COMMISSION STAFF WORKING DOCUMENT 2026 Country Report – Hungary Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Hungary
Date: 2026-06-03
Institutions: European Commission, Reform and Investment Task Force
Subjects: Hungary, budget policy, economic policy, economic recovery, economic reform, employment policy, investment, macroeconomics, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  SWD(2026) 217 final  COMMISSION STAFF WORKING DOCUMENT 2026 Country Report – Hungary         Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Hungary {COM(2026) 217 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC DEVELOPMENTS AND KEY POLICY 
CHALLENGES 

reached a record high of 17% in 2023 before 
declining  to  3.7%  in  2024  as  the  impact  of 
earlier  energy  and  food  price  increases  and 
supply  chain  bottlenecks  eased.  In  2025, 
inflation  rose  to  4.4%  as  a  result  of  rising 
global  food  prices  and  continued  domestic 
demand.  The  government  imposed  price  caps 
in  food  retail,  drugstores  and  energy,  and 
telecommunication 
pressured  banks  and 
companies  to  contain  prices.  However,  core 
inflation remained well above the EU average. 
Nominal  wage  growth 
is  set  to  sustain 
domestic price pressures. Moreover, price caps 
and  agreements  with  service  providers  to 
postpone price increases are not sustainable in 
the long term and create a further upward risk 
to  inflation.  Inflation  is  expected  to  gradually 
decline but to remain above 3% in 2026. 

Graph 1.2: Breakdown of GDP deflator 

GDP is expected to pick up after a 
long period of stagnation 

After three years of stagnation, growth is 
expected  to  resume,  but  significant  risks 
remain.  The  poor  economic  performance  of 
the last years is explained mainly by the sharp 
fall  in  investment  –  due  to  an  uncertain 
business  and  policy  environment  –  and  weak 
remained 
external  demand.  Consumption 
supportive  driven  by 
significant  wage 
increases,  including  a  11%  minimum  wage 
hike  and  public  wage 
increases,  and  an 
expansionary fiscal policy, which are expected 
to  support  growth 
in  2026.  Exports  are 
projected to recover as well as a result of the 
launch of assembly facilities in the automotive 
industry.  Nevertheless,  continued  weaknesses 
linked  to  global  supply  chains  pose  a  risk  to 
the macroeconomic outlook. 

Graph 1.1: Breakdown of the Hungarian GDP 
growth 

Source: Eurostat, European Commission 

Economic vulnerabilities remain 

Source: Eurostat, European Commission 

Inflationary  pressures  are  expected  to 
Inflation 
in  the  coming  years. 
persist 

Hungary  continues to face vulnerabilities 
primarily  related  to  high  government 
debt  and  government  financing  needs, 

2 

-10-8-6-4-20246810151617181920212223242526'27'Growth (%)ConsumptionInvestment (GFCF)Inventories investmentNet exportsReal GDP growth-20246810121416151617181920212223242526*27*Pps.Labour costProfitsNet taxesGDP deflator 
 
     
     
competitiveness,  and  house  prices.  The 
Commission  undertook  an  in-depth  review  of 
the  Hungarian  economy  as  part  of  the 
Macroeconomic Imbalance Procedure earlier in 
2026(1).  That  review  highlighted  that  public 
debt increased in 2025 as a result of the high 
deficit  and  debt  servicing  costs.    Meanwhile, 
wages  grew  rapidly,  exerting  pressure  on 
competitiveness,  while  substantial  energy 
imports pose risks to external balances. House 
price  growth  accelerated  further  in  2025 
driven 
demand-supporting 
measures.  Government  policies,  in  particular 
the 
have 
compounded these vulnerabilities. 

expansionary 

extensive 

policy, 

fiscal 

by 

State interventions are costly and 
make the business environment 
less predictable  

ad 

hoc 

government 
Frequent 
interventions  have  impacted  negatively 
on  the  business  environment  and  are 
fiscally  costly,  thus  limiting  fiscal  space 
for reacting to shocks. In 2025, the Council 
of  the  European  Union  recommended  that 
Hungary  pursue  effective  coordination  of 
macroeconomic  policies  and  phase  out 
remaining  price  and  interest-rate  caps,  and 
equivalent  measures.  Since  then,  there  has 
been  no  progress 
this 
recommendation.  Price  and  interest-rate  caps, 
as  well  as  subsidised  loan  programmes,  have 
also weakened monetary policy transmission. 

in  addressing 

The government has introduced new price 
caps  and  extended  the  existing  interest-
rate  caps.  In  the  retail  sector,  after  phasing 
out  mandatory  discounts,  the  government 
imposed  price  controls  on  certain  food  and 
industrial  goods,  reduced  regulated  utility 
prices  for  January  2026,  and  capped  motor 
fuel prices in March 2026 to tackle the impact 
of  the  escalating  conflict  in  the  Middle  East. 
Regarding 
interest  rates,  the  government 
extended the caps on mortgage interest rates 

(1)  SWD (2026) 138 final; European Economy Institutional 

Paper 336, May 2026 

until  June  2026,  freezing  the  interest  rate  of 
floating-rate  mortgages  at  the  October  2021 
level (2).  The  temporary  nature  of  these 
renewal 
measures  and 
price 
increase 
developments  and 
impact  negatively  on 
business  climate  and  investment  in  the  retail 
sector. 

their  continuous 
around 

uncertainty 

lending 

schemes 

Subsidised  lending  programmes  impair 
the  functioning  of  the  banking  system 
and  monetary policy.  In  addition  to  existing 
for  house 
subsidised 
purchases,  the  government  introduced  a  new 
mortgage scheme for households and lowered 
the preferential interest rate available to small 
to  medium-sized  enterprises  (SMEs).  These 
subsidised  lending  schemes  offer  borrowers 
an interest rate of 3%, well below the central 
bank rate and market-based benchmarks, such 
as  the  10-year  government  bond  yield,  which 
averaged  6.9%  in  2025.  The  loans  are  also 
guaranteed by the state. These policies further 
distort  credit  markets,  entail  significant  fiscal 
costs,  impair  the  transmission  mechanism  of 
monetary  policy  and  adversely  impact  capital 
allocation  through  financing  of  investment 
with low rates of return (3).  

In 

its  medium-term 

With  a  high  government  deficit  and  debt 
ratio,  Hungary  faces  significant  fiscal 
fiscal-
challenges. 
structural  plan,  adopted  in  February  2025, 
Hungary committed to limiting net expenditure 
growth, aiming to reduce its deficit below 3% 
of GDP by 2026, in line with the requirements 
of the excessive deficit procedure. According to 
the plan, this would imply an improvement of 
the  structural  primary  balance  of  2.2 
percentage  points  of  GDP  between  2024  and 
2028.  Since  the  implementation  of  the  plan 
began, Hungary has requested and the Council 
has  activated  the  national  escape  clause  for 
it  additional 
defence  for  Hungary,  giving 
flexibility  to  increase  defence  spending.  Fiscal 

(2)  Hungary’s largest bank (OTP) went to court to annul the 

corresponding government decree. 

(3)  The government decree on home mortgages caps the 
maximum loan interest rate at 110% of the five-year 
benchmark government bond yield, plus 1 percentage 
point. This hypothetical interest rate serves as the basis 
for determining the interest-rate subsidy. 

3 

 
 
 
policy continues to be expansionary, driven by 
the  adoption  of  new  deficit-increasing 
measures, which has led to frequent revisions 
of  deficit  targets.  Many  of  these  measures 
undermine the effort to bring the deficit below 
3%  of  GDP.  Putting  debt  on  a  downward 
trajectory  is  also  necessary  given  Hungary’s 
high  debt-servicing  costs  and 
large 
projected  increase  in  pension  expenditure  by 
2070. The effectiveness of Hungary’s national 
fiscal 
fiscal 
in 
framework 
sustainability is also limited.  

ensuring 

the 

on  Hungarian  government  debt  reflecting  its 
fiscal  sustainability  challenges.  This  interest 
burden limits Hungary’s fiscal space to support 
economic  growth  when  the  economy  faces 
its  potential. 
shocks  or  performs  below 
Moreover, 
has 
significant gross financing needs, worth about 
18% of GDP in 2026, and almost one third of 
its  debt  is  in  foreign  currencies.  This  exposes 
public 
investor 
sentiment.  

to  changes 

government 

Hungary’s 

finances 

in 

The  government  deficit  remains  high, 
driving  an  increase  in  the  debt  ratio.  The 
general  government  deficit  stood  at  4.7%  of 
GDP  in  2025,  compared  to  an  originally 
announced  budgetary  target  of  3.7%.  The 
Commission's  Spring  2026  Economic  Forecast 
projects  the  deficit  to  reach  6.2%  of  GDP  in 
2026 and 5.8% of GDP in 2027 as a result of 
cuts  to  personal  income  tax,  public  wage 
increases, a 14th month pension and generous 
housing  subsidies.  Public  debt  is  expected  to 
increase from around 74.6% in 2025 to 76.8% 
in 2027, largely due to the substantial budget 
deficit.   

Graph 1.3: Interest expenditure, % of GDP, 
2019-2024 

Source: AMECO 

Debt-servicing  costs  remain  high,  adding 
to  fiscal  sustainability  concerns.  Hungary 
faces the highest level of interest expenditure 
in  the  EU,  at  close  to  5%  of  GDP  in  2024. 
Debt-servicing  costs  have  risen  rapidly  since 
the  pandemic,  with  the  high  sovereign  yields 

4 

increasing. 

in  Hungary, 

Significant  reliance  on  retail  bonds  is 
costly  and  represents  an  additional  risk 
to debt management. Retail bonds should in 
principle  be  a  stable  source  of  financing. 
retail  bonds  are 
However, 
redeemable  at  any  time  and  are  typically 
redeemed  when  yields  are 
In 
practice,  this  lowers  the  average  maturity  of 
public debt. It can also affect  financing needs 
and  increases  uncertainty  over  public  debt 
issuance. For example, at the beginning of the 
year, the Debt Management Agency estimated 
a  gross  financing  need  of  15%  of  GDP  for 
2025;  it  eventually  turned  out  to  be  26%  of 
GDP.  In  2025,  retail  bonds  offered  yields 
around  60-90  basis  points  above  market 
rates, which pushed their share higher than in 
other  EU  countries.  The  government  also 
offers  tax  benefits  to  encourage  households 
and banks to buy government bonds. In 2025, 
households 
from 
withholding tax  amounting  to  around  0.4%  of 
GDP,  while  banks’  tax  liabilities  were  reduced 
by  around  0.1%  of  GDP.  These  tax  benefits 
further increase annual debt-servicing costs by 
reducing  government  revenues,  and  create 
incentives  to  use  subsidised  lending  schemes 
to finance purchases of government bonds.  

exemptions 

gained 

Several  factors 
increase  fiscal  risks. 
Government guarantees that would add to the 
government’s deficit and debt level if called – 
in  particular  those  given  on  borrowings  of 
certain  state  enterprises  and  households  – 
have  increased  significantly  since  2019  to 
13%  of  GDP  in  2025,  well  above  the  EU 
average.  The  government  has  invested  public 
funds  equivalent  to  more  than  5%  of  GDP  in 
private equity and other funds (public interest 
trusts, 
etc.). 
foundations, 
However, 
transparency  and  control 
mechanisms raise concerns (see Chapter 2 for 

central  bank 

their 

0.01.02.03.04.05.06.0201920202021202220232024EU27Hungary 
      
to 

interest  payments 

more details). In addition, the central bank has 
accumulated  a  loss  of  around  2%  of  GDP, 
largely  due 
to 
commercial  banks  as  part  of  its  monetary 
policy  operations,  creating  additional  fiscal 
risks as these losses should be covered by the 
budget, though only gradually due to a recent 
change in legislation.  

to 

plan 

and 
the 

accountability. 

The  national  fiscal  framework  offers 
only limited incentives for 
fiscal 
sustainability. 
the  Council 
In  2025, 
recommended  that  Hungary  strengthen  its 
medium-term  fiscal  framework.  The  ‘state  of 
danger’  in  force  since  2020 has  lifted  the 
publish  a  multiannual 
requirement 
therefore 
budgetary 
limits the ability of 
fiscal 
medium-term 
framework to ensure a 
orientation and 
In  2024, 
Hungary ranked second lowest in the EU in the 
Commission’s  fiscal  governance  database, 
both in terms of the strength of the medium-
term  budgetary  framework  and  the  design 
strength  of  its  national  fiscal  rules.  The 
national  debt 
the 
government  to  ensure  the  public  debt  ratio  is 
reduced  each  year  was  not  met  in  2024  or 
2025, and the government already announced 
that  it  would  not  be  met  in  2026.  The 
Hungarian  Fiscal  Council’s  mandate  remains 
and 
narrow; 
independence  by  enhancing  its  operational 
capacities  could  help  improve  fiscal  discipline 
and transparency. Spending reviews are useful 
tools to improve efficiency. Hungary conducted 
two  spending  reviews  in  2023-2024,  but  the 
results  were  not  published  or  reflected  in 
budgetary planning.  

strengthening 

requires 

that 

rule 

role 

its 

The practice of early budget adoption and 
frequent revisions  reduces  the  credibility 
of  targets.  The  2025  budget  was  amended 
46 times (4). The 2026 budget was adopted in 
June  2025,  which  made  it  rapidly  outdated, 
both in terms  of macroeconomic  assumptions 
and  announced  policy  measures,  by  the  time 
implementation began in 2026. The budgetary 

targets  for  both  2025  and  2026  were  also 
revised several times in 2025.  

In 

the 

2025, 

The  projected  increase  in  pension  costs 
in  pension 
and  the  gradual  decline 
adequacy  for  low-income  earners  pose 
challenges. 
Council 
recommended that Hungary improve the long-
term  sustainability  of  the  pension  system, 
while  preserving  adequacy.  Hungary’s  public 
spending-to-GDP  ratio  for  pensions  is  facing 
one  of  the  largest  increases  in  the  EU,  set  to 
rise  4.1  percentage points  between  2025  and 
2070.  According 
the  Commission’s 
to 
projections, Hungary’s public debt would rise to 
over  100%  of  GDP  in  the  next  decade  if 
ageing-related spending remains unaddressed. 
Supplementary  pensions  only  play  a  limited 
role  in  providing  retirement  income,  with  low 
coverage  and  limited  financial  depth  (see 
Annexes 2 and 6).  

age 

and 

The  design  of  the  pension  system  also 
generates equity issues. These include large 
pension  gaps  between  pensioners 
from 
different 
increasing 
cohorts 
expenditure  on  pensions  for  high-income 
reflect  current 
individuals.  New  pensions 
wages,  which  have  increased  rapidly,  while 
existing pensions are only indexed to inflation. 
As  a  result,  people  who  retired  earlier  receive 
lower  pensions  than  recent  retirees  with 
similar  careers.  Pension  contributions  are  not 
capped,  boosting  current  revenues  from  high 
earners but increasing future spending through 
higher pensions. As a result, income inequality 
(measured  as  the  ratio  of  total  income in  the 
highest  quintile  to  that  in  the  lowest  quintile) 
among  people  aged  65  and  over  increased 
from  2.6  in  2010  to  4  in  2024,  while  it 
stagnated  in  peer  countries (5)  at  2.7  during 
the same period. The average value of pension 
compared 
decreased 
significantly  in  the  last  one  and  half  decade 
due to the rapid increase of wages (see Graph 
1.4).  

to  wages 

has 

(4)  hvg360: Nyolcnaponta írta át 2025-ben a kormány a 

költségvetést, mutatjuk, pontosan hogyan. 

(5)  Czechia, Poland and Slovakia. 

5 

 
 
 
Graph 1.4: Share of average pension compared 
to average wages in Hungary, 2010-2024 

administration (7)  and  sport,  media  and 
churches  was  6%  of  GDP,  the  highest  in  the 
EU and well above the EU average of 3%.  

Graph 1.5: Public expenditure in Hungary 
compared with the EU average between 2022 
and 2024 (% of GDP) 

Source: KSH 

in 

the  pension 

Recent  measures  do  not  address  the 
challenges 
system 
effectively.  The  government  introduced  a 
universal  14th  month  pension  in  2026,  with 
one  quarter  to  be  phased  in  each  year  until 
2029. While the measure would raise average 
pension  levels,  its  non-targeted  nature  does 
rising 
not  address 
inequalities nor those related to the long-term 
The 
sustainability 
public 
government  commissioned 
to 
explore  reform  proposals.  A  report (6)  was 
published,  but  no  further  action  has  been 
taken. 

finances. 
the  OECD 

challenges  of 

the 

of 

There  is  room  to  restructure  spending 
towards  more  growth-friendly  areas.  The 
government  spends  a  low  share  on  health, 
education and R&D. Spending on healthcare is 
markedly  lower  than  the  EU  average,  which 
may  contribute  to  the  country's  unfavourable 
health  outcomes.  Public  expenditure  on 
education  (without  tertiary  education)  and 
public  R&D  spending  is  among  the  lowest  in 
the  EU.  However,  expenditure  on  economic 
affairs  is  well  above  the  EU  average  due  to 
increased  state  involvement  in  the  economy, 
such  as  generous  subsidies  to  firms.  Between 
spending  on  public 
2022  and  2024, 

(1) Education without tertiary education 
Source: Eurostat 

Public  expenditure  could  be  used  more 
spending  on 
efficiently.  Despite  high 
executive  administration,  institutional  quality 
and  government  effectiveness  are  among  the 
lowest  in  the  EU  (see  Chapter  2),  reflecting 
overpriced  public  procurement,  low  levels  of 
transparency 
accountability.  While 
spending  on  tertiary  education  is  two  times 
higher  than  the  EU  average,  the  tertiary 
attainment rate is still one of the lowest in the 
EU.  The  high  spending  on  economic  affairs 
does  not  translate 
into  high  productivity 
growth.   

and 

Hungary  has 
its  defence 
increased 
spending significantly since 2021. Hungary 
increased  its  expenditure  on  defence  from 
1.0% of GDP in 2021 to 2.0% in 2024 but has 
not  indicated  that  it  would  further  increase 
expenditure to meet the revised NATO targets 
of  3.5%  and  5%  of  GDP.  The  Council  has 
activated  the  national  escape  clause  for 
defence for Hungary, which has also provided 
Hungary  with  general  flexibility  to  increase 

(6)  Strengthening-the-Hungarian-Pension-System.pdf. 

fiscal affairs, external affairs. 

