examples from economic history, but here and now in Hungary, if it is done well, it is possible to do all this together, at the same time. We tried, and we succeeded! I would remind everyone that since 2010 the gross domestic product has tripled in nominal terms: we started from 27.5 thousand billion forints, and this year it will reach 77–78 thousand billion forints. At the same time, we have increased employment, with one million more people in work than earlier, and the figure now standing at 4.8 million; in the language of employment, this is a jump from 57 per cent to 75 per cent. The tax system has been discussed earlier, but the tax wedge ratio has fallen from 54 per cent in 2000 to 41 per cent in 2022 – and if we are to be competitive we need to bring it down further. Thanks to Mihály Varga, by 2019 we had already managed to bring public debt down to 65 per cent. Then we slipped back because of COVID and the war, but now we are back on track: the trend is that we are on a downward path, we can reach the level of around 70 per cent by the end of the year, and perhaps even go a little below it. Our public debt vulnerability has never been as low as it is now: in 2010, at the time of the conversation referred to here, the public debt held by our citizenry was 4 per cent, let’s say in terms of government bonds; but now the population holds not 4 per cent, but 22 per cent. Sándor Demján always said that the best thing is for the state to owe money to its own citizens, and if it gives money to someone, it should give it to Hungarians. This is why it is good for Hungarians to be able to buy government bonds. By the way, this 22 per cent makes us the top performer in Europe. And now I am not even talking about investment, foreign working capital or economic resources from outside Europe. The much-criticised policy of Eastward Opening, which Péter Szijjártó has committed himself to with the confidence of youth, is actually the idea of Sándor Demján. It was he who personally persuaded me of it in 2009. I will tell you a story. We were still in opposition at the time, and he persuaded me that we should get on a plane and go to China, and that we should establish political relations with the Chinese leadership at the time, while still in opposition, which we could then later turn into something productive when in a government position, and that this would stimulate business, the economy and investment. And when I said that the opposition party was poor, he said he would pay for the flight; and he took us to China. The financing of the whole policy of Eastward Opening is essentially based on the price of a flight, and it is definitely on account of him.
Ladies and Gentlemen,
What I would also like to say to you is that there were three traps that we had to avoid, and that we must avoid in the coming period. The first is the debt trap, the second is the energy price trap, and the third is the consumption trap. We have avoided the energy price trap for the population as a whole, because we have defended the cuts in household utility bills. For entrepreneurs this is a burden. We are not used to talking about this so openly, but perhaps in this context it is possible to say that the higher energy price paid by businesses is partly cross-subsidising the lower price paid by the public. This is not right, but the remedy is not to raise domestic prices, but to find a way to lower business prices. In the government meeting yesterday or the day before yesterday, we decided on a 10-euro price cut. You will see the measures soon. And we want to bring about further energy price cuts for businesses in the coming year, so that they can remain competitive. We can’t avoid the debt trap on our own, although here and there we are trying to move towards lowering interest rates by methods that impinge on the powers of the Central Bank, methods that just impinge on them from the outside. But this cannot change the fact that the setting of interest rates in Hungary falls, after all, within the remit of monetary policy and its master: the Central Bank and the Governor of the Central Bank. Of course, in the classic debate within every modern market economy about whether the economy should have higher interest rates to promote security or lower interest rates to allow investment and the necessary lending, the Government is in essence always on the side of business and the economy, because it has as an interest in growth and in lending – and that means lower interest rates.
Ladies and Gentlemen,
And when we cannot achieve results because the Central Bank is keeping interest rates high, we try to help businesses with all kinds of credit programmes. I am sure you remember the programmes for re-industrialisation, factory rescue and export support which Hungarian businesses have been able to benefit from.
