Hungary’s government plans to cut state spending by HUF 1,465 billion (EUR 4 billion) in 2027 by eliminating wasteful expenditure, reforming public spending and reviewing contracts.
Huge cuts in spending from the government
Hungary’s Finance Minister András Kármán says the measures will help reduce the budget deficit while funding higher wages, pensions, family benefits and public services. Prime Minister Péter Magyar and Finance Minister András Kármán have outlined plans to reduce Hungary’s budget deficit from an expected 7.5% of GDP in 2026 to 4.9% next year.
The government says it has identified significant inefficiencies in the previous administration’s spending and intends to redirect public money towards social support and essential services. Kármán said the planned savings would amount to approximately 1.5% of GDP, while tax changes are expected to generate an additional HUF 665 billion (more than EUR 1.8 billion) in net revenue.
Where will the government save money?
The proposed spending cuts include HUF 246.1 billion (EUR 675 million) from unfavourable concession contracts, HUF 169.5 billion (EUR 465 million) from inefficient economic development subsidies and HUF 135 billion (more than EUR 370 million) linked to the expected abolition of an EU migration-related fine.
Other measures include reducing support for public foundations overseeing universities, cutting government communications and event spending, and reviewing prestige investments and state property expenditure.
The government also plans to reduce spending on public media, introduce more economical central procurement and review funding for politically connected foundations and organisations. Magyar said the government intended to terminate the existing motorway concession contract, although some ongoing projects would continue to generate costs in 2027.
Higher taxes for wealthy individuals and large companies
Hungary’s government expects tax measures to deliver HUF 929 billion (more than EUR 2.5 billion) in additional revenue, partly offset by HUF 264 billion (~EUR 724 million) in household tax reductions. A proposed wealth tax is expected to raise HUF 200 billion (~EUR 548 million) annually. Other revenue measures include higher taxes on large companies, tobacco products and environmentally damaging activities, alongside changes affecting retail, insurance and advertising businesses.
The government argues that these measures will make the tax system fairer and reduce opportunities for large companies to minimise their tax bills. However, Magyar acknowledged that businesses could pass some additional costs on to consumers, making enforcement and consumer protection important.
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Families, pensioners and public services to receive more
Despite the planned savings, the government has announced substantial increases in social spending. Family allowance payments are set to double, while the minimum pension will rise fourfold to HUF 120,000 (~EUR 330) per month. A new pensioner SZÉP Card benefit is also planned.
The government intends to spend an additional HUF 510 billion (~EUR 1.4 billion) on healthcare and HUF 734 billion (~EUR 2 billion) more on social provision. A total of HUF 667 billion (~EUR 1.8 billion) is earmarked for sectoral wage increases in 2027, benefiting workers in areas including healthcare, education and social care. The personal income tax rate for minimum-wage earners is also set to fall to 9%.
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Deficit reduction remains a challenge
The government forecasts economic growth of 2.4% in 2027, rising to 3.1% by 2030. It also aims to reduce the budget deficit below 3% of GDP by 2030. However, the plans involve balancing significant new spending commitments against savings and higher tax revenues. The government’s projections will depend on whether the planned cuts materialise, economic growth accelerates and additional tax revenue meets expectations.
While the administration says its approach will restore stability and make public spending more efficient, the final budget legislation will provide further details on how the measures are implemented.
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