(7)  01.1 Executive and legislative organs, financial and 

6 

40%45%50%55%60%65%70%75%80%1.01.52.02.53.03.54.04.52010201120122013201420152016201720182019202020212022202320242025%salariespensionbenefit ratio0.01.02.03.04.05.06.07.08.09.010.0public admin,sport, media,churcheseconomicaffairshealtheducationHungaryEU27 
     
 
   
 
expenditure,  given 
increased its defence spending since 2021.  

it  had  already 

that 

The tax system is overly complex 
and is undermining growth, 
competitiveness and income 
inequality 

Over  time,  Hungary’s  tax  revenue  has 
declined  as  a  share  of  GDP,  increasing 
fiscal  consolidation  challenges.  The  tax 
revenue as a share of GDP has been trending 
downwards  since  2016,  falling  from  39%  to 
around  35%,  while  the  EU  average  has 
remained  stable.  Measures  such  as 
the 
gradual 
reduction  of  social  contributions 
between 2017 and 2022, the personal income 
tax  exemption  for  mothers,  which  will  be 
phased  in  over  2025-2029,  and  the  increase 
in  the  family  tax  allowance  have  reduced 
revenue  shares  from  income  taxes.  While 
Hungary  extended  temporary,  sector-specific 
taxes  in  finance,  energy  and  retail  in  2026, 
these are not projected to offset the revenue-
limits  scope  for 
reducing  measures.  This 
growth-friendly  expenditure  and  makes 
it 
harder  to  consolidate  sufficiently  to  bring  the 
government deficit below 3% of GDP. 

The  high  number  of  tax  exemptions,  tax 
incentives  and  sector-specific  taxes  add 
to  the  complexity  of  the  tax  system. 
Revenues from sector-specific taxes amounted 
to  2.1%  of  GDP  in  2025,  burdening  a  small 
number  of  companies  producing  only  around 
10% of the gross value added, while revenues 
from corporate income tax amounted to 1.2%. 
Sector-specific  taxes  increase  effective  tax 
rates  to  30-100%  in  the  sectors  concerned. 
They  also  increase  prices  in  the  construction, 
energy  and  services  sectors,  which  are  crucial 
for 
In  the  past, 
Hungary  committed  to  phasing  out  distorting 
the 
sector-specific 
government introduced additional taxes of this 
kind  and extended some of those that were in 
place into 2026. There were 54 types of tax in 
2025.  

innovation  and  growth. 

instead 

taxes, 

but 

7 

Graph 1.6: Sectoral tax, % of GDP 

Source: Hungarian cash budget data 

The  fairness  of  the  tax  system  could  be 
improved.  Hungary  relies  on  consumption 
taxes,  which  inherently  place  a  higher  burden 
on low-income earners. At the same time, the 
lacks 
personal 
progressivity,  with  Hungary  being  one  of  the 
few Member States to apply a flat-rate tax to 
labour income.  The tax wedge for low-income 
earners  is  one  of  the  highest  in  the  EU  (see 
Annex 3).  

system 

income 

tax 

Structural challenges call for 
ambitious reforms 

in 

Income  convergence  has  been  slower  in 
Hungary  than 
its  regional  peers. 
Hungary’s  economy  caught  up  with  the  EU 
average  in  the  years  after  it  joined  the  EU 
(Graph  1.7).  However,  income  convergence 
was  supported  by  a  significant  increase  in 
employment  rather  than  by  improvements  in 
skills  and  productivity.  For  instance,  despite 
strong  income  convergence  over  the  past 
decade, labour productivity remains at roughly 
the same level relative to the EU average as it 
was  15  years  ago,  while  regional  peers  have 
recorded  much  faster  productivity  growth. 
Overall,  Hungary’s  productivity 
level  and 
average  salary  are  still  among  the  lowest  in 
the  EU.  One  reason  for  modest  productivity 
growth 
the  additional 
workforce entered low-skilled jobs.  

that  much  of 

is 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%2020202120222023202420252026BankingInsuranceEnergyRetailTelecommunicationsother 
      
Graph 1.7: Income convergence, EU=100, in 
purchasing power standard 

Dependency on energy imports 
poses economic security 
challenges 

Hungary’s  economy  relies  on  imported 
energy and resource efficiency is low. The 
Hungarian  economy  is  highly  energy-intensive 
and  continues  to  rely  heavily  on  imported 
fossil  fuels,  particularly  from  Russia.  In  2024, 
Hungary imported 50% of its energy, close to 
the  EU  average.  However,  its  economy  is 
among  the  most  energy-intensive  in  the  EU, 
alongside  Czechia  and  Slovakia,  using  70% 
more energy than the EU average to produce a 
unit  of  value  added,  owing  to  relatively  high 
consumption  by  households  and  industry.  In 
2025, Hungary's net energy imports amounted 
to 2.6% of its GDP, ranking third highest in the 
EU.  Furthermore, 
resource 
efficiency is  among  the  lowest  in  the  EU.  The 
government 
resource-intensive 
industries,  such  as  battery  manufacturing, 
which  require 
lot  of  energy,  water  and 
workforce.  

the  country’s 

incentivises 

funding 

instruments 

competitiveness, 

provide 
EU 
considerable  resources  to  Hungary.  They 
support investments and structural reforms to 
increase 
environmental 
fairness  and 
sustainability,  skills,  social 
security,  while  helping  to  address  challenges 
identified in the CSRs. Key instruments include 
the  Recovery  and  Resilience  Facility  (see  Box 
2)  and  Cohesion  policy  funds  (see  Box  3).  In 
addition, the Common Agricultural Policy (CAP) 
provides  Hungary  with  an  EU  contribution  of 
EUR 8.5 billion under the CAP strategic plan for 
2023-2027  (9).  A  further  EUR  252  million  are 
available  under  the  Asylum,  Migration  and 
Integration  Fund  (AMIF),  together  with  the 
Instrument 
Border  Management  and  Visa 
(BMVI)  and  the  Internal  Security  Fund  (ISF). 
support 
Other 
instance 
competitiveness 

also 
in  Hungary,  for 

programmes 

EU 

(9)  An  overview  of  Hungary  ’s  formally  approved  strategy 
to  implement  the  EU’s  common  agricultural  policy 
nationally 
at 
https://agriculture.ec.europa.eu/cap-my-country/cap-
strategic-plans/hungary_en  

found 

can 

be 

(1) Bulgaria, Croatia, Estonia, Lithuania, Latvia, Poland, 
Romania and Slovakia 
Source: Eurostat 

The current growth model has reached its 
limits. The working age population is shrinking 
therefore, 
by  30 000  people  each  year; 
additional  growth  is  unlikely  to  come  from 
further  increases  in  employment.  To  sustain 
and  further  improve  living  standards,  more 
growth will need to come from innovation, and 
investment 
in  high  value-added  activities. 
However, for now, productivity growth remains 
level  of  the 
hampered  by  the 
workforce, 
business 
environment,  and  an  unequal  distribution  of 
income,  which 
limits  human  capital  and 
opportunities.   

low  skill 
unpredictable 

the 

public 

services.  Moreover, 

Hungary  has  one  of  the  highest  internal 
regional  disparities 
in  the  EU.  Large 
differences  exist,  in  particular,  in  GDP  per 
capita,  R&D  expenditure  and  access  to  key 
local 
local 
governments face tight financial positions and 
shrinking  fiscal  autonomy,  which  limit  their 
capacity  to  maintain  and  develop  quality 
public services (see Annex 18). Ensuring access 
to quality public services has a central  role  in 
local  populations  and  boosting 
retaining 
economic performance (8).  

(8)  Horeczki R., Póla P. (2023). ‘Fejlesztési lehetőségek a 

periférián egy Baranya megyei felmérés tükrében’. Tér 
és Társadalom 37(3):77–97. 

8 

4550556065707580200420052006200720082009201020112012201320142015201620172018201920202021202220232024%HungaryCEE9 
     
 
 
through  open  calls  under  the  Connecting 
Europe Facility.  

9 

 
Box 1: 

UN Sustainable Development Goals (SDGs) 

Despite making progress on most SDGs, Hungary remains below the EU average on 
all SDGs apart from SDG 1 (No poverty), SDG 7 (Affordable and clean energy), SDG 
8  (Decent  work  and  economic  growth)  and  SDG  11  (Sustainable  cities  and 
communities). Moreover, Hungary is moving away from the targets for several SDGs 
on sustainability (SDGs 11 and 15) and macroeconomic stability (SDGs 16 and 17). 

Hungary is improving on most SDGs related to fairness (SDGs 1, 3, 4, 5, 7 and 8), 
but is moving away from the targets for SDG 10 (Reduced inequalities). 

Box 2: 

Key achievements of the recovery and resilience plan  

The recovery and resilience plan (RRP) of Hungary represents a total investment budget 
of EUR 10.4 billion, corresponding to 5.3 % of GDP, aimed at supporting the green and 
digital  transitions,  strengthening  economic  resilience,  and  addressing  long-standing 
structural challenges identified in the European Semester. 

As  of  1  May  2026,  Hungary  had  not  yet  submitted  any  payment  requests. 
Implementation has progressed slowly, with a few reforms and investments delivering 
results on the ground. 

Highlights and impact of the plan 

•  Competitive public education using 21st century technology. Investments 
include  the  distribution  of  ca.  580 000  digital  notebooks  to  students  and 
teachers  to  support  digital  education  by  2026,  accompanied  by  reforms  to 
improve the attractiveness of the teaching profession.  

•  Development  and  digitalisation  of  the  electricity  network.  The 
investments combined with reforms will significantly increase the ability of the 
power  grid  to  integrate  additional  power  plant  capacity  stemming  from 
renewable energy sources. 

•  Solar  panel  installation  and  energy-efficiency  improvements  in  the 
residential sector. Households receive support to install solar panel  systems 
and electric heating solutions, and to make energy-efficiency improvements. 

10 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
 
Box 3: 

Contribution of cohesion policy funds 

EU  cohesion  policy  funding  is  supporting  Hungary’s  efforts  to  boost 
competitiveness, environmental sustainability, skills and social fairness. In the 
2021-2027  programming  period,  EU  cohesion  policy  funds (10)  are  providing 
EUR 19.6 billion  (amounting  to  EUR 24.3 billion  paired  with  national  co-financing),  or 
9.5% of 2024 GDP, to Hungary. This makes cohesion policy one of the main sources of 
public investment in the country. The value of selected projects corresponded to 58.8% 
of  the  total  allocation  as  of  March  2026,  with  additional  calls  for  projects  in  the 
pipeline. 

• 

Innovation, business environment and productivity. EUR 5.5 billion is allocated 
for research and innovation, SME competitiveness, and digitalisation. Around 25 000 
firms have already seen their projects approved.  

•  Decarbonisation,  energy  affordability  and  sustainability.  EUR 6.1 billion  is 
dedicated  to  clean  transition  projects.  Out  of  this,  more  than  EUR 865 million  is 
allocated to water management, drinking water and wastewater treatment projects, 
which,  among  other  outcomes,  is  expected  to  improve  wastewater  treatment 
capacity  for  612 000  people.  Another  EUR 985 million  supports  energy-efficiency 
interventions.  

•  Skills, quality jobs and social fairness. Nearly EUR 1.8 billion of European Social 
Fund  Plus  (ESF+)  funds  are  allocated  to  supporting  quality  education  by  making 
teaching  more  attractive,  and  a  further  EUR 800 million  aims  to  improve  equal 
access to quality mainstream education. Around EUR 1 billion supports access to the 
labour market, targeting those most in need and young people, and EUR 17 million 
is  allocated  to  capacity  building  of  social  partners.  EUR 200 million  contributes  to 
reducing  poverty  and  social  exclusion  in  economically  and  socially  disadvantaged 
areas (‘catching-up settlements’).  

The mid-term review (11) reinforced cohesion policy’s contribution to emerging strategic 
priorities,  reallocating  around  EUR 930 million  to  competitiveness,  through  support  for 
critical  technologies  –  including  the  promotion  of  skills  in  the  development  of  critical 
Strategic  Technologies  for  Europe  Platform  (STEP)  technologies  –  and  to  defence, 
particularly  military  mobility  along  the  EU’s  main  corridors.  Following  the  mid-term 
review, the development and production of critical STEP technologies will be supported 
by EUR 135 million of ESF+ funding, allocated to specialised skills development.  

(10)  European Regional Development Fund, European 

Social Fund Plus, Cohesion Fund and Just Transition 
Fund. 

(11)  The  mid-term  review  is  carried  out  halfway  through 
the  2021-2027  programming  period.  It  is  a  formal 
process  required  under  Article  18  of  the  Common 
Provisions  Regulation  that  aims  to  assess  the 
implementation 
and,  where 
necessary,  propose  adjustments  to  improve  their 
performance,  ensure  their  relevance  in  light  of  new 
and  emerging  needs  and  keep  them  aligned  with 
other EU policies. 

programmes 

of 

11 

 
 
 
 
 
 
 
 
 
INNOVATION, BUSINESS ENVIRONMENT AND 
PRODUCTIVITY 

the 

the 

regulatory 

the  public 

the  government  has  continued 

A  better  business  environment  and 
greater  innovation  are  key  to  increasing 
productivity. 
In  2025,  Hungary  received 
country-specific  recommendations  (CSRs)  to 
framework  and 
improve 
enhance  competition  in  product  markets  and 
services, stimulate the development of capital 
markets  and  strengthen 
innovation 
sector  and 
for 
framework 
businesses.  Since  the  adoption  of  the  2025 
CSRs, 
to 
introduce  new  measures  creating  uncertainty 
for businesses. Important pieces of legislation 
are  adopted  without  meaningful  involvement 
of  stakeholders.  Measures  targeting  specific 
sectors  or  companies  increase  prices  and 
discourage  companies  from  investing.  Public 
procurement 
to 
anticompetitive  practices  and  corruption  risks. 
The weakness of the anticorruption framework 
remains  a  challenge.  R&D  spending  in  public 
research 
low,  and  the  generous  R&D 
subsidies  for  companies  do  not  achieve  the 
are 
expected 
underdeveloped,  and  certain  aspects  of  the 
regulatory 
their 
development. 

Capital  markets 

environment 

vulnerable 

remains 

hinder 

result. 

is 

Low competition in domestic 
markets increases costs and 
hinders productivity 

framework 

The  weak  business  environment  is  a 
major  barrier  to  productivity  growth.  In 
2025, Hungary received a CSR to improve the 
enhance 
regulatory 
competition  in  product  markets  and  services. 
Hungary’s  9%  corporate  income  tax  rate  (the 
EU’s 
of 
environmental  protection  rules  and  generous 
state  subsidies  make  it  an  attractive  location 
in  manufacturing. 
for 

investment,  mainly 

enforcement 

lowest), 

loose 

and 

However,  many  industries  face  obstacles  and 
the  overall  perception  of 
the  business 
environment  is  negative.  According  to  the 
for  Management 
International 
Competitiveness 
World 
Development’s 
Yearbook,  Hungary  ranked  among  the  lowest 
in the EU in 2025.  

Institute 

This 

includes 

Businesses  continue  to  face  a  highly 
volatile  and  unpredictable  regulatory 
environment. 
frequent 
amendments, the extensive use of emergency 
measures  and  limited  preparation  time  for 
economically significant changes. This remains 
a structural challenge, as the pace and manner 
of  regulatory  change  have  not  stabilised  and 
long-term  business 
continue 
planning.  

to  affect 

and 

stakeholder  engagement 

the 
involvement 
Stakeholder 
implementation of better regulation tools 
remain  limited  in  practice.  Between  2021 
and  2024, 
in 
laws  was  the  second 
developing  primary 
lowest  in  the  EU  (12).  Consultation  is  not 
required  in  the  early  phases  of  rulemaking 
and,  although  ex  post  evaluation  is  legally 
mandated,  it  is  not  conducted  systematically. 
While  Hungary  has 
introduced  a  central 
consultation  portal  and  publishes  summaries 
of preliminary impact assessments, there is no 
for 
specific  oversight  body 
ensuring  the  quality  of  regulatory  impact 
analysis  or 
the  breadth  of  stakeholder 
consultation.  In  addition,  important  draft  laws 
continue  to  be  tabled  by  individual  members 
of  parliament,  thereby  formally  exempting 
them  from  standard  consultation  and  impact 
assessment 
Even  when 
requirements. 
consultation  is  conducted,  stakeholder  input 
lead  to  substantive 
does  not  necessarily 

responsible 

(12)  OECD Regulatory Policy Outlook. 

12 

 
 
 
adjustments,  and  implementation  timelines 
may remain tight.  

