Analysts say the decision by U.K. voters to leave the European Union could slow growth here by 0.8%. It could also mean 100,000 or more economic emigrants from Hungary will eventually lose their jobs.
The decision by U.K. citizens to exit the European Union in yesterday’s referendum, will have broad implications for Hungary’s economy, Economics Minister Mihály Varga and a host of other experts have said.
While Varga said at a June 13 press conference that this country could experience a 0.3-0.4% slowdown in GDP, others see even worse “Brexit” fallout.
Experts note that a Brexit would reduce the size of EU funding for Hungary, force many Hungarians to give up their jobs in the U.K., and also reduce the amount of trade between the two countries.
Citing an April report published by Citibank, analysts at Equilor said on June 14 that a Brexit could cost Hungary an estimated HUF 800 billion in EU funding and slow the country’s GDP as much as 0.8% in subsequent Brexit renegotiations. The Citibank report notes that as much as 3% of Central Europe’s GDP from 2016-2020 is expected to come from EU funding, and this money as well as the revenue from foreign workers would decline significantly if there is a Brexit.
The “leave” vote will have direct consequences to standing Hungarian-British economic ties, and subtler effects based on budgetary and political changes in the EU according to Varga.
Last year, the utilization of EU funds amounted to 5-6% of Hungary’s GDP, according to a report from the Hungarian National Bank. Although the report predicted that this year EU funds would contribute only about 2.5% of the country’s GDP, any reduction in those funds would have an impact.
Hungarians working in the U.K. would, off course, feel a direct impact if they lose their jobs. Currently, there are approximately 60,000 registered Hungarians working in Britain, according to Edit Zgut, an analyst at the Political Capital Institute. She added that, as registration is not mandatory, the total number of Hungarian workers there could be as high as 150,000-200,000.
“Only a fraction of potential workers from the EU would be eligible to get visas in the case of Brexit,” Zgut explained, adding that experts at the British Embassy in Budapest have been unable to determine what will happen to Hungarians employed in the U.K. in the event of a “leave” vote.