Ladies and Gentlemen,
On the subject of consumption, perhaps I should also say that I agree with President Parragh, who said that consumption will return to its old level at a slower pace than expected by the Government or the government leaders. This is not a debate that needs to be decided by us, because life will decide it. But I also think that Hungarians are a sensible breed, and when we see that they are not consuming it means that they are saving. And even this year – which in terms of real incomes has been a more difficult year than previous years – there is money in the economy. There is still new income being generated, which people are not consuming but saving, and this is quite clear from the accounts. Behind this lies a healthy survival instinct. It is not the job of the Government to use artificial means to divert people from the path of normal thinking, but caution is justified when trouble can happen in an economy of the kind that has happened. But it is also not good if people’s caution stems from unwarranted fears; these need to be dispelled, so that people can realistically assess the risks of increasing consumption. I think that today there is more unwarranted fear about the future of the economy than is justified by reality, so the Government needs to send a cautious but clear message to the Hungarian public that 2024 will be a year of hope. In 2023 we all – all ten million Hungarians – worked to protect what we have, and in 2024 we will work to live better than we did in 2023 and before. We must send this message to the Hungarian electorate, to consumers.
Ladies and Gentlemen,
I have one more important thing to say to you, which I hope you will appreciate. In the economy, too, there are fetishes, superstitions and myths, and from time to time it is worth examining them to see whether they are still valid. I think that one of these myths in the European economy is that a Member State of the European Union cannot do without European Union money. I can report that this myth has been debunked. Because the fact that we have defended ourselves in 2023, that we are visibly returning to the growth path in 2024, and in the meantime not a single cent of EU funding has been received by Hungary, shows that it is possible to organise economic life in such a way that we build economic growth solely on our own resources or on resources mobilised through market means – with or without the financial transfers that are customary in Europe. This does not mean that we will not collect the few billions in euros that we are owed. Of course we will collect them, but for the Hungarian economy it is important to be confident that we are now in a period, 2022–23, when our economy has proved that it can achieve results without financial transfers – without politically-based financial and development transfers. This is a major achievement, which of course will not discourage us from seeing that we must get the resources we are entitled to.
And finally, Ladies and Gentlemen, there is another feature of this crisis, which we are now slowly emerging from, that entrepreneurs with a long-term perspective should take into account. For the nature of this crisis is not cyclical. So we are not talking about the fact that in a capitalist economy or in a market economy it is natural that all kinds of cycles alternate, which bring with them booms and busts; and that since we believe in the self-healing – or at least self-correcting – capacity of the market economy, the economy always responds to these cycles according to its own logic. I believe that this is true, but this crisis is not a crisis of that nature: it is linked to a major realignment of world politics and the world economy. And I think you should also take this dimension into account. The arc of economic cycles may be changing, but what we have been used to up to now – our usual practices – will not work in the future as they did before the crisis. Therefore we must understand the demands that the restructuring of the world economy is making on you and on the world of politics.
As the world’s economic power structure is now shifting, this means that new technologies are also coming in; and in the new technology industries, the traditional Western civilisational lead has disappeared. You are people of the world, you have been to the places I have been, and you see that, quite simply, in new industries there is a shift in the world economy. Here in Hungary we do not have to travel very far to see that Eastern technology is challenging Western technology. In Hungary, for example, we see that not only Hungarians, not only Westerners, but also the Chinese are producing buses. Electric buses. Hopefully they will also produce cars. And we see the technological competition that is taking place in these sectors. This means that the technological transformation will bring with it an era of information technology, it will bring with it an automation challenge, a digital transformation challenge, and an infocommunication challenge. It will bring with it a new energy era, in which the source of our energy and how we can store it will be completely different from how it has been up to now. All this shows that in these new industries the world economy is becoming more balanced, with East and West competing on roughly equal terms. And if to this you add the fact that in these technology sectors Westerners often produce in the East, you can see that the competition is really serious. Some of the world economy’s resources – which always flow through some channel, from somewhere to somewhere else – have been diverted away from the West; and therefore a large part of the profits generated in the world economy are going to the East. This means that we must find Hungary’s place in this situation: in this great transformation, of which I have just highlighted only a few aspects, the political and technological aspects. So it is not a cyclical question, not a period after which the economic downturn will pass and be followed by the economic upturn, when we will be able to continue our work and make profits in the same industries as we did before the crisis. Other sectors are becoming important, other sectors are generating higher profits, other sectors are where the competition is coming from. Therefore, for us to be the winners in this transformation, with your help, because you will actually be doing the work, we need to connect – your companies need to connect – to the new technology; and your network of contacts needs to be complemented with the existing Western and Eastern networks.