Significant  regulatory  changes  happen 
quickly, leaving little time to adapt. While 
the  accelerated  legislative  procedure  may  be 
used up to  20 times a year (seven  laws were 
adopted  under  this  procedure  in  2025),  in 
2025,  the  government  amended  laws  more 
than  80  times  under  the  war  emergency 
regime. This allows the government to amend 
or  derogate  from  acts  of  parliament  without 
following  the  ordinary  legislative  process  (13). 
Sustained reliance on decree-based regulation 
limits  parliamentary  scrutiny  and  contributes 
to  compliance  uncertainty  and  elevated 
is 
regulatory 
compounded  by  an  eightfold  decrease  in  the 
average  time  between  a  piece  of  legislation’s 
entry into force and its first amendment since 
2009 (Graph 2.1).  

for  businesses.  This 

risk 

business  registrations  remained  among  the 
lowest in the EU between 2021 and 2024. The 
widespread use of subsidy schemes keeps less 
productive  firms  in  the  market.  Hungary’s 
is  among  the 
product  market  regulation 
strictest  of  all  EU  countries  that  are  OECD 
members,  in  particular  in  subcategories  on 
distortions 
involvement, 
induced  by  state 
regulatory  impact  evaluation  and  barriers  in 
the  services  sector  (14).  Setting  up  a  new 
company 
is  administratively  complex  and 
costly, and late payments from government to 
to  business  are 
business  and  business 
increasingly  lengthy.  According  to  the  World 
Bank,  the  quality  of  regulation  for  business 
entry,  the  quality  of  insolvency  proceedings 
and  the  quality  of  regulations  promoting 
market  competition  are  among  the  lowest  in 
professional 
Recognition 
the 
qualifications 
excessively 
slow 
bureaucratic.  Hungary  has  one  of  the  highest 
numbers of regulated professions in the EU. 

of 
and 

EU. 

is 

Graph 2.1: Average time between a piece of 
legislation’s entry into force and its first 
amendment, days 

Source: Hungarian Official Gazette 

Business  dynamism  is  low,  as  stringent 
regulations  hold  back  business  creation, 
slowing 
reallocation  of  capital 
towards  the  most  productive  firms.  New 

the 

Competition 
in  several 
is  restricted 
service  and  product  markets.  Several 
services  are  entrusted  to  state-owned  or 
private firms that operate without competition. 
include  textbook  publishing, 
Such  services 
waste  management,  mobile  payments,  the 
cash-in-transit market, tobacco wholesale and 
retail  trade,  gambling,  motorway  construction 
and,  from  2025,  cybersecurity  audits  and 
certified translation services.  

to  operate 

Targeted  measures  make  it  difficult  for 
in 
firms 
non-Hungarian 
specific  sectors.  Various  state  interventions 
have  been  used  to  the  detriment  of  mostly 
foreign-owned  firms,  facilitating  the  creation 
of  public  or  government-connected  national 
champions.  Firms  are  forced  to  operate  at  a 
loss due to a supplementary mining tax, a CO2 
quota  tax,  price-margin  caps  in  retail  and 
export  restrictions  on  construction  materials. 
The  Commission  has  initiated  infringement 
procedures  (15)  on  these  four  measures  as 

(13)  For example, under emergency powers, the government 
adopted new taxes, introduced price-margin caps in 
food retail and drugstores, required banks to operate 
cash dispenser machines, and granted special status to 
certain insolvency procedures.  

(14)  OECD PMR 2023-2024. 

(15)  In November 2025, January 2026 and April 2026, the 

Court of Justice of the European Union ruled that export 
restrictions, the supplementary mining tax and the CO2 
quota tax, respectively, violated the freedom of 

13 

02004006008001000120014001600200920112013201520172019202120232025 
     
 
 
 
Retail  outlets  continue  to  operate  in  a 
quickly  changing  regulatory  environment. 
In  November  2025,  the  government  slightly 
reduced  the  retail  tax  burden  by  shifting  the 
foreign 
tax  brackets  upwards.  However, 
companies still bear a disproportionate burden, 
and the tax rules do not allow firms to reduce 
their  tax  base  through  restructuring.  In  March 
2025, the government introduced price-margin 
caps  for  certain  food  and  non-food  products 
as  a  temporary  measure  to  curb  inflation. 
Since  then,  both  the  product  scope  and  the 
duration of application have been extended. In 
2025,  the  ‘plaza  stop’  law  was  tightened 
further.  Currently,  not  only  opening  a  retail 
outlet  requires  permission,  but  also  renting 
one  or  changing  its  interior  layout.  The  new 
rules  limit  the  maximum  size  of  a  food  retail 
outlet to 800 m², which makes it impossible to 
open  larger  ones  in  more  populated  areas. 
Other measures, linked to packaging, labelling 
and  waste,  for  example  discriminatory  food 
waste requirements and burdensome extended 
producer  responsibility  rules,  act  as  obstacles 
to  trade  in  goods  and  increase  compliance 
costs, as reported by businesses.  

limit  competition, 
Targeted  measures 
hinder  investment  and  increase  price 
levels.  As  a  result  of  state  interventions, 
affected  firms  do  not 
invest  enough  to 
maintain  or  improve  the  quality  of  their 
services.  Hungarians  experience  higher  prices 
in  affected  sectors,  such  as  construction 
materials,  retail,  telecommunication,  banking 
(which  account  for  3.6%  of  the  inflation 
basket vs an EU average of 1.2%) and energy 
(see Section 4).   

Public  procurement  in  Hungary  remains 
vulnerable  to  anticompetitive  practices 
and corruption risks, despite recent policy 
efforts.  The  share  of  tenders  receiving  a 
single bid decreased following the introduction 
of competition-enhancing measures under the 
recovery and resilience plan (RRP). The number 
of  first-instance  public  procurement  review 
decisions  relative  to  the  number  of  calls  for 
tenders  rose  from  21%  in  2023  to  28.6%  in 
2024.  This  is  the  second-highest  ratio  in  the 
EU. Only 28% of businesses perceive the level 

they  are  not  consistent  with  single  market 
rules. 
the 
In  2025,  an  amendment 
Architectural Law granted additional powers of 
intervention, including pre-emption rights over 
the assets of construction-material producers.  

to 

companies 

continued 

the  mining 

The  government  has 
to 
introduce  measures  that  can  be  used 
against  foreign  companies.  In  2025,  a 
legislative  change  gave 
the  Competition 
Authority  the  power  to  impose  measures  on 
large 
and 
in 
construction  sectors,  for  example  requiring 
them  to  sell  off  part  of  their  business.  While 
the new tool seems to follow a model used in 
Germany,  it  lacks  the  guarantees  of  the 
legislation  and  provides  more 
German 
discretion for the Authority. The independence 
of  the  Hungarian  Competition  Authority  has 
been  assessed  as  among  the  lowest  in  the 
EU (16). Important investments and acquisitions 
are  classified  as  being  of  ‘national  economic 
interest’  or  of  ‘strategic  interests’,  exempting 
in-depth 
them  from  public  oversight  and 
assessment  by  the  Competition  Authority  (17). 
Such  designation  decisions  seem  to  be  taken 
arbitrarily.  The  government  has  tightened  the 
rules  under  which  it  can  block  the  acquisition 
of companies in Hungary. In case of a negative 
decision,  the  government  will  have  a  buy 
option.  Such  a  buy  option  is  at  odds  with  the 
objective  of  protecting  competition  and  with 
other  competition  regimes,  it  decreases  the 
value  of  the  companies,  affects  the  property 
rights  of  company  owners,  limits  competition 
for  acquisitions,  reduces  business  dynamics 
and  hinders  the  mergers  and  acquisitions 
market. 
innovative 
companies  and  start-ups,  for  which  the  main 
exit  strategy  is  to  sell  the  company.  In  2025, 
the  government  blocked  a  foreign  investor’s 
acquisition  of  a  milk  wholesaler,  citing  public 
policy grounds.   

is  detrimental 

to 

It 

establishment and the principles of equal treatment 
and non-discrimination for economic operators. 

(16)  2025 EU Justice Scoreboard. 

(17)  In 2025, the Competition Authority approved 92% of 
mergers under an accelerated procedure, issuing an 
official certificate without a substantive investigation. 

14 

 
 
of  independence  of  the  Public  Procurement 
Arbitration Board as very or fairly good (18). 

competitive  tendering  opportunities  in  key 
network industries. 

in 

likely 

Persistent  challenges  continue  to  affect 
and  market 
integrity 
procurement 
functioning.  Structural  factors  appear  to 
hinder  effective  competition  in  procurement 
procedures,  particularly 
infrastructure, 
defence  and  centralised  procurement  sectors, 
where  tenders  are  more  likely  to  receive  only 
one  or  very  few  bids  and  contract  values  are 
comparatively  high.  The  Integrity  Authority 
reports  high  market  concentration, 
also 
especially  linked  to  companies  with  the  same 
ownership structure. Companies affiliated with 
politically  connected  economic  actors  are 
to  win  public 
significantly  more 
procurement contracts, including in EU-funded 
tenders,  than  other  market  participants.  The 
extensive  use  of  framework  agreements  may 
further  limit  competition  by  locking  in  certain 
firms  and  reinforcing  market  concentration, 
with limited transparency in second-stage call-
off  procedures.  In  2025,  their  value  exceeded 
that of all other tenders (ca. 60%) and close to 
75%  of  them  was  concluded  with  a  single 
bidder.  Concerns  regarding  bid-rigging  and 
in 
collusive  practices 
sectors with repeated participation by a small 
pool  of  firms.  While  the  transparency  of  the 
public procurement system is in general good, 
in practice remains a concern for certain public 
procurement  data  and  the  application  of 
conflict-of-interest rules. 

remain,  particularly 

Hungary  has  relied  on  multiple-decade-
long  concession  contracts  in  key  sectors, 
with  potential  distorting  implications  for 
market  structure  and  competition. 
In 
2025,  the  Commission  opened  infringement 
procedures  against  Hungary  concerning  the 
nationwide  waste  management  concession 
and the motorway concession contract. In both 
cases,  the  35-year  duration  of  the  contracts 
may  exceed  the  maximum  period  permitted 
under  EU  rules.  In  the  motorway  case,  the 
contract  may  have  been  misclassified  as  a 
concession  despite  insufficient  transfer  of 
operational 
reinforcing 
dominant market positions and limiting future 

potentially 

risk, 

in 

performance 

Corruption  remains  an  area  of  strong 
concern  as  systemic  weaknesses  of  the 
anticorruption  framework  persist.  The 
Worldwide  Governance  Indicators  along  with 
other indices (19) continue to show a decline in 
controlling 
Hungary’s 
corruption.  The  perception  of  widespread 
corruption  remains  very  high  (88%  vs  an  EU 
average  of  69%)  and  the  vast  majority  (78% 
vs an EU average of 66%) consider that high-
level  corruption  cases  are  not  pursued 
appropriately.  Corruption  continues 
to  be 
increasingly  perceived  as  an  obstacle  to 
businesses  (50%  vs  an  EU  average  of  35%), 
and  the  perception  persists  that  the  only  way 
to succeed in business is to have good political 
connections  (78%  vs  an  EU  average  of 
51%) (20). 

Graph 2.2: Development of the scores on voice 
and accountability and control of corruption, 
EU average=1 

(1) CEE3 = Czechia, Poland and Slovakia 
Source: Worldwide Governance Indicators 

Some  positive  steps  have  been  taken  to 
strengthen  tax  integrity,  but  high-level 
corruption is still a challenge. Digitalisation 
of  tax  reporting  and  declaration  resulted  in  a 

(19)  WJP Rule of Law Index; TI Corruption Perception Index; 

BTI Governance Index. 

(18)  Figure 59, 2025 EU Justice Scoreboard. 

(20)  2026 Special Eurobarometer on Corruption. 

15 

0.00.10.20.30.40.50.60.70.80.91.0200420052006200720082009201020112012201320142015201620172018201920202021202220232024%HungaryCEE3 
 
     
 
low value added tax gap. Gratuity payments in 
healthcare  have  fallen  following  targeted 
checks. While the total number of indictments 
for  corruption-related  crimes  has  increased, 
there  is  still  a  lack  of  determined,  systematic 
action to prosecute high-level corruption. Such 
investigations can drag on for years and often 
remain  pending.  According  to  the  European 
the 
Anti-Fraud  Office 
prosecution  recovered  only  18%  of  the  funds 
linked to corruption and fraud between 2015-
2024,  a  much  lower  share  than  in  other  EU 
countries (EU average: 71%). 

(OLAF) 

report, 

strengthening.  While 

The  anticorruption  framework  needs 
further 
asset 
declaration  rules  have  recently  changed,  the 
system  still  does  not  fulfil  its  purpose.  There 
are  no  systematic  checks  on  the  accuracy  of 
declarations,  and  false  declarations  carry  no 
consequences.  As  relatives’  declarations  are 
not public, and declarations are not submitted 
electronically,  public  oversight  is  limited.  A 
persistent vulnerability is the fragmentation of 
the  regulatory  framework  on  conflicts  of 
interest, 
lack  of  a  general 
definition  of  conflicts  of  interest  and  the 
absence  of  a  central  supervisory  body. 
Similarly, 
lack  of  post-employment 
restrictions for high-level government officials, 
together  with  the  absence  of  an  effective 
enforcement  mechanism,  has  remained  an 
outstanding  concern  for  years.  The  Integrity 
Authority  continues  to  report  obstacles  to 
effectively carrying out its tasks.  

including  the 

the 

funds 

New 
public  money  management 
structures  lack  transparency.  In  recent 
years,  Hungary  has  set  up  an  increasing 
(public 
interest  asset 
number  of 
management 
bank 
central 
foundations, 
foundations,  etc.)  to  carry  out  public  duties 
such as education and research. These bodies 
received  substantial  public  assets  (real  estate 
and company shares) worth more than 2% of 
GDP.  The  decision-making  structures  and 
processes 
asset 
public 
management  foundations  lack  transparency 
(21)  and  external  supervision,  and  serving 

interest 

of 

(21)  In 2025, two new public interest asset management 

foundations were created and the transfer of assets to 
existing ones continued.  

16 

investment 

politicians  play  a  significant  role  on  their 
management  and  control  bodies  (22).  The  role 
of  private  equity  funds  in  the  economy  is 
increasing, 
is 
public 
and 
into  such 
increasingly  being  channelled 
structures.  So  far, 
the  government  has 
invested public funds equivalent to 3% of GDP 
in private equity funds, representing more than 
50%  of  those  funds’  total  assets.  However, 
Hungarian 
ensure 
transparency regarding the ultimate beneficial 
owners of private equity funds, preventing the 
authorities  and  the  public  from  effectively 
verifying the absence of conflicts of interest or 
compliance with anti-money laundering rules.  

law  does 

not 

yet 

Public  oversight  is  constrained  in  its 
ability  to  support  the  fight  against 
corruption.  Following  reforms  in  2022  and 
early  2023  that  increased  access  to  public 
information,  the  trend  reversed,  and  new 
restrictions  were  introduced  on  access  to 
information related to the use of public money 
and  decisions  made  in  the  public  interest  (23). 
There are serious limitations on the scope and 

The information provided on their decisions in annual 
reports is uneven; some still do not have websites, and 
they are not covered by the Central Public Data 
Information Registry. 

(22)  Over 20% of places are filled by serving politicians and 
their aides, close to 10% by former politicians, and over 
25% by public officials who are in a dependent 
relationship with political executives. They sit on these 
bodies in a personal capacity, by discretionary invitation 
issued when the bodies were set up. Board members 
are nominated without transparent and objective 
selection criteria and without the need to demonstrate 
asset management experience. 

(23)  In addition to the new limits on refusing access to data 
introduced from 1 January 2024 by Act CI of 2023, 
since 2023, ‘state assets’ have been defined as 
including only corporate shares directly owned by the 
state. This limits access to information on indirectly 
owned shares. Public bodies are no longer obliged to 
comply with requests for information not held directly 
by them, but by their subordinate entities. State-owned 
enterprises are also authorised to keep data on their 
foreign investments confidential for 10 years, and the 
government may withhold certain decisions for 20 
years instead of 10. Furthermore, Act CXXVIII of 2025 
introduced a new ground for refusal where there are 
cybersecurity concerns. Case-law has in effect removed 
judicial protection where access to documents is 
refused on foreign policy grounds. The supervisory 
authority of the Hungarian Development Bank also 
found problems with the provision of data relating to 
the bank’s reports, including those on private equity 
funds. 

 
 
 
 
detail  of  the  information  that  public  bodies 
publish  in  advance  about  their  activities.  The 
scope  for  rejecting  requests  for  access  to 
information  has  broadened  in  the  last  few 
years.  Data  requesters  have  to  go  to  court  to 
receive  access  to  the  requested  information. 
Despite  strict  deadlines,  procedures  tend  to 
become longer due to procedural loopholes or 
In 
non-compliance  with 
addition, public bodies often do not implement 
court  rulings.  The  degree  of  media  freedom 
has  also  worsened. Hungary  ranks  among the 
lowest  in  the  EU  for  media  freedom  and  its 
position  has  deteriorated  in  recent  years.  The 
concentration  of  media  outlets  under  a  single 
holding  company  in  2018  heightened  the 
overall risk to media pluralism (25).  

limits 

time 

(24). 

devote  only  10%  of  their  spending  to  R&D, 
compared  to  the  EU  average  of  60%.  This 
underinvestment limits scientific excellence. In 
2025, Hungary continued the reorganisation of 
improve 
the  research  system,  aiming  to 
efficiency,  public  private  cooperation  and 
strategic  prioritisation.  At  the  same  time, 
however,  researchers  report  a  growing  sense 
of  unpredictability,  driven  in  particular  by 
persistent  changes,  the  creation  of  parallel 
about 
institutional 
academic 
to 
freedom, 
including 
researchers’  employment  status, 
differing 
union 
conditions 
representation.  Furthermore,  the  lack  of  a 
research  career  model,  coupled  with 
low 
salaries,  makes  academic  research  careers 
significantly less attractive.  

structures, 

concerns 

changes 

trade 

and 

and 

European 

Innovation 

R&D spending is low in  the public sector, 
and  business  innovation  is  limited  to  a 
few large firms. In 2025, Hungary received a 
CSR  to  strengthen  the  innovation  framework 
for  the  sector  and  business,  and  to  better 
target existing measures at small to medium-
sized  enterprises  (SMEs).  According  to  the 
2025 
Scoreboard, 
Hungary  has  fallen  back  to  the  ‘emerging 
innovator’  category.  Hungary’s  R&D  intensity 
has stagnated over the past decade, remaining 
significantly  below  the  EU  average  (1.31%  of 
GDP  in  2024,  compared  to  an  EU  average  of 
remain 
2.24%).  Science-business 
underexploited,  and 
innovation  activities 
continue  to  be  concentrated  in  a  small  group 
of 
the 
development of a broader domestic innovation 
base, 
In  addition, 
southern  and  many  eastern  areas  lag  behind 
in the uptake of advanced technologies.  

in  particular  of  SMEs. 

foreign-owned 

linkages 

limiting 

firms, 

Hungary’s  persistently  low  public  R&D 
investment 
limits  scientific  progress. 
Public  R&D  expenditure  has  stagnated  over 
the  past  decade,  falling  to  0.31%  of  GDP  in 
2024, far below the EU average of 0.72% and 
behind  most  central  and  eastern  European 
(Graph  2.3).  Hungarian  universities 
peers 

(24)  National Authority for Data Protection and Freedom of 
Information. In addition, public authorities seem to 
increasingly rely on proceedings before the Kúria, which 
can delay access to information. 

