Budapest bites EU austerity bullet

Hungary will on Friday submit a tough cost-cutting public finance package to the European commission as Budapest attempts to bring spending within euro fiscal ceilings.

Hungary’s forint dropped sharply against the euro after details of a plan leaked in August showed the government expects debt to soar over the next three years, making euro adoption unlikely before 2013/2014.

Newly elected Prime Minister Ferenc Gyurcsany is braced for a popular backlash against a raft of tax hikes, cuts and painful public sector restructuring.

In an FT Europe interview, Gyurcsany insists that public opinion or a popular opposition to his austerity drive will not swerve Budapest from meeting Brussels rules on government spending.

“For some voters it was shocking, beyond a question. I don't blame the people for not falling in love with this programme but by 2009 the first results will start to be visible,” he said.

“We have to rebuild our credibility. The markets, Brussels and analysts need evidence not promises. I know it.”

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