Then of course it is also our job – the job of politicians – to adapt Hungary’s foreign policy and foreign economic relations to this new situation. This is not an easy situation, because in Europe there is also a tendency which claims that the rise of the East can still be halted, and that we can stop their development if we do not trade with them and do not cooperate with them. You can find arguments supporting this position, but I think there are more arguments supporting the other position – according to which it is already too late. We might have been able to do something like that ten, twenty or thirty years ago – if, say, we had not allowed the rising powers in the East into the modern world economic system. But we not only let them in, we invited them in, and we trained them how to do well in it. And now they are doing well. So I do not think that we can stop them by cutting ties with them. But if we do not cooperate with them, we will miss out on the economic opportunity that their economic rise represents for the entire world economy. This is why we believe that what is needed is – to use the Brussels buzzwords – not isolation, not decoupling, not de-risking, not bloc formation; what is needed is connectivity, interconnection, building links, trade and support for mutual investment. This is the line that Hungarian foreign policy is taking. But it is moving in this direction because we think it is the best thing for the Hungarian economy. Therefore Hungary’s pursuit of foreign policy demonstrating a commitment to cooperation, interconnection and connectivity, opening up to the East and maintaining balanced relations, is not in the interest of the political sphere, but in the interests of the Hungarian economy and the entrepreneurs running it.
But it is also true that we can only pave this path, we cannot walk along it; because the Hungarian economy is not a state economy, but a market economy. In order for you to be able to make use of the opportunities that have opened up here, you need to go all the way down this path and be successful in this. In the Government there has also been a great debate – which is still going on – about how to identify the major industries that will be the most profitable ones in the future. We have already covered one of them quite well, and perhaps most of the work has been done: this is the question of the green economy and its energy sector offshoot, with green energy production and green energy storage in cars, houses and industrial sites. We are launching a continuous series of tenders worth tens of billions of euros for people – for businesses and for families – to create their own energy storage capacity at the level of households and industrial sites.
After green energy – including nuclear energy, of course – the second area that we must deal with, and which we are prioritising, is logistics. So I would like to draw your attention to the fact that in the next decade the great opportunities in the Hungarian economy – alongside and after green energy – will be opening up in logistics. Participating in this, investing in it, increasing market share in it, seems to us to be a sensible course of action in the next ten years. And then in the coming period we will also define other industries, because we want to channel resources and regulation – favourable regulation – towards these industries.
This does not mean that we are abandoning the others; we just feel that in the next ten years in terms of the national economy these will be the most important industries, the industries that will create opportunities for development. We believe that this will be the case for infocommunications and the defence industry. You can see the kind of investments we are making in the defence industry. We feel we have the capability and the talent, so we need to prioritise the food industry. We are doing well in the automotive sector, where the transition is following the logic of electromobility. And it seems that the pharmaceutical industry is another area where we can make money on a large scale, where we can make big profits.
Ladies and Gentlemen,
I just wanted to say to you that those speaking before me who said that it is worth cooperating with the Government are right. This is partly because if you cooperate with us you will learn more about the future, and you will be able to influence the regulations. You have done this well over the last few years, and we look forward to your initiatives and proposals. Many good decisions have emerged not because a minister came up with the idea, but because we received proposals from the Chamber or from VOSZ [National Association of Entrepreneurs and Employers]. So I ask you to continue to provide us with such proposals, to continue to bombard us with such proposals. And thirdly, it is worth cooperating with the Government because, since we will not have the money to develop everything in the same way, there will be prioritised development directions. And the budgetary resources, the sources of financing managed by the state – the development bank, Eximbank – will also primarily operate in those directions. And linked to this, of course, if you have such knowledge and you want to be active in these areas, this is an opportunity to consider. So I would encourage VOSZ – and I would also like to thank the VOSZ board – to continue the cooperation that has gone so well in the past.
Ladies and Gentlemen,
I wish Hungarian entrepreneurs fat profits, high revenues, plenty of employees, and successful sailing in new, uncharted waters. Through your own personal success, with the intervention of the Government, we can turn what you can achieve as private successes in the world economy into public good.
Happy birthday to you! A Beautiful Advent and Merry Christmas to you all!