(25)  2026 Media Pluralism Monitor. 

17 

Graph 2.3: Spending on public R&D as a share 
of GDP 

(1) CEE3 = Czechia, Poland and Slovakia 
Source: Eurostat 

the  expected 

Public  support  for  business  R&D  has  not 
delivered 
results.  The 
government  has  implemented  a  range  of 
measures  to  stimulate  business  R&D.  Direct 
support, including through cohesion policy and 
other  EU  funds,  and  indirect  support,  through 
tax  incentive  schemes,  are  also  available. 
However,  SMEs’  uptake  of  tax  incentives  has 
been lower than anticipated. As a result, there 
has  been  no  corresponding 
in 
innovation  performance,  as  measured  by 
patent applications, despite the subsidies’ high 
cost.  Many  firms  are  unwilling  to  disclose 
research details and therefore do not apply for 

increase 

0.00.10.20.30.40.50.60.70.80.9201620172018201920202021202220232024%HungaryCEE3EU27 
 
     
subsidies.  The  limited  awareness  of  R&D 
activity  and  high  administrative  burdens  on 
SMEs, is also a factor holding back innovation 
activity. According to the European Investment 
Bank  (2025),  Hungary  has  one  of  the  lowest 
shares of innovative firms in the EU.  

limited. 

remains 

Cooperation  between  academia  and 
Several 
businesses 
initiatives have been launched in the past year 
to boost university-industry collaboration, such 
as  the  creation  of  science  and  innovation 
parks,  mentoring,  entrepreneurial  education 
and  support  for  the  commercialisation  of 
university  research.  Despite  these  initiatives, 
Hungary  still  lags  behind  in  the  digitalisation 
of businesses, entrepreneurship education and 
innovation  performance.  Key  factors  affecting 
business  digitalisation  include  weak  digital 
skills among the adult working-age population, 
a limited supply of IT specialists in the labour 
market,  and  low  uptake  of  digital  solutions, 
including artificial intelligence. In recent years, 
entrepreneurial  aspects  have  been  added  to 
the vocational and tertiary education curricula, 
as  well  as  financial  support  and  mentorship 
programmes  to  further  enhance  students’ 
the 
skills. 
entrepreneurial 
entrepreneurial 
remains 
underdeveloped. Moreover, certain regions are 
moving  more  slowly  towards  knowledge-
including  by 
intensive  economic  activities, 
investing 
innovation 
ecosystems 
business-academia 
cooperation. 

However, 

in 
and 

regional 

mindset 

less 

The  venture  capital  ecosystem  remains 
small  and  is  dominated  by  government 
funds.  Venture  capital 
investment  as  a 
percentage  of  GDP  grew  steadily  until  2021 
but  then  fell  sharply,  from  0.09%  of  GDP  in 
2021  to  0.03%  in  2024,  well  below  the  EU 
average of 0.06%. The number of transactions 
decreased  from  247  in  2021  to  56  in  2024. 
The  sector  remains  heavily  dependent  on 
public  funding.  While  it  has  stimulated  the 
market,  it  also  raises  concerns  about  long-
term  sustainability  once  subsidised  funding 
recedes (26). However, the main obstacle is the 
low  number  of  start-ups  seeking  finance  due 

to  an  unsupportive  regulatory  and  business 
environment  and  the  Hungarian  economy’s 
prolonged weak performance.  

The  capital  market  is  underdeveloped.  In 
2025, Hungary received a CSR to stimulate the 
development  of  capital  markets.  In  Q3-2025, 
the  Budapest  Stock  Exchange  (BSE)  had  a 
listed equity market capitalisation of 21.9% of 
GDP (EU average: 70%). The BSE has started a 
cooperation  with  regional  stock  exchanges  to 
exploit  synergies.  There  is  a  savings  and 
investment  account  that offers tax benefits if 
it is held for at least five years.  

The regulatory and tax environment could 
be  made  more  supportive.  Government 
policies  channel  savings 
into  government 
bonds  and  housing  rather  than  into  capital 
markets, which finance productive investment. 
In  2022,  the  government  began  issuing  tax-
free long-term bonds for retail investors, while 
increasing  the  withholding  tax  on  interest 
income from 15% to 28% (effective from July 
2023). From October 2023, banks must inform 
their clients about the potential loss they may 
suffer  from  holding  their  money  in  cash 
instead of investing in government bonds. It is 
difficult to incentivise retail clients to invest in 
life  insurance  or  pension  funds  (pillar  III)  if 
they  have  direct  access  to  liquid,  tax-exempt 
government bonds  offering  high  yields  at low 
risk. Financial transaction tax (FTT) is levied on 
securities  (0.45%  on  each  transaction,  with  a 
maximum tax of around EUR 50), which makes 
capital  markets  less  attractive.  Government 
bond  transactions  are  exempt  from  FTT.  The 
unpredictable  regulatory  environment  makes 
business planning difficult for fund managers.  

A  high  presence  of  subsidy  schemes  for 
SMEs  makes  capital  market  financing 
unattractive.  SMEs  faced  an  8.8%  interest 
rate  on  bank  loans  in  2025,  which  was  the 
highest  in  the  EU.  Despite  the  high  interest 
rates,  Hungarian  firms  are  among  the  least 
constrained  in  terms  of  access  to  finance.  In 
2025, the debt stock of Hungarian firms (53% 
of GDP) (27) was the highest in the region, and 
high  relative  to  the  country’s  income  level.  In 

(26)  https://doi.org/10.2478/ceej-2025-0009. 

(27)  Total debt excluding foreign direct investment. 

18 

 
 
 
autumn  2025,  the  government  launched  an 
untargeted  subsidies  loan  product  for  SMEs, 
offering interest rates around 600 basis points 
below  the  market  rate.  SMEs  can  use  it  for 
investments  but  also  to  refinance  existing 
loans  or  to  buy  low-risk  products  on  capital 
markets,  in  particular  government  bonds.  This 
arbitrage reduces the risk of default and helps 
the  government  to  finance  its  debt,  but  it 
makes  the  product  ineffective  at  addressing 
market  failures.  In  2025,  around  50%  of  the 
SME  loan  stock  was  subsidised.  Hungarian 
firms  benefit  from  the  most  generous  state 
subsidies  in  the  EU  (1.4%  of  GDP  vs  an  EU 
average  of  0.86%  of  GDP  in  2024).  The 
abundance  of  subsidies  keeps  less  productive 
the  market,  slowing  business 
in 
firms 
dynamics.  

19 

 
 
DECARBONISATION, ENERGY AFFORDABILITY AND 
SUSTAINABILITY 

which 

would 

companies, 

GDP in 2025. Hungary signed three long-term 
gas purchase agreements in 2025 with US and 
EU 
cover 
approximately  12%  of  annual  domestic  gas 
consumption  once  deliveries  have  started. 
Despite  steps  taken  to  diversify  nuclear  fuel 
supply  in  the  future,  Hungary  will  remain 
dependent  on  Russian  nuclear  fuel  for  its 
existing reactors until at least 2028. 

Graph 3.1: Share of oil and gas imports 
originating in Russia in Hungary and in the 
rest of the EU 

in 

hinder 

competition 

the  energy  sector’s 
Weaknesses 
regulation 
and 
investments  and  drive  up  energy  prices 
for  business.  At  the  same  time,  poorly 
targeted  energy  subsidies  delay  energy 
efficiency improvements. In 2025, Hungary 
received  country-specific 
recommendations 
(CSRs)  to  diversify  its  fossil-fuel  supply  away 
from  Russian  sources,  phase  out  fossil-fuel 
subsidies,  improve  flexibility  and  competition 
in  the  electricity  sector,  and  improve  water 
resilience and circularity. Hungary continues to 
depend  on  Russian 
imports, 
especially  for  oil,  while  steps  to  diversify  gas 
sources are slow. No action has been taken to 
phase  out  harmful  fossil-fuel  subsidies  or  to 
improve  capacities  in  waste  management. 
Hungary has taken some steps to improve the 
balancing  market,  notably  by 
increasing 
storage  capacity  at  firm  and  household  level. 
Hungary has taken some initial steps to move 
towards  a  sustainable  water  management 
approach,  including  actions  to  promote  water 
retention.  The  decarbonisation  of  transport  in 
Hungary poses a significant challenge.  

fossil-fuel 

Well-functioning energy markets 
are key for competitiveness 

Hungary  remained  highly  dependent  on 
Russian  energy  sources  and  took  only 
marginal  steps  towards  addressing  the 
CSR  on  diversification.  Despite  geopolitical 
risks of over-reliance on a single  supplier,  the 
share  of  Russian  sources  in  energy  imports 
continued  to  increase.  In  2025,  more  than 
90% of Hungary’s imported  oil  (up  from 86% 
in  2024)  and  74%  of 
its  imported  gas 
originated  from  Russia,  making  Hungary’s 
reliance  on  Russian  fossil  fuels  the  second 
highest in the EU (see Annex 9). Overall, fossil-
fuel  imports  from  Russia  amounted  to  2.1% 

(1) EU without Hungary, weighted average, in kg 
Source: Eurostat  

Generous  subsidies  disincentivise  energy 
savings.  Hungary  has  taken  no  steps  to 
address the 2025 CSR to phase out fossil-fuel 
subsidies.  In  2024,  environmentally  harmful 
fossil-fuel  subsidies  with  no  planned  phase-
out  before  2030 
remained  economically 
significant  at  0.7% of  Hungary’s  GDP (above 
the  EU  weighted  average  of  0.32%)  (see 
Annex 9).  Since  2022,  Hungary  has  not 
modified the subsidy regime in place. In 2025, 
budgetary  support  for  fossil-fuel  subsidies  – 
through reduced value added tax rates and tax 
refunds  –  increased  to  EUR 202 million,  up 
from  EUR 165 million  in  2024.  In  addition,  in 

20 

0%10%20%30%40%50%60%70%80%90%202020212022202320242025HungaryEU26 
 
   
under 

energy 

providers 

subsidising 

the  universal  service 

received 
2025, 
losses 
EUR 2.5 billion  in  compensation  for 
under 
framework; 
according  to  government  data,  72%  of  this 
fossil-fuel 
spent 
was 
on 
In  early  2026,  the  subsidy 
consumption. 
provided 
service 
universal 
the 
framework  was  increased,  with  a  view  to 
covering  30%  of  gas  consumption  in  January 
2026. Following the conflict in the Middle East, 
the government decided to temporarily reduce 
excise  duty  on  petrol  and  diesel,  in  parallel 
with  introducing  a  price  cap  on  petrol.  The 
objectives served by these fossil fuel subsidies 
could be achieved through alternative forms of 
support 
that  do  not  generate  harmful 
environmental externalities. 

in 

investment 

for  significant 

Despite  recent 
investments,  the  grid 
remains under strain. While implementation 
in  Hungary  has 
reforms 
of  grid-related 
progressed,  grid  congestion  has  resulted  in 
substantial  connection  queues,  slowing  the 
uptake  of  renewables  and  highlighting  the 
need 
the 
electricity grid. Furthermore, heavy reliance on 
gas  –  which  sets  the price  in  68%  of  hours  – 
contributes  to  relatively  high  electricity  prices 
in  Hungary.  Moreover,  Hungary  faces  high 
price spikes during peak-demand hours due to 
volatile  solar  output  and  limited  non-fossil 
to  an  average  price 
flexibility, 
spread (28) 
in  2025, 
significantly  above 
the  EU  average  of 
EUR 121/MWh.  Electricity  imports,  particularly 
during peak demand, help stabilise supply and 
keep  domestic  prices  lower.  Wind’s  share  of 
electricity  generation  has  stagnated  at  1.5%, 
compared with 28% from solar. The low share 
of  wind  power  generation  cannot  compensate 
for the high volatility of solar output.  

leading 
of 

EUR 155/MWh 

to  strengthen 

the 
Initial  measures 
cross-border 
balancing  market  and 
electricity  trade  have 
increased  the 
flexibility  of  the  electricity  system,  but 
further  measures  are  needed  to  improve 
the 
flexibility  and 

competition 

in 

electricity  sector  in  line  with  the  2025 
CSR.  In  2025  and  early  2026,  Hungary 
significantly  increased  the  roll-out  of  battery 
energy  storage  systems  and  invested  in  the 
grid, including in the development of the smart 
grid,  with  support  from  cohesion  policy 
programmes as well as from the Recovery and 
Resilience Facility and the Modernisation Fund. 
Hungary has started the test phase for joining 
the  PICASSO  and  MARI  platforms  to  enable 
cross-border  balancing.  Hungary  now  ensures 
that  a  minimum  of  70%  of  cross-border 
capacity  is  available  for  trading.  However, 
demand-side response is hampered by energy 
price 
industrial 
consumers’  limited  access  to  consumption 
data,  the  slow  roll-out  of  smart  meters  (29), 
and the limited role of aggregators and energy 
communities.  More  ambitious  development  of 
non-fossil  flexibility  solutions  could  help 
stabilise  the  system  and  better  capture  the 
benefits of cheap renewables. 

households, 

caps 

for 

Graph 3.2: Electricity price for firms, EUR per 
KWh 

(1) Excluding taxes and levies, in purchasing power 
standard (PPS), consumption from 500 MWh to 1999 
MWh 
Source: Eurostat 

Electricity  prices  for 
industrial  users 
remained  higher  than  the  EU  average, 

(28)  ‘Spread’ refers to the difference between the highest 
and lowest hourly day-ahead electricity prices in a 
single day. 

(29)  According to government data, around 12% of 

connection points are equipped with smart meters, 
while 6% of energy flows are measured by such 
devices.  

21 

0.00.10.10.20.20.30.30.40.40.50.52016201720182019202020212022202320242025HungaryEU27 
 
     
 
factors 

contribute 
industrial  users: 

the 
hampering  competitiveness.  While 
utility price cap scheme applies to households 
and  micro-enterprises,  electricity  prices  for 
other consumers were 74% higher than the EU 
average  in  the  first  half  of  2025.  Wholesale 
electricity  prices  in  Hungary  were  the  third 
highest  in  the  EU.  In  addition,  Hungary's 
economy  is  among  the  most  energy-intensive 
in  the  EU,  alongside  Czechia  and  Slovakia, 
using  70%  more  energy  to  produce  a  unit  of 
value  added  than  the  EU  average.  Several 
underlying 
to  higher 
low 
electricity  costs  for 
competition  between  suppliers,  burdensome 
regulations  and 
taxes,  and  guaranteed 
compensation  for  renewables  under  fixed 
feed-in  tariffs  (‘KÁT’)  that  falls  on  industrial 
consumers – although the latter was reformed 
to  some  extent 
in  2025.  High  network 
transmission fees may partly reflect high costs 
the 
for  network  operators. 
regulated  low  energy  prices  for  households 
continue  to  put  an  indirect  burden  on  energy 
the 
prices  for  businesses.  The  cost  of 
household  subsidies  is  compensated,  among 
other things, by the sector-specific energy tax 
(‘Robin  Hood  tax’),  which  further  drives  up 
energy  prices  for  businesses  and  hinders 
energy companies’ investments.  

In  addition, 

a 

remains 

efficiency 

Energy 
key 
challenge,  particularly  in  the  residential 
building  sector.  The  energy  intensity  of 
residential  buildings  was  the  fifth  highest  in 
the  EU 
in  2023.  The  residential  sector 
accounted  for  29%  of  total  final  energy 
consumption  in  2023,  while  47%  of  energy 
consumption  was  covered  by  natural  gas  and 
23%  by  biofuels  and  waste  (30),  leading  to 
significant emissions of greenhouse gases and 
particulate matter. Considering that Hungary’s 
housing  stock  is  among  the  least  energy-
efficient  in  the  EU  (31),  energy  efficiency 
investments  would  significantly  contribute  to 
decarbonisation,  decrease  of  dependence  on 
fossil  fuels,  improvement  of  air  quality  by 
reducing  pollution  stemming  from  heating,  as 
well as reduction of energy poverty, especially 

(30)  Water Governance for Climate Resilience in Hungary, 

link. 

among households at risk of poverty or social 
exclusion.  Data  on  energy  efficiency  gains  in 
the  business  sector  suggest  that  price  signals 
work,  while  residential  energy  consumption  is 
not  on  a  clear  path  to  meet  the  2030 
reduction targets. 

Addressing environmental and 
climate vulnerabilities to ensure 
sustainable growth 

to 

continues 

Steps  have  been  taken  towards  more 
sustainable water management practices, 
but  implementation  remains  at  an  early 
stage.  In  2025,  Hungary  received  a  CSR  to 
improve water resilience through natural water 
retention  and  strengthened  administrative 
capacities.  Hungary 
face 
environmental challenges related to water use 
and  management,  including  an  increased  risk 
of  drought,  poor  water  quality  and  illegal 
water  abstraction  (see  Annex 10).  Climate 
vulnerability is highly uneven across regions in 
Hungary, with the Great Plain region especially 
affected  by  water  scarcity.  The  government 
launched 
Landscapes’ 
‘Water 
programme  in  2025,  aiming  to  combat  the 
adverse  consequences  of  climate  change  by 
raising 
promoting  water 
awareness  among  farmers.  Implementation is 
under  way,  though  a  third  of  the  properties 
offered  for  flooding  have  been  identified  as 
unviable (32). Furthermore, the Inter-Ministerial 
Water  Management  Committee  commenced 
its  work  in  2025.  Despite  these  efforts,  there 
is  insufficient  monitoring  and  taxation  of 
water abstraction. Furthermore, the successful 
implementation 
water 
management practices is impeded by a lack of 
green  skills  at  the  policy  and  implementation 
levels. 

retention  and 

sustainable 

the 

of 

to 

in  water 
The  governance  challenges 
in  climate 
management  mirror  those 
adaptation policy. Hungary faces significant 
climate  risks,  in  particular  water  scarcity  and 
transport disruptions, necessitating substantial 

(31)  See OECD country report – to be published. 

(32)  Source: terkeptar.vizugy.hu/vizetatajba/. 

22 

 
 
 
investments  to  enhance  climate  adaptation. 
Estimated  at  0.52%  of  GDP  per  year  until 
2050 (EU average: 0.46%), these investments 
are  crucial  for  addressing 
the  country's 
vulnerabilities to  climate-change-related  risks, 
including  fiscal  risks.  However,  governance 
issues  hinder  effective  action. 
In  water 
management,  this  is  reflected  in  a  lack  of 
cooperation  across  sectors  (energy,  industry, 
agriculture and forestry) and between regional 
and  national  authorities.  The  country’s  ability 
to adapt to climate change is further hindered 
by  a  lack  of  comprehensive  monitoring  and 
evaluation  frameworks.  The  revision  process 
of 
the  second  national  climate  change 
strategy  is  under  way  and  updating  the 
climate adaptation strategies remains vital for 
managing risks.  

– 

heating 

household 

Hungary's  air  pollution  problem  –  driven 
notably by transport, industrial emissions 
and 
causes 
significant  costs  and  health  risks.  Air 
pollution  causes  around  9 300  deaths  per 
year, resulting in one of the highest per capita 
death  rates  in  the  EU.  The  annual  cost  to 
public  health  and  the  economy  is  at  least 
EUR 6.3 billion, placing Hungary 10th in the EU 
on  a  per  capita  basis  (33)  (see  Annex 10). 
Hungary also ranks 9th in the EU for industrial 
emissions  intensity,  driven  by  the  energy, 
mineral and waste sectors. Household heating 
worsens  winter  smog,  while  transport  and 
agricultural  emissions  remain  high.  Hungary’s 
failure  to  meet  the  2020–2029  emission 
targets  for  PM2.5  and  NH3  highlights  systemic 
regulations, 
policy  gaps.  Without  stricter 
targeted 
cross-policy 
coordination,  and  rapid  decarbonisation  of 
faces 
heating  and 
persistent health crises and high economic and 
environmental pollution costs.  

transport,  Hungary 

increased 

taxes, 

The  transition  to  a  circular  economy  is 
not progressing. In 2025, Hungary received a 
CSR  to  improve  circularity,  by  strengthening 
waste  treatment  capacities.  No  substantial 
measures  have  been  adopted  to  address  the 

(33)  European Commission: Directorate-General for 

Environment, IEEP, Green taxation and other economic 
instruments – Internalising environmental costs to 
make the polluter pay (p. 32-33, Table 3), 2021, Link. 

Hungary’s 

resource 
recommendation. 
productivity  is  well  below  the  EU  average; 
however, it  has  improved in  recent years.  Key 
recycling  rates  are  lagging  behind  the  EU 
average  and  showing  worrying  trends  (see 
Annex  8).  In  2024,  53%  of  municipal  waste 
was  landfilled,  more  than  double  the  EU 
average  (22%  in  2023).  The  recycling  rate  of 
municipal waste has not increased since 2018. 
The  deterioration  in  these  indicators  may  be 
linked 
insufficient 
treatment  capacity  and  gradually  declining 
competition in the waste management sector. 
Hungary is also yet to adopt a national circular 
economy strategy. Economic incentives remain 
insufficient.  Hungary’s  landfill  tax  has  not 
changed  since  2014  and  fails  to  deter 
disposal. Additionally, there are no incineration 
or  plastic-specific 
legal 
provisions  acknowledging  the  issue.  Updating 
fiscal tools could help reduce inefficiency.  

taxes,  despite 

resources, 

limited 

to 

Decarbonisation of the transport 
sector has been slow 

to 

rail 

and 

final 

shift 

to  Hungary’s 

Decarbonising  transport  is  a  persistent 
challenge  in  Hungary,  requiring  both  a 
modal 
the 
decarbonisation  of  the  rail  and  road 
the  second-largest 
sectors.  Transport 
is 
contributor 
energy 
consumption, accounting for 26% of the total; 
81% of this comes  from oil  products (34)  (see 
Annex 8).  A  further  modal  shift  to  rail  would 
require significant investments. From 2018 to 
2022,  the  share  of  rail  in  inland  rail  freight 
transport  decreased  in  Hungary,  and  the  level 
of rail infrastructure investments per capita is 
below the EU average (EUR 73 vs EUR 114 per 
inhabitant  in  2022)  (35).  Hungary  is  not  on 
track  to  meet  its  trans-European  transport 
network (TEN-T) requirements. In 2024, an EU-
wide 
that 
assessment 
highly 
Hungary’s transport 

has 
system 

found 
is 

(34)  https://www.iea.org/countries/hungary/efficiency-

demand. 

(35)  Source: Calculation based on Rail Market Monitoring 

(RMMS, 2024) for data on ‘rail infrastructure 
investments’ and on Eurostat data for ‘population’. 

23 

 
 
 
rail 

rail 

transport 

its  entire  TEN-T 

vulnerable  to  climate  risks,  including  a  high 
risk  of river  flood  and  heatwave vulnerability 
track  network. 
on 
Furthermore,  significant 
infrastructure 
investments  under  Hungary’s  recovery  and 
resilience  plan  have  not  been  implemented. 
The  decarbonisation  of  the  rail  and  road 
sectors  is  not  progressing  fast  enough,  with 
rail  network 
only  45.3%  of  Hungary’s 
electrified  –  below  the  EU  average (36).  A  lack 
of  comprehensive 
infrastructure 
planning  hinders  the  development  of  less-
developed  and  peripheral  areas  and  limits 
transport 
equal  access  to  quality  public 
services, 
transport 
aggravating 
poverty in these areas (see Annex 12). In road 
transport,  by  the  end  of  2025,  Hungary  had 
deployed  only  around  25%  of  the  electric 
vehicle  charging  infrastructure  required  to 
meet  the  2030  target.  For  trucks,  charging 
infrastructure is largely absent, and the uptake 
of zero-emission trucks is not being supported, 
despite  the  option  to  exempt  them  from  the 
infrastructure-charge  component  of  the  road 
toll.  

thereby 

(36)  European Commission, Statistical Pocketbook 2025: EU 

Transport in figures, p. 80, link 

24 

 
 
SKILLS, QUALITY JOBS AND SOCIAL FAIRNESS 

social 

improve 

assistance 

the  2025  CSRs, 
implemented 

Education and health outcomes are weak, 
and  social  policy  does  not  provide 
adequate  support  for  those  in  need.  In 
2025,  Hungary 
country-specific 
received 
recommendations (CSRs) to improve education 
outcomes,  increase  access  to  effective  active 
the 
labour  market  measures, 
adequacy 
and 
of 
unemployment  benefits  as  well  as  access  to 
essential  services,  and  ensure  effective  social 
dialogue  and  sufficient  social  housing.  Since 
the 
the  adoption  of 
various 
has 
government 
measures to address them, but there has been 
limited  progress  in  addressing  the  challenges 
in these policy areas (see Annexes 10, 11 and 
12).  Preventable  diseases  and  avoidable 
mortality  are  more  prevalent  in  Hungary,  due 
to  weaker  prevention  and  unequal  access  to 
high-quality  healthcare  and  long-term  care. 
The  social  protection  system  does  not 
sufficiently  cater  for  children  in  foster  care, 
young  people 
living,  non-
standards  workers  and  homeless  people.  To 
labour  market  demands  and  boost 
meet 
productivity  and 
innovation  capacity,  skill 
levels  and  health  should  be  improved  across 
the  life  course,  and  job  quality  should  be 
raised. 

independent 

in 

Persistent educational inequalities 
are significant barriers to 
competitiveness 

inequalities. 

The  education  system  reinforces  existing 
socio-economic 
In  2025, 
Hungary  received  a  CSR  to  improve  education 
outcomes  and  the  tertiary  attainment  rate. 
Student performance gaps in basic skills linked 
to  socio-economic  background  are  among  the 
largest in the EU. While there is some support 
for schools with high shares of disadvantaged 
students  and  for  underperforming  schools, 

25 

more  effort  is  needed  to  empower  teachers 
and  school  leaders  to  work  with  the  data 
collected  through  standardised  competence 
tests and the early warning system. Measures 
to address Roma segregation are insufficiently 
leaving  pupils 
implemented, 
targeted  and 
more exposed to early school leaving and low 
educational 
Educational 
attainment. 
segregation  is  further  intensified  by  the  early 
tracking of students by ability and the growing 
number  of  church-affiliated  and  private 
schools. In many disadvantaged regions, these 
schools  tend  to  attract  and  concentrate  more 
experienced 
advantaged 
teachers,  widening  existing  divides.  Hungary 
could support the  lifelong learning and labour 
market  prospects  of  vocational  education  and 
training 
(VET)  students  through  extended 
learning  time  for  basic  skills  in  VET,  fully 
qualified  teachers  and  greater  permeability 
between VET and other education pathways.  

students 

and 

Despite  efforts  to  reduce  early  school 
leaving, significant disparities persist for 
some  territories  and  vulnerable  groups. 
Early school leaving decreased from 11.6% in 
2023 to 9.3% in 2025 but remains above the 
EU  average  of  9%.  In  2025,  young  people  in 
rural  areas  were  more  than  four  times  as 
likely as those in cities to leave education and 
training  prematurely,  while  4  in  10  persons 
with  disabilities  were  early  leavers  in  2024. 
Hungary  continues  implementing  measures  to 
prevent  school  dropout,  but  little  is  known 
their  effectiveness.  Strengthening 
about 
systemic 
cross-sectoral 
cooperation  and  individualised  support  for 
pupils at risk could be considered.  

evaluation, 

Institutional  autonomy  of  public  schools 
remains limited. Public education institutions 
are managed top-down by the district offices, 
which  are  responsible  for  key  aspects  of 
school operation, including admission, staffing, 
budgeting  and  infrastructure.  The  textbook 
extensive 
is  monopolised,  and 
market 

 
 
curriculum  requirements  limit  schools’  and 
teachers’  capacity  to  adapt  teaching  content 
and  materials  to  local  needs.  These  financial 
and  governance  constraints  may  have  also 
affected  the  provision  of  services  supporting 
inclusive  education, 
specialised 
pedagogical  services  and  early  diagnostic and 
developmental support (37). 

including 

Teacher  shortages  pose  a  significant 
challenge, driven by an ageing workforce. 
Teacher shortages are greatest in rural  areas, 
and  the  share  of  unqualified  teachers  in 
disadvantaged  schools  is  two  to  three  times 
higher  than  in  non-disadvantaged  schools (38). 
Hungary’s  teaching  workforce  is  one  of  the 
oldest  in  the  EU,  adding  concerns  to  existing 
shortages,  mainly  in  rural  areas.  In  2024, 
Hungary  implemented  a  large-scale  salary 
reform,  with  significant  European  Social  Fund 
Plus  (ESF+)  support.  As  a  result,  teacher 
salaries  in  general  education  reached  around 
80%  of 
tertiary 
the  average  wage  of 
graduates.  Many  teachers  face  a  heavy 
workload,  high  stress  levels  and  low  social 
recognition.  Induction  programmes  could  be 
further  strengthened  to  better  support  novice 
teachers  early  in  their  careers  and  improve 
retention.  In-service  professional  development 
has  been  strengthened.  Reinforcing  initial  and 
continuous  training  on  special  educational 
needs  could  be  considered,  given  the  growing 
number  of  pupils  with  special  educational 
needs  in  mainstream  education.  At  the  same 
time, limited school autonomy may reduce the 
system’s  capacity  to  promote  pedagogical 
innovation, impacting the attractiveness of the 
teaching profession.  

participation 

is 
education 
Tertiary 
remains 
increasing,  but  attainment 
in  the  EU.  Higher 
among  the  lowest 
education  enrolment  has 
increased  since 
2022, with international students representing 
a growing share. Tertiary graduates are in high 
demand,  with  an  employment  rate  of  recent 

(37)  Velkey G. (2022). ‘The increasing replication of territorial 
and social inequalities in public education in Hungary-
causes, components, practices and mechanisms’. Soc. 
Sci., 11(3), 95 https://doi.org/10.3390/socsci11030095. 

(38)  European Commission. Education and Training Monitor 

2025, country report for Hungary.  

26 

people 

graduates above the EU average. Spending on 
tertiary  education  has  increased  significantly 
since 2020, and in 2023, it was well above the 
EU  average;  however,  government-funded 
places  increased  at  a  much  slower  rate.  In 
addition, at 32.6%, the tertiary attainment rate 
(among  people  aged  25-34)  remains  among 
the  lowest  in  the  EU  (EU  average:  44.8%), 
hampering innovation and productivity growth. 
Young 
disadvantaged 
backgrounds  still  face  financial  barriers  to 
entering  higher  education,  and  parental 
to  have  a  strong 
background  continues 
influence  on  access  to  tertiary  education.  At 
the  same 
in  secondary 
education  giving  access  to  tertiary  education 
has  not  increased  significantly.  Despite  some 
initiatives  promoting  science, 
technology, 
engineering  and  mathematics  (STEM)  study 
fields, the  share  of  students  enrolled  remains 
below the EU average.  

time,  enrolment 

from 

Graph 4.1: Public spending on tertiary 
education, % of GDP 

Source: Eurostat 

learning. 

participate 

Low-skilled  adults  often  lack  incentives 
Adult 
in 
to 
participation  in  learning  over  the  past  12 
months  is  among  the  highest  in  the  EU. 
However,  low-educated  people,  unemployed 
people  and  people  outside  the  labour  market 
participate  significantly  less.  They  also  have 
lower  basic  and  digital  skills.  The  ESF+ 
finances  basic  digital  skills  development,  also 
for  disadvantaged  groups.  Additional  efforts 
are needed to improve adults’ basic skills and 

0.00.40.81.21.6201020112012201320142015201620172018201920202021202220232024HungaryEU27 
 
       
labour  force 
the  competitiveness  of  the 
overall.  The  institutional  and  legal  framework 
for individual  learning accounts, together with 
strengthened  guidance  and  counselling,  could 
help promote access to learning for all adults.  

Inequalities and limited social 
dialogue also affect the labour 
market 

to  face  barriers 

The  labour  market  remains  tight  and 
significant 
inequalities  persist.  Low-
educated  people,  Roma  and  persons  with 
to 
disabilities  continue 
accessing  and  staying  in  the  labour  market. 
While  Hungary  performs  relatively  well  on 
most dimensions of job quality, the gender pay 
gap is one of the highest in the EU, low-skilled 
workers  experience  a  high  in-work  poverty 
rate,  and  the  duration  of  unemployment 
benefits  –  three  months  –  is  inadequate  to 
support  unemployed  people  to  find  relevant 
work,  as  the  average  job-seeking  period  has 
increased,  exceeding  12  months  in  2025.  The 
net  income  replacement  rate  of  a  single 
person  after  six months  of  unemployment  is 
among  the 
in  the  EU.  Extending 
unemployment  benefits  to  cover  the  average 
job-seeking  period  could  better  support  skills 
matching in the labour market. 

lowest 

in 

integrating 

Active  labour  market  policies  are  not 
the  most 
effective 
vulnerable  people.  Hungary  received  a  CSR 
on increasing access to effective active labour 
market  measures,  but  only  limited  progress 
has been made in this area. As from 2024, the 
legal framework allows the public employment 
service  (PES)  to  purchase  and  oversee  the 
content and quality of labour market trainings. 
Large-scale ESF+-funded measures have been 
implemented and some measures have helped 
reduce  the  disability  employment gap,  though 
it  remains  above  the  EU  average.  Training  is 
still  significantly  underused,  despite  some 
recent  increase  in  the  number  of  participants. 
The  underfunded  PES  is  dependent  on  EU 
institutional 
funding. 
The 
framework 
impedes  coordinated  action  to 
address  the  complex  needs  of  long-term 

fragmented 

27 

unemployed  people.  The  effectiveness  of 
active 
labour  market  policies  and  skills 
matching  could  be  enhanced  by  setting  up  a 
one-stop-shop  PES  as  the  main  point  of 
contact  for  different  actors,  and  by  aligning 
activation  and  training  services  with  labour 
market needs, including at local level. 

from 

The  effectiveness  of  social  dialogue 
remains limited, and collective bargaining 
coverage is low.  Hungary received a CSR on 
improving the effectiveness of social dialogue, 
but  the  involvement  of  social  partners  in 
policymaking  continues to  be  limited.  There  is 
practically  no  social  dialogue  in  the  public 
sector.  Minimum  wage  agreements  are 
reached  in  the  tripartite  forum  of  the  private 
sector (VKF), but the government typically uses 
VKF  as  an  information-sharing  forum  rather 
than  for  cooperation.  Social  dialogue 
in 
reinforced 
Hungary  would  benefit 
capacity  building  and  a  more  systematic, 
meaningful  and  timely  involvement  of  social 
partners  in  policymaking.  Introducing  specific 
provisions  in  the  Labour  Code  and  in  public-
sector  statutes  to  strengthen  social  dialogue 
and  collective  bargaining  could  address 
current gaps in the legal framework. Collective 
bargaining coverage is also among the lowest 
in 
is 
the  EU,  and  collective  bargaining 
prohibited  in  some  sectors.  In  practice,  the 
10% representativeness legal threshold makes 
such  agreements  impossible.  Authorities  are 
working on a collective bargaining action plan, 
but  social  partners  have  not  yet  been 
consulted.  Enhanced  collective  bargaining 
coverage  and  trade  union  density  could 
effectively  support  workers’ 
influence  on 
labour conditions and policymaking. 

Social assistance benefits are 
inadequate and unequal access to 
services contributes to poverty 

average 

improving 

Despite 
living 
conditions, the social protection system is 
not  able  to  effectively  address  deep 
poverty  and  severe  material  and  social 
deprivation.  Hungary  received  a  CSR  to 
improve  the  adequacy  of  social  assistance, 

 
in 

the 

lowest 

is  among 

and ensure access to essential services for all, 
but no action has been taken. While improving, 
severe  material  and  social  deprivation  in 
Hungary remains among the highest in the EU. 
The  impact  of  social  transfers  on  poverty 
reduction  halved  between  2018  and  2025, 
and 
the  EU, 
contributing  to  increasing  income  inequalities 
and  above  EU  average  depth  of  poverty. 
Poverty  is  particularly  prevalent  in  northern 
Hungary and North Great Plain. The adequacy 
of  minimum  income  benefits  remains  among 
the  lowest  in  the  EU,  with  no  mechanism  in 
place for periodic adjustment, despite Hungary 
having one of the highest inflation rates in the 
EU 
regular 
indexation  of  minimum  income  benefits  to 
living costs could reduce the depth of poverty 
and  improve  the  living  conditions  of  the 
poorest  people.  This  could  be  complemented 
by  financial  and  in-kind  support  targeted  at 
low-income  households  and  by  extending 
social  protection 
to  cover  non-standard 
workers.  Increasing  pension  adequacy  could 
help address growing old-age poverty.  

recent  years. 

Introducing 

in 

disadvantaged  municipalities, 
ensuring suitably qualified staff. 

including  by 

Children are particularly vulnerable. While 
the rate of children who are at risk of poverty 
or  social  exclusion 
is  decreasing,  Roma 
children  and  those  with  low-educated  parents 
are  significantly  more  vulnerable.  Affected 
children  often  live in  overcrowded  households 
and  are  less  likely  to  attend  formal  childcare 
before  the  age  of  three.  Social  and  financial 
pressures are pushing an increasing number of 
into  professional  child  protection 
children 
services,  and  more  are  being  placed 
in 
institutional  foster  care  due  to  a  shortage  of 
foster  families.  The  government 
remains 
committed to creating new crèche places, with 
the  Recovery  and  Resilience  Facility  and  the 
European 
Fund 
supporting  the  creation  of  over  3 500  across 
the country. However, there is room for further 
investment  in  mainstream  services  for  all 
children  (childcare,  education,  healthcare  and 
social  care),  including  early  intervention  and 
prevention,  mental  health  support,  alternative 
care, and adequately trained professionals.  

Development 

Regional 

including  when 

Vulnerable  groups,  especially  in  rural 
in  accessing 
areas,  face  challenges 
essential  and  social  services.  Low-
educated  people,  Roma  and  persons  with 
disabilities  experience  significantly  higher 
in 
social  exclusion  risks, 
employment.  A  large  share  of  Roma  live  in 
segregated municipalities and neighbourhoods 
with  poor  infrastructure,  often  poorly  served 
by public transport, which limits access to jobs, 
high-quality  education  and  services.  People 
living in the most disadvantaged regions or in 
rural  areas  face  challenges  in  accessing  key 
public  services,  such  as  childcare,  schools, 
healthcare, long-term care and social services. 
In  2023,  a  major  EU-funded  project  was 
launched  in  the  300  most  disadvantaged 
municipalities, but results have fallen short of 
expectations.  In  2025,  several  municipalities 
adopted local decrees to restrict settlement by 
disadvantaged  people,  citing  ‘local  identity 
further 
protection’. 
worsening  the  situation  of  Roma  and  other 
vulnerable  groups.  In  addition  to  stronger 
desegregation measures, investment is needed 
in  sustainable  mainstream  essential  services 
(digital,  transport,  water  and  energy)  and 
social  services  (health,  education  and  care)  in 

These  decrees 

risk 

Steeply  rising  housing  costs  underscore 
the  need  to  improve  the  social  housing 
stock  and  provide  targeted  support  to 
low-income  households.  In  2025,  Hungary 
received  a  CSR  to  target  housing  support 
measures  at 
low-income  households  and 
increase  the  social  housing  supply.  Hungarian 
households  need to  save more  than  15  years 
of income to buy a 100  m² flat, which is one 
of  the  highest  figures  in  the  EU  and  almost 
double 
the  EU  average.  The  share  of 
households  that  spend  over  40%  of  their 
disposable income on housing costs decreased 
to  below  EU  average,  after  significantly  high 
levels in the past years (39). A fifth of people at 
risk  of  poverty  or  social  exclusion,  and  more 
than  a  third  of  tenants,  are  overburdened  by 
housing  costs.  Simultaneously,  municipalities’ 
social  housing  stock  has  been  decreasing. 
Rising  housing  costs  are  increasingly  forcing 
children  into  temporary  accommodation,  and 
the number of people in shelters for homeless 

(39)  This indicator should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions 

28 

 
 
people  is  growing.  Government  support  for 
home rental is available for young employees, 
but  there  are  no  larger-scale  means-tested 
measures  for  people  who  are  renting.  The 
rental  market  is  not  regulated,  which  creates 
uncertainties  for  both  tenants  and  landlords, 
and  results  in  higher  prices  and  lower  supply. 
The  launch  of  a  non-targeted,  non-means-
tested  subsidy  scheme  in  September  2025 
gave  a  further 
impetus  to  house  price 
increases. Social housing is being developed as 
the  300  most  disadvantaged 
part  of 
there  are  no 
municipalities’  project,  but 
targeted measures to eradicate homelessness. 
There  is  further  room  to  address  residential 
segregation  and  to  invest  in  the  maintenance 
and  renovation  of  existing  social  housing,  as 
well as to increase the overall supply of social 
housing (see Annex 16). 

Access to healthcare and long-
term care is challenging 

low  per 

consistently  very 

A  heavy  focus  on  hospital-centred  care 
leaves  primary  and  preventive  care 
underfunded.  In  2023,  health  spending  per 
inhabitant  was  among  the  lowest  in  the  EU, 
with 
capita 
investment in health infrastructure since 2015. 
The  system  is  reliant  on  hospital  services, 
which  receive  the  largest  share  of  health 
funding,  thus  limiting  funds  for  primary  and 
preventive care. This has resulted in one of the 
highest numbers of hospital beds per capita in 
the  EU,  while  unmet  needs  for  primary  care 
are  almost  double  the  EU  average.  Some 
progress  has  been  made  in  strengthening  the 
role of general practitioners and increasing the 
number  of  patients  enrolled  in  prevention 
programmes  with  Recovery  and  Resilience 
Facility  and  ESF+  support.  A  strategic 
reallocation of resources towards primary and 
preventive  healthcare  could  help 
improve 
health outcomes. 

Graph 4.2: Life expectancy at birth 

(1) CEE3: Czechia, Poland and Slovakia 
Source: Eurostat 

remains 

contributors. 

comparatively 

Weak  prevention  undermines  population 
health.  Hungary  has  made  some  efforts  to 
increase investment in disease prevention, but 
low. 
spending 
Avoidable  mortality  in  Hungary  is  among  the 
highest in the EU, with behavioural risk factors 
like  smoking,  poor  diet  and  limited  physical 
Life 
activity  being  major 
expectancy is among the lowest in the EU and 
the gap with the EU average and the average 
of  regional  peers  has  not  narrowed  over  the 
last decade (Graph 4.2). The suicide rate is still 
among  the  highest  in  the  EU,  with  increasing 
unmet  needs  for  mental  healthcare  since  the 
pandemic.  Hungary’s  Activity  Prescription 
Programme 2024  allows  general  practitioners 
to  prescribe  physical  activity 
to  combat 
lifestyle-related  diseases.  However,  more 
efforts  are  needed  to  strengthen  preventive 
care and promote healthy living to address the 
high 
non-communicable 
of 
diseases and improve the overall effectiveness 
of the health system. 

prevalence 

Persistent  qualified  staff  shortages  and 
significant 
disparities 
geographical 
to  healthcare 
hinder  equal  access 
services.  In  2023,  the  number  of  practising 
nurses per inhabitant was among the lowest in 
the EU, and the high proportion of nurses aged 
55  and  over  underscores  the  urgent  need  for 
attracting young professionals. The number of 
general  practitioners  per  inhabitant  is  low 

29 

73747576777879808182201320142015201620172018201920202021202220232024HungaryEU27CEE3 
     
compared with the number of specialists. Rural 
and 
remote  areas  face  particular  staff 
shortages,  and  healthcare  workers  report 
significant mental health challenges, including 
elevated  rates  of  depression.  Phased  salary 
increases  and  performance-based  rewards 
have  been  implemented,  but  there  is  further 
room  for  expanding  the  healthcare  labour 
force  and  improving  retention,  especially  in 
underserved areas.  

Access  to  high-quality  long-term  care  is 
limited,  especially  in  rural  areas.  Healthy 
life  expectancy  at  age  65  is  relatively  low.  In 
2024,  fewer  older  people  in  rural  areas  rated 
their health as good or very good than those in 
urban areas. Long-term and specialised care is 
concentrated in developed urban areas, and is 
strongly  oriented  towards  residential  care, 
while  the  availability  of  qualified  staff  for 
home  care  is  limited.  There  is  a  shortage  of 
affordable  homecare  and  community-based 
services. Investing in expanding homecare and 
community-based  care  services  as  well  as 
staff  professionalisation  could  improve  care 
provision  and  potentially  reduce  the  current 
high pressure on the healthcare system. 

30 

 
KEY FINDINGS 

In  areas  covered  by  existing  country-
specific  recommendations,  Hungary  would 
benefit from: 

the 

effectiveness 

improving 
of 
economic  policy  by  removing  distorting 
and  costly  state  interventions  in  the  credit 
and product markets; 

improving  the  sustainability  of  public 
finances,  including  by  strengthening  the 
medium-term  budgetary  framework  and 
the 
annual  budgeting,  and 
quality  and  efficiency  of  public  spending 
through  the  use  of  spending  reviews,  as 
well  as  by  reforming  the  pension  system 
and  addressing  its  income  inequalities  and 
ensuring adequacy for low-income groups;  

improving 

• 

• 

• 

• 

a 

predictable 

improving  the  quality  of  the  business 
environment and ensuring a consistent 
application  of  single  market  rules  by 
ensuring 
regulatory 
framework  and  a  level  playing  field  for  all 
avoiding  market-distorting 
companies, 
state-supported  transactions  and  the  use 
applying 
of 
to 
competition  scrutiny  systematically 
business 
transactions,  and  simplifying 
administrative  procedures,  particularly  in 
the retail sector;  

legislation, 

distorting 

•  facilitating  access  to  finance  for 
innovative  and  fast-growing  small  to 
medium-sized  enterprises  by ensuring  a 
level  playing  field  for  capital  market 
development  through  regulatory  measures 
and improving the effectiveness of existing 
support measures;  

•  fostering 

innovation 

through  more 
predictable  and  efficient  public  R&D 
support  and  a  stronger  involvement  of 
in 
small 
knowledge 
transfer 
channels,  also  taking  into  account  regional 

to  medium-sized  enterprises 

technology 

and 

competitive  advantages  and  specialisation 
strategies disparities;   

•  accelerating 

the  green 

transition 
further  by  phasing  out  dependence  on 
Russian energy imports and taking concrete 
steps  to  phase  out  fossil-fuel  subsidies,  in 
particular those related to excise duties on 
diesel and those hindering electrification in 
the residential sector; 

improving  flexibility  and  competition 
in  the  electricity  sector  by  increasing 
grid  capacity,  accelerating  the  roll-out  of 
renewable  energy  sources  (in  particular 
wind), 
of 
aggregators,  supporting  the  creation  of 
energy 
expanding 
smart-grid and smart-meter infrastructure; 

communities,  and 

strengthening 

role 

the 

•  managing 

climate-change-related 
risks  by  adopting  nature-based  water 
retention measures and addressing related 
green  skill gaps  as  well  as  developing 
comprehensive  cross-sectoral  strategies 
with  an 
less 
developed 
those  highly 
regions  and 
exposed to climate change; 

integrated  approach  for 

• 

• 

improving 
by 
circularity 
strengthening waste treatment capacities; 

further 

improving the participation in the jobs 
market  of  vulnerable  groups,  including 
low-skilled people, Roma and persons with 
disabilities, by ensuring effective reskilling 
and  upskilling  and  strengthening 
the 
capacity of the public employment service; 

•  ensuring  effective  social  dialogue, 
particularly 
in  the  public  sector,  and 
enhancing  collective  bargaining  coverage 
and social partners’ capacity;  

•  promoting 

development 

human 
and 

capital 
improving 

31 

 
 
the 

participation 

educational performance and skills by 
reducing  underachievement  in  basic  skills, 
increasing 
of 
disadvantaged  groups,  particularly  Roma, 
in  -quality  mainstream  education,  further 
increasing 
the 
teaching  profession  and  improving  the 
tertiary attainment rate;  

the  attractiveness  of 

•  providing  more 

to 

them 

effective 

living 
to 

social 
protection by: (i) improving the adequacy 
of the minimum income benefits, including 
costs; 
indexing 
by 
(ii) improving 
quality 
access 
mainstream  essential  and  social  services, 
including  in  disadvantaged  municipalities, 
for  persons  with  disabilities  and  children: 
(iii) extending 
the 
unemployment  benefit;  and  (iv) ensuring 
access to social protection for all workers, 
including  those  in  non-standard  forms  of 
employment;  

duration 

the 

of 

• 

those 

increasing  access  to  housing  by  better 
targeting  housing  and  rental  subsidies, 
towards 
in  greater  need,  and 
introducing  measures  to  increase  housing 
supply, including for social housing in non-
segregated  neighbourhoods  and  through 
intermunicipal cooperation. 

In other areas, Hungary would benefit from: 

•  simplifying  the  tax  system  by  phasing 
out  distorting  taxes  imposed  on  specific 
sectors, and increasing its fairness;  

• 

• 

• 

improving  the  effectiveness  of  the 
anti-corruption framework, including by 
improving prosecutorial efforts and access 
to public information; 

the 

quality 

and 
improving 
transparency  of  the  decision-making 
process  through  effective  engagement 
with 
impact 
limiting  the  use  of 
assessments  and 
emergency  legislation  to  what  is  strictly 
necessary; 

stakeholders, 

regular 

competition 

in  public 
improving 
procurement  by 
restrictive 
tender requirements, reducing the share of 

removing 

tenders  receiving  only  a  single  bid,  in 
particular  for  high-value  contracts,  and 
increasing  the  transparency  of  data  on 
market developments and interests;  

•  promoting  cleaner 

in 

transport  and 
transport  poverty  by 
addressing 
investing 
the  electrification  and 
addressing  climate  vulnerabilities  of  the 
transport  sector,  facilitating  the  modal 
shift  to  rail,  and  improving  the  quality  of 
affordable  public  transport,  notably  in 
peripheral areas in less developed regions;  

•  accelerating 

decarbonisation 

and 
improving  air  quality  by  investing  in 
energy  efficiency  improvements,  including 
in residential buildings, while adjusting the 
current system of regulated energy prices; 

improving  access 
to  high-quality 
healthcare,  in  particular  preventive 
and primary care services, by allocating 
care, 
more 
addressing  shortages  of  healthcare  staff, 
and  developing  affordable  homecare  and 
community-based  services  for  long-term 
care. 

to  preventive 

resources 

• 

32 

 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

A1.  CSR implementation 

Fiscal 

A2.  Fiscal developments and debt sustainability 

A3.  Taxation 

Productivity 

A4. 

Innovation to business 

A5.  Single market and industry 

A6.  Savings, investment and access to finance 

A7.  Effective institutional framework 

Sustainability 

A8. 

Industry decarbonisation, circularity and climate mitigation 

A9.  Affordable energy transition 

A10.  Climate adaptation, preparedness and environment 

Fairness 

A11.  Labour market 

A12.  Social policies 

A13.  Education and skills 

A14.  Social scoreboard 

A15.  Health and health systems 

A16.  Housing 

Horizontal 

A17.  Sustainable development goals 

A18.  Competitive regions 

A19.  Transport 

LIST OF TABLES 

A1.1. 
A2.1. 
A2.2. 
A2.3. 
A3.1. 
A4.1. 

CSR Implementation and Commission assessment 
Projected change in age-related expenditure in 2025-2040 and 2025-2070 
Supplementary pension schemes - Scope for expansion 
Fiscal Governance Database indicators and Public Accounting Maturity 
Taxation Indicators 
Key innovation indicators 

35 

38 

41 

41 

46 

49 

49 

54 

62 

70 

75 

75 

82 

89 

97 

97 

101 

106 

111 

112 

116 

121 

121 

123 

131 

38 
43 
43 
45 
47 
53 

 
 
 
Single Market and Industry 
Savings and Investments Union summary diagnostic 
Financial sector indicators 
Hungary. Selected indicators on better regulation practices for primary legislation 
Digital Decade key performance indicators: availability of digital public services 
Key clean industry and climate mitigation indicators: Hungary 

A5.1. 
A6.1. 
A6.2. 
A7.1. 
A7.2. 
A8.1. 
A10.1.  Key Adaptation Indicators 
A14.1.  Social Scoreboard for Hungary 
A15.1.  Key health indicators 
A18.1.  Main development trends, challenges and the concentration of resources 
A18.2.  Key regional indicators (at NUTS 2 level) for Hungary 
A19.1.  ERTMS deployment in Hungary. 

LIST OF GRAPHS 

Composition of non-financial corporations’ funding 
Capital markets and financial intermediaries 
Composition of households’ financial assets 
Trust in the justice system, regional / local authorities and in government 

Contribution to the change in the general government balance (% of GDP) 
Public investment evolution and composition (% of GDP) 
Primary spending evolution and compositional change 
Tax revenue by economic function in 2024, HU (outer ring) and EU-27 (inner ring) 
Tax wedge for single and second earners as a % of total labour costs, 2025 
Public expenditure on R&D (GOVERD + HERD) as a percentage of GDP in 2024 
Patent applications to the EPO by country of applicants and inventors in 2024 
GVA by NACE in Hungary (inner circle) and EU27 (outer circle) 

A2.1. 
A2.2. 
A2.3. 
A3.1. 
A3.2. 
A4.1. 
A4.2. 
A5.1. 
A5.2.  Manufacturing production: total and selected sector, index (2021=100), 2015-2024 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2.  Most time-consuming aspects of service delivery 
A8.1. 
A9.1. 
A9.2. 
A9.3. 
A11.1.  Employment rates 
A12.1. 
A12.2.  Regional differences in poverty and social exclusion risks, low educational attainment and unemployment, 2025 
A13.1.  Provision of induction to teachers upon joining school 
A15.1.  Treatable mortality 
A15.2.  Potential gains in working-life years from prevention, between 2022 and 2040 
A16.1.  House prices, rents and price-to-income evolution in HU and EU27 since 2005 
A16.2.  House supply indicators in HU since 2005 
A16.3.  Bank loans to households for house purchase 
A16.4.  Housing affordability selected indicators 
A17.1.  Progress towards the SDGs in Hungary 
A19.1.  Hungary's road fatalities per million, 2024 

Greenhouse gas emissions in the effort sharing sectors, 2005, 2023, and 2024 
Electricity and gas prices for household and non-household consumers, first half of 2025 
Low-carbon electricity generation vs. electricity wholesale prices, 2025 
Hungary’s installed renewable capacity vs electricity generation mix 

Impact of social transfers (excluding pensions) on poverty reduction 

LIST OF MAPS 

A18.1.  GDP per head compared with the EU average. 
A18.2.  Labour productivity (2023), Hungary (NUTS 2 regions) 
A18.3.  Average annual population change at NUTS 3 level (2015-2024) 
A18.4.  House purchase capacity relative to income (2024) 
A18.5.  Economic impact of climate change (2024) 

36 

61 
62 
69 
71 
72 
81 
96 
111 
113 
124 
126 
132 

41 
42 
42 
46 
48 
49 
51 
54 
60 
63 
63 
64 
70 
72 
77 
83 
83 
86 
97 
101 
104 
108 
112 
113 
116 
117 
117 
120 
121 
133 

123 
124 
128 
129 
130 

 
 
 
 
 
37 

 
 
ANNEX 1: CSR IMPLEMENTATION  

Table A1.1:  CSR Implementation and Commission assessment 

(Continued on the next page) 

38 

Hungary faces challenges in a wide range of policy areas, as identified in the country-specific recommendations (CSRs).  Hungary  was recommended, among other things, to reinforce overall defence and security spending, improve the regulatory framework, stimulate the development of capital markets, strengthen the innovation framework for the public sector and businesses, accelerate the diversification of fossil fuel supply, improve education outcomes and tertiary attainment rate, increase access to effective active labour market measures, the adequacy of social assistance and unemployment benefits, and ensure access to essential services for all. The Commission has assessed the degree of implementation of the 2025 CSRs considering the policy action taken by Hungary to date*. To do so, the Commission has taken into account the information provided by Hungary in its Annual Progress Report as well as other information sources. This annex provides summary information on the policy actions taken or planned by Hungary for each CSR. More detailed information on these actions is included in the relevant chapters and other annexes of the report. *CSR 2 is not assessed in CeSaR. RRP implementation is monitored through the assessment of RRP payment requests and analysis of the bi-annual reporting on the achievement of the milestones and targets, to be reflected in the country reports. Progress with the cohesion policy is monitored in the context of the Cohesion Policy of the European Union. Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  1.1: Reinforce overall defence and security spending and readiness while ensuring debt sustainability in line with the European Council conclusions of 6 March 2025.  Total general government defence expenditure in 2026 is projected at 2.1% of GDP, corresponding to an increase of 0.1 ppt. compared to 2024.  Total general government defence expenditure in 2027 is projected at 2.0% of GDP, unchanged compared to 2024. Substantial Progress 1.2: Adhere to the maximum growth rates of net expenditure recommended by the Council on 18 February 2025, with a view to bringing an end to the situation of an excessive deficit while making use of the allowance under the national escape clause for higher defence expenditure.  Cumulated deviation in 2025 amounted to 0.8% of GDP but is fully explained by the NEC flexibility (0.8 pps. of GDP). Cumulated deviation in 2026 projected at 3.0% of GDP and is only partially explained by the NEC flexibility (1.1 pps. of GDP).  The EDP is held in abeyance. Limited Progress 1.3: Wind down the emergency energy support measures.  The net budgetary cost of energy support measures is estimated at 1.6% of GDP in 2023 and at 1.7% in 2024, and 1.1% in 2025. In particular, subsidies to utility companies for the losses incurred due to caps on residential energy prices are assumed to remain in force in 2026 and beyond. The energy support measures were not wound down as soon as possible in 2023, 2024 and 2025.  Limited Progress 1.4: Pursue effective coordination and clear demarcation of    macroeconomic policies to ensure fiscal and external sustainability.     No measures.  No Progress 1.5: Phase out price    and interest-rate caps, and equivalent measures, to reduce distortive effects and facilitate the    smooth transmission of monetary policy. No measures.  No Progress 1.6: Strengthen the medium-term budgetary framework,    A new regulation broadened the tasks of the Fiscal Council.     Limited Progress  
 
 
 
      
 
Table (continued) 

(Continued on the next page) 

39 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  align the preparation of annual budgets with the budgetary year and limit discretion in the    implementation of annual budgets.  1.7: Improve the long-term sustainability of the pension    system, while preserving adequacy, in particular by addressing income inequalities.  No measures.  No Progress 3.1 Improve the regulatory framework and enhance competition in product markets and services, in particular in retail, by avoiding arbitrary administrative interventions, tailor-made legislation providing undue advantage or disadvantage to specific companies and market-distorting state-supported transactions and by reducing the use of emergency measures to what is strictly necessary, in line with the principles of the single market and the rule of law. No measures.  No Progress 3.2 Stimulate the development of capital markets by increasing tax and regulatory incentives. No measures.  No Progress 3.3 Strengthen the innovation framework for the public sector and businesses by improving the predictability of public R&D spending and better targeting existing measures towards SMEs The public science and innovation framework has been modified without the involvement of stakeholders  No Progress 4.1 Accelerate the diversification of fossil fuel supply to phase out dependence on Russian sources and Hungary signed three long-term gas purchase agreements in 2025 with US and EU companies, which would cover approximately 12% of annual domestic gas consumption once the deliveries will have started.   No Progress 4.2 take concrete steps to phase out fossil-fuel subsidies, in particular those related to excise duties on diesel and those hindering electrification in the residential sector. No measures.  No Progress 4.3 Improve flexibility and competition in the electricity sector, by strengthening the balancing market and boosting cross-border electricity trading. Some progress related to the balancing market: -70% minimum transmission capacity reached by 31/12/2025 on all TSO network elements - increased storage capacity - amended rules to facilitate colocation -test period to join MARI and PICASSO started in April 2026 Some Progress 4.4 Improve water resilience through natural water retention and strengthened administrative capacities, and - Government launched the “Water to Landscape” programme to enhance water retention. - Act on Water Management was  Limited Progress  
 
 
      
 
Table (continued) 

Source: Commission’s Assessment  

40 

Recommendation text Main measures adopted or implemented  By 30 April 2026  Preparatory steps/ credibly announced measures By 30 April 2026 Assessm. of progress  amended, establishing drought mitigation and water retention as core water-management responsibilities. - An inter-ministerial committee on water management commenced its work to coordinate water policy across sector with a focus on climate resilience and drought/flood risks.  4.5 improve circularity, in particular by strengthening waste treatment capacities.  Some investments are included in the EEEOP+ and in the waste management's rolling development plan. No Progress 5.1 Improve education outcomes and tertiary attainment rate and increase the participation of  disadvantaged groups, particularly Roma, in quality mainstream education by further  increasing the attractiveness of the teaching profession and the share of pupils obtaining an  upper-secondary qualification that gives access to tertiary education.  - Pilot project ongoing to improve VET permeability. - Progress on reducing ESL rates through the roll out of an early warning monitoring system.  Limited Progress 6.1 Increase access to effective active labour market measures, in particular by providing upskilling and reskilling opportunities to the most disadvantaged groups, and Due to a legislative change the Public Employment Service can procure trainings.  Limited Progress 6.2 ensure effective social dialogue. No measures.  Limited Progress 6.3 Improve the adequacy of social assistance and unemployment benefits, and ensure access to essential services for all. No measures.  No Progress 6.4 Target support measures in the housing sector to  low-income households and increase housing supply, including for social housing.   No measures.    No Progress      
 
     
 
FISCAL 
ANNEX 2: FISCAL DEVELOPMENTS AND DEBT SUSTAINABILITY 

This annex discusses selected topics in public 
finances  and  developments  on 
fiscal-
structural  country-specific  recommendations 
(CSRs)  addressed  to  Hungary  in  July  2025. 
These include a call to increase defence spending 
and readiness while implementing a fiscal strategy 
in  line  with  the  Council  Recommendation  of  18 
February 2025. Hungary was also called on to take 
decisive  action  to  safeguard  the  sustainability  of 
public  finances,  by  measures  such  as  i)  winding 
down  emergency  energy  support  measures,  ii) 
clear 
pursuing 
demarcation  of  macroeconomic  policies, 
iii) 
budgetary 
strengthening 
long-term 
framework  and 
sustainability of the pension system.  

the  medium-term 

improving  the 

coordination 

effective 

and 

iv) 

The 

fiscal-structural  plan 

On  18  February  2025,  the  Council  adopted 
the  recommendation  endorsing  Hungary’s 
(40), 
medium-term 
which includes a fiscal adjustment over four 
years. 
a 
recommendation  under  Article  126(7)  TFEU  to 
correct  the  excessive  deficit  in  Hungary  (41).  On  8 
July  2025,  the  Council  activated  the  national 
escape clause for defence spending for Hungary to 
facilitate the transition to higher levels of defence 
spending (42)(43). 

adopted 

Council 

also 

(40)  OJ C, C/2025/1707, ELI: 

http://data.europa.eu/eli/C/2025/1707/oj 

(41)  Council Recommendation with a view to bringing an end to 
the situation of an excessive deficit in Hungary, as adopted 
on 18 February 2025. The corrective net expenditure path 
recommended by the Council under the excessive deficit 
procedure is consistent with the maximum growth rates of 
net expenditure set out in the plan. 

(42)  OJ C, C/2025/3968, ELI: 

http://data.europa.eu/eli/C/2025/3968/oj 

(43)  Compliance by Hungary with the maximum growth rates of 
net expenditure recommended by the Council is assessed in 
COM(2026)200. 

Developments in government balance, 
debt and public expenditure (44) 

Hungary had a government deficit of 5.0% of 
GDP  and  a  government  debt-to-GDP  ratio  of 
73.5%  at  the  end  of  2024.  According  to  the 
Commission’s  autumn  2025  forecast,  Hungary’s 
government  deficit  is  projected  to  increase  to 
5.1% of GDP in 2025 and remain at 5.1% of GDP 
in  2026.  The  projected  increase  in  the  deficit  in 
2025  is  driven  by  strong  growth  in  primary 
interest 
expenditure  outweighing  a 
expenditure  and  in  the  cost  of  household  energy 
subsidies. Hungary’s  debt-to-GDP  ratio is  forecast 
to  increase  to  74.9%  by  2027  driven  by  the  high 
deficit.   

fall 

in 

Graph A2.1: Contribution to the change in the 
general government balance (% of GDP) 

Source: Commission autumn 2025 forecast 

Public  investment  has  been  declining  as  a 
proportion of GDP since 2019. Efforts at fiscal 
consolidation  have  often  targeted  investment, 
which  has  been  hindered  by  Hungary’s  access  to 
some EU funds (under the Recovery and Resilience 
Facility  and  cohesion  policy)  being  blocked  policy 
due 
In  2026  public 
investment was projected to remain similar to the 
2025  figure  of  4.2%,  still  below  the  6.2%  it 
reached in 2019.  

rule-of-law 

issues. 

to 

(44)  Figures underpinning fiscal surveillance (net expenditure 
growth) are provided in the Fiscal Statistical Tables 
SWD(2026)200 providing background data relevant for the 
assessment of the budgetary policies of the Member States. 

41 

-3-2-1012342021202220232024202520262027RevenueExpenditureChange in budget balance% of GDP 
 
 
 
     
 
 
 
Graph A2.2: Public investment evolution and 
composition (% of GDP) 

Graph A2.3: Primary spending evolution and 
compositional change 

Source: Commission Autumn 2025 Forecast 

Expenditures  with  a  higher  impact  on  GDP 
began  rising  in  the  pre-COVID-19  period  but 
have since reverted to previous lower levels. 
As  regards  the  composition  of  spending,  social 
protection and general  public services account for 
the  largest  proportion  of  total  expenditure (above 
20%),  followed  by  economic  affairs  (45)  and 
education  (above  10%  of  total  spending).  Since 
2019,  public  expenditure  on  interest  and  defence  
has  increased  significantly  (See  Graph  A2.3),  the 
latter  rise  due  to  recent  security  developments. 
Spending  on  housing,  communication,  other 
economic  affairs,  health  and  education  has  risen 
more modestly.  By contrast, spending on research 
and  development  has  remained  broadly  stable 
while spending transport expenditure has declined.  
This trend deserves attention, as these categories 
are  generally  considered  to  be  conducive  to 
growth.  

Source: Eurostat 
Note: Based on economic literature, the categories considered 
to have the higher growth impact include education, research 
and development, health, transport and communication (See 
Barbiero and Cournede (2013), Gemmel et al. (2016), Lupu et 
al (2018), Cepparulo and Mourre (2020) and OECD (2025)). 

Hungary’s  tax  revenue  as  a  proportion  of 
GDP  is  below  the  EU  average  and  relies  on 
consumption taxes. In 2024, Hungary’s total tax 
revenues  as  a  percentage  of  GDP  (including 
compulsory 
contributions) 
social-security 
amounted  to  35.3%  compared  to  the  EU  average 
of  39.4%.  Total  tax  revenues  are  projected  to  be 
unchanged  as  a  percentage  of  GDP  in  2025  and 
are set to slip to 34.8% of GDP in 2026, according 
to the autumn 2025 forecast  (46). Growth-friendly 
taxes  are  underused,  with  Hungary’s  tax  mix 
relying  relatively  heavily  on  consumption  taxation 
and  less  on labour taxation.  Nevertheless,  the tax 
burden on low earners is relatively high for the EU 
because  of  the  flat  income-tax  structure.  Sector-
specific  taxes  remain  in  the  energy,  retail  and 
finance sectors, which has a detrimental effect on 
the business environment (see Annex 3).  

(45)  This refers to the set of government activities, policies, and 

expenditures aimed at regulating, supporting, and developing 
economic activity across major sectors, including general 
economic and labour policies, agriculture and natural 
resources, energy, industry, construction, and other economic 
functions not elsewhere classified. Although transport and 
communication, as well as research and development 
activities, are normally considered part of this function, they 
are treated separately in the graph presented. 

(46)  Data retrieved from the AMECO database (https://economy-

finance.ec.europa.eu/economic-research-and-
databases/economic-databases/ameco-database_en)  

42 

01234567201920202021202220232024202520262027% of GDPDefenceRRF grants and other EU fundsOther nationally-financed101520404550200720082009201020112012201320142015201620172018201920202021202220232024a) Evolution (% of GDP)Primary expenditureSpending with higher impact on GDP (rhs)-4.00-3.00-2.00-1.000.001.002.003.004.005.006.007.00TransportGeneralservicesSocialprotectionCulturePublicorderEnvironmentR&DEducationHealthCommunicationHousingOther economicDefenceInterestspendingb) Compositional change 2024-2019                                            (% of Total spending) 
     
 
  
 
 
 
Table A2.1:  Projected change in age-related expenditure in 2025-2040 and 2025-2070 

Source: 2024 Ageing Report (EC/EPC). 

Table A2.2:  Supplementary pension schemes - Scope for expansion 

Source: European Commission. 

Cost of ageing 

Total  ageing-related  spending  in  Hungary  is 
projected  to  rise  by  about  1.5  percentage 
points (pps) of GDP by 2040, to around 18% 
of GDP, with a further increase of 3.5 pps by 
2070  (see  Table  A1.12).  The  overall increase is 
in  pension 
the 
expenditure, with smaller increases for healthcare 
and  long-term  care.  Total  spending  on  ageing-
related  items  is  set  to  remain  below  the  EU 
average. 

result  of  a  projected 

rise 

Public  pension  spending  as  a  proportion  of 
GDP  is  projected  to  increase  by  around 
1.5 pps over the next decades and by around 
4 pps  by  2070.  At  12%  of  GDP  in  2070,  gross 
spending  on  public  pension  benefits  would  be  in 
line  with  the  projected  EU  average.  In  2025,  the 
Council called on to Hungary to improve the long-
term  sustainability  of  the  pension  system,  while 
preserving adequacy. No measures to address this 
matter have been adopted recently, though a 14th 
month pension benefit has been introduced, which 
will add to the projected spending pressures. 

Supplementary  pension  schemes  can  boost 
the  resilience  of  the  pension  system  by 
diversifying  sources  of  retirement income.  In 
Hungary, however, their uptake remains limited: at 

the end of 2024, private pension assets amounted 
to  around  5%  of  GDP  while  around  18%  of  the 
(47).  This 
working-age  population  participated 
coincides  with 
rising  spending  pressures  on 
medium-term  public  pensions  and  a  projected 
increase  in  the  replacement  rate  of  1.6  pps 
between  2025  and  2040  (Table  A2.2  and  A2.3) 
(48). 

the 

but 

below 

remain 

long-term 

Public  healthcare  and 
care 
expenditure  are  projected  to  increase  by 
EU 
2070 
average.   Public  healthcare  expenditure 
is 
projected  at  4.3%  of  GDP  in  2025  (below  the  EU 
average  of  6.6%)  and  is  expected  to  increase  by 
0.3 pps by 2040 and by a further 0.2 pps by 2070. 
Public  expenditure  on  long-term  care  is  projected 
at 0.6% of GDP in 2025 (below the EU average of 
1.7%)  and  is  expected  to  increase  by  0.1  pp  of 
GDP by 2040 and by a further 0.2 pps of GDP by 
2070. 

(47)  Source: OECD Pension Market in Focus 2025. The highest 

participation rate in at least one supplementary pension plan 
is reported.   

(48)  The (gross) replacement rate refers, depending on data 

availability, to both public and private pensions. It is based 
on projections from the 2024 Ageing Report.  

43 

HU16.01.30.30.10.11.717.7HUEU24.30.50.30.4-0.30.925.2EUHU16.04.20.50.30.25.221.3HUEU24.30.20.60.8-0.31.325.6EUageing-related expenditure change in 2025-2040 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalageing-related expenditure change in 2025-2070 (pps GDP) due to:ageing-related expenditure pensionshealthcarelong-term careeducationtotalAssets in 2024 (% GDP)Participation in 2024 (% working-age population)HU4.81.618.4HUEU32.4-2.855.9EUGross replacement rate at retirement: (pps change 2025-2040)  
 
 
   
 
 
     
 
National fiscal frameworks 

interference.  Hungary  conducted  two  spending 
reviews  in  2023-24  but  the  results  were  not 
published or reflected in budgetary planning.  

The  CSRs  addressed  to  Hungary  in  2025 
include a call to strengthen the medium-term 
budgetary  framework,  align  the  preparation 
of  annual  budgets  with  the  budget  year  and 
limit  discretion  in  the  implementation  of 
annual budgets. The ‘state of danger’ law (49) in 
force  since  2020  has  lifted  the  requirement  to 
publish  a  multiannual  budgetary  plan  and 
therefore limits the ability of the fiscal framework 
to 
and 
accountability.  Hungary  tends  to  adopt  its  budget 
early  and  the  2026  budget  was  no  exception  –  it 
was  adopted  in  June  2025.  Frequent  revisions  of 
budgetary targets reduce their credibility.  

ensure  medium-term 

orientation 

or 

to 

assess 
forecast  underlying 

The Fiscal Council of Hungary (FCH) is a small 
independent  fiscal  institution  (IFI)  with  a 
the 
narrow  mandate: 
macroeconomic 
the 
government’s  annual  budgetary  plan  and  to 
monitor  compliance  with  national  fiscal 
rules.  It  produces  medium-term  forecasts  but  no 
long-term  macroeconomic 
budgetary 
projections.  It  also  does  no  policy  costing.  The 
President of Hungary appoints the head of the FCH 
without  any  nomination  procedure.  Two  of  three 
board members are heads of other institutions at 
the same time (the Central Bank and Audit Office), 
which  could  affect  the  FCH’s  independence  and 
make it harder to develop a proper identity as an 
IFI.  It  also  relies  heavily  on  staff  from  these  two 
other  institutions  to  perform  its  regular  tasks.  It 
maintains  a  relatively  low  media  profile  and  has 
never  undergone  an 
independent  external 
evaluation. 

The  state  of  play  on  spending  reviews  is 
heavily intertwined with broader governance 
concerns: 
fiscal 
budgetary 
transparency,  medium-term 
anchoring  and  the  independence  of  public 
financial  management  bodies  from  political 

institutional 

strength, 

(49)  Under the state of danger, the government may issue 

decrees by which it can suspend the application of certain 
laws, deviate from legal provisions and take other 
extraordinary measures, which can be adopted by the 
parliament as laws ex post. The state of danger under the 
Article 53 of the Fundamental Law was introduced during 
COVID-19 pandemic and has been repeatedly extended. It is 
currently in force until 13 May 2026.   

improves 

accounting 

Accrual 
the 
transparency  of  a  public  body’s  financial 
position  and  performance,  and  can  support 
sustainability  and  intergenerational  equity. 
Most  Member  States  (14)  have  implemented 
accrual accounting across the general government 
sector  and  five  are  set  to  do  so  by  2030  (50). 
Hungary  is  close  to  the  EU  average  in  terms  of 
public-accounting  maturity  (see  Table  …)  but  has 
not  yet  implemented  accrual  accounting  and  has 
no plans to do so in the medium term (51). 

Climate  change  is  increasingly  impacting 
public  finances.  The  Commission’s  scenario 
analyses show that the long-term costs of inaction 
significantly  exceed  those  of  climate  action  (52). 
insurance  protection  gap, 
Hungary’s  climate 
estimated  at  95%,  highlights potential  fiscal  risks 
(see  EEA  data  (53)).  Meeting  Hungary’s  mitigation 
and  adaptation  priorities  will  require  additional 
resources (see Chapter 3).    

(50)  Report on public accounting in the EU (COM(2025)746 and 
accompanying Staff Working Document SWD(2025)396). 
Countries with an accounting maturity of 70% or more in 
relation to International Public Accounting Standards are 
deemed to apply accrual accounting. 

(51)  Annexes 3.1 and 3.4 of SWD(2025)396 

(52)  See European Commission (2026), Debt Sustainability 
Monitor 2025, Institutional Paper No 332, 12 February. 

(53)  European Environment Agency: Economic losses from 
weather- and climate-related extremes in Europe 

44 

 
 
 
 
Table A2.3:  Fiscal Governance Database indicators and Public Accounting Maturity 

(1) "The Country Fiscal Rule Strength Index (C-FRSI) shows the strength of national fiscal rules aggregated at the country level 
based on i) the legal base, ii) how binding the rule is, iii) monitoring bodies, iv) correction mechanisms, and v) resilience to shocks. 
The Medium-Term Budgetary Framework Index (MTBFI) shows the strength of the national MTBF based on i) coverage of the 
targets/ceilings included in the national medium-term fiscal plans; ii) connectedness between these targets/ceilings and the 
annual budgets; iii) involvement of the national parliament in the preparation of the plans; iv) involvement of independent fiscal 
institutions in their preparation; and v) their level of detail. A higher score is associated with higher rule and MTBF strength. 
The score for public accounting reflects the degree of maturity in relation to the International Public Sector Accounting Standards 
(IPSAS). Countries with an accounting maturity of 70% or more in relation to IPSAS are deemed to apply accrual accounting. For 
more information, see the report on public accounting in the EU (COM(2025)746 and accompanying Staff Working Document 
SWD(2025)396)." 
Source: Fiscal Governance Database, European Commission 

45 

2024HungaryEU AverageCountry Fiscal Rule Strength Index (C-FRSI)10.3914.81Medium-Term Budgetary Framework Index (MTBFI)0.330.722025 Public accounting maturity of general government64%65% 
 
  
 
ANNEX 3: TAXATION 

This  annex  provides  an 
indicator-based 
overview of Hungary’s tax system.  It includes 
information  on  the  tax  mix,  on  competitiveness 
and fairness aspects of the tax system, and on tax 
collection  and  compliance. 
It  also  provides 
information on the risks of aggressive tax planning 
activity. In the area of taxation, the 2025 CSRs for 
Hungary  highlighted  challenges  in  stimulating  the 
development  of  capital  markets  by  increasing  tax 
and regulatory incentives. 

Hungary’s  tax  revenues  as  a  percentage  of 
GDP  remain  below  the  EU  average,  with  a 
relatively  heavy  reliance  on  consumption 
taxes and a relatively low reliance on labour 
taxes.  Table A3.1  shows  that  Hungary’s  annual 
tax  revenues  as  a  percentage  of  GDP  increased 
from  35.0%  in  2023  to  35.3%  in  2024,  although 
this  figure  remained  below  the  EU  average  of 
39.4%. Labour taxation (15.4% of GDP in 2024) is 
still  the  largest  tax  base,  although  its  relative 
importance  has  declined  since  2019.  The  tax 
system  relies  heavily  on  consumption  taxes 
(13.6% of GDP in 2024, above the EU average of 
10.6%).  Capital  taxation  as  a  percentage  of  GDP 
was  6.2%  in  2024  (against  an  EU  average  of 
8.5%).  Revenue  from  environmental  taxation  is 
close to the EU average (2.0% of GDP in 2024 as 
compared  with  2.1%  in  the  EU),  but  recurrent 
property  taxation  remains  relatively  low  (0.3%  of 
GDP  in  2024  compared  with  the  EU  average  of 
taxes  were 
0.9%).  Revenues  from  property 
relatively low (0.8% GDP), remaining below the EU 
average (1.8%). 

Graph A3.1: Tax revenue by economic function in 
2024, HU (outer ring) and EU-27 (inner ring) 

Source: Taxation Trends Data, DG TAXUD 

The corporate income tax (CIT) rate, at 9%, is 
the  lowest  in  the  EU  (the  EU  average  is 
around  21%).  In  addition  to  CIT,  Hungarian 

46 

resident companies are subject to a local business 
tax,  which  is  deductible  for  CIT  purposes.  The 
forward-looking  average  effective  tax  rate  was 
11.1%  in  2022  (third  lowest  among  EU  Member 
States;  EU  average  around  19%).  The 
low 
statutory  tax  rates,  combined  with  a  limited  tax 
base due to various tax incentives and exemptions, 
reduces  the  tax  revenue  generated  from  CIT. 
Companies  can  avail  of  an  energy  efficiency  tax 
incentive  to support  clean  investment.  This  allows 
them to deduct up to 70% of their CIT liability (the 
total  tax  benefit  is  capped  by  state  aid  intensity 
rules at 30% of eligible investment costs for large 
enterprises,  which  may  increase  to  40%  for 
medium-sized  enterprises  and  50%  for  small 
enterprises,  with  an  overall  ceiling  of  EUR  15 
million  per  investment),  if  they  meet  certain 
energy savings targets. 

Hungary  has  increased  the  threshold  that 
requires  companies  to  submit  monthly  tax 
filings. From 2026, companies with an annual tax 
liability 
(previously 
HUF 5 million)  will  be  eligible  to  submit  quarterly 
advances. The main aim of this reform is to reduce 
the  administrative  burden  on  SMEs  and  allow 
higher short-term cash flow. 

HUF 20 million 

below 

Hungary’s  labour  tax  burden  is  significantly 
higher  than  the  EU  average  for  low-wage 
earners. Hungary’s flat 15% personal income tax 
(PIT) rate is one of the lowest top income tax rates 
in  the  EU.  As  a  result,  the  tax  wedge (54)  is  the 
same across different income levels, meaning it is 
relatively  high  for 
low-income  earners  and 
relatively  low  for  high-income  earners.  As  shown 
in  Table A3.1,  Hungary’s  labour  tax  wedge  for 
single  people  earning  50%  of  the  average  wage 
was  41.2%  in  2025,  which  is  higher  than  the  EU 
average (31.6%). For workers earning the average 
wage,  Hungary’s  tax  wedge  was  close  to  the  EU 
average,  while  it  was  below  the  EU  average  for 

(54)  The  tax  wedge  is  an  indicator  of  the  tax  burden  on  labour 
that  can  be  assessed  at  various  levels  of  earnings.  It  is 
defined as the sum of personal income taxes and employee, 
employer  social-security  contributions,  and  other  mandatory 
contributions,  expressed  as  a  percentage  of  total  labour 
costs  (the  sum  of  the  gross  wage  and  social-security 
contributions  paid  by  the  employer).  Tax  wedge  data  in  the 
2026  country  reports  are  based  on  the  EUROMOD  model, 
calculated  by  the  Joint  Research  Centre  of  the  European 
Commission,  while  past  country  reports  were  based  on  the 
OECD 
the  underlying 
methodology  is  very  similar,  differences  in  the  assumptions 
can lead to different results between both models. 

tax  and  benefit  model.  While 

51.526.821.643.838.617.7Taxes on labourTaxes on consumptionTaxes on capital 
 
     
 
 
 
Table A3.1:  Taxation Indicators 

(1) Forward-looking effective tax rate (KPMG).  
(2) A higher value indicates a stronger redistributive impact of taxation. This indicator is calculated based on microdata from the 
EU statistics on income and living conditions survey. Data for Hungary were not available in the EU SILC microdata at the time of 
the preparation of this Annex. 
(*) EU-27 simple average. 
(**) Forecast value for 2024. EU-27 refers to the median value. For more data on tax revenues as well as the methodology 
applied, see the Data on Taxation Trends webpage. 
Source: European Commission, OECD, ISORA. 

higher earners (at 167% of the average wage, see 
Graph A3.2).  This  means  that  the  tax  system 
places  a  disproportionate  burden  on  lower-paid 
workers,  which  could  have  negative  implications 
for  the  employment  of  low-skilled  workers  (see 
they  are  also 
In  addition, 
also  Annex 11). 
disproportionately  burdened  by  high  consumption 
taxes,  as  poorer  households  consume  a  higher 
proportion of their income than richer ones.  

measures (56).  By  2026, 
tax  allowances  for 
mothers  have  been  extended  to  those  with  three 
children, as well as mothers under 40 years of age 
with two children. However, tax allowances and tax 
credits  have  not  proved  effective  in  reducing 
monetary  poverty  as  low-income  households  and 
those  with  low  work intensity  cannot  fully  benefit 
from  them  for  having  a  low  tax  base  (see  also 
Annex 12). 

is 

system 

benefit 

limited. 

The  inequality-reducing  impact  of  the  tax 
and 
The 
effectiveness  of  the  tax  and  benefit  system  in 
reducing inequality  has declined  over time, falling 
below  the  EU  average (55).  Hungary  is  one  of  the 
few  EU  countries  that  imposes  a  flat  rate  tax  on 
labour income, combined with high flat-rate social 
the 
security  contributions.  Tax  expenditures 
personal income tax amount to about 11% of total 
PIT  revenues,  and  around  98%  of  these  tax 
to  family-related 
expenditures  are  dedicated 

(55)  See European Commission: ‘2025 Country Report – Hungary’, 
Commission Staff Working Document  COM(2025) 217 final, 
p. 41; see also Annex 12.   

(56)  See Turrini et al. (2024): ‘Tax Expenditures in the EU: Recent 
Trends  and  New  Policy  Challenges’,  European  Commission, 
European Economy Discussion Paper 212. 

47 

2019202220232024202520192022202320242025Tax structureTotal taxes (including compulsory actual social contributions) (% of GDP)36.135.135.035.339.939.739.039.4Taxes on labour (% of GDP)16.514.614.715.420.620.119.920.3of which, social security contributions (SSC, % of GDP)11.69.910.010.413.012.712.713.0Taxes on consumption (% of GDP)13.714.213.513.611.210.910.510.6of which, value added taxes (VAT, % of GDP)9.410.19.49.27.17.47.17.1Taxes on capital (% of GDP)5.86.36.86.28.18.78.58.5Personal income taxes (PIT, % of GDP)5.15.35.45.69.69.49.39.6Corporate income taxes (CIT, % of GDP)1.11.31.71.62.63.23.23.1Total property taxes (% of GDP)1.01.00.80.82.22.11.91.8Recurrent taxes on immovable property (% of GDP)0.40.30.30.31.21.00.90.9Environmental taxes (% of GDP)2.31.92.22.02.62.12.12.1Effective carbon rate in EUR per tonne of CO2 equivalentsnana50.6nanana84.8naTax wedge at 50% of average wage (single person) (*)44.441.241.241.241.232.431.631.531.531.6Tax wedge at 100% of average wage (single person) (*)44.441.241.241.241.240.139.739.939.940.0Corporate income tax - effective average tax rates (1) (*)10.210.210.210.220.019.219.019.3Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)nananana7.88.07.97.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)12.310.69.5na31.832.630.7naVAT gap (% of VAT total tax liability, VTTL) (**)10.42.57.4na10.57.38.2naProgressivity & fairnessTax administration & complianceBy tax baseSome tax typesEU-27Hungary 
 
 
 
 
   
 
Graph A3.2: Tax wedge for single and second 
earners as a % of total labour costs, 2025 

(1) The second earner tax wedge assumes a first earner at 
100% of the average wage and no children. For the 
methodology of the tax wedge for second earners, see 
OECD, 2016, Taxing Wages 2014-2015. 
Source: European Commission 

Hungary publishes an annual tax expenditure 
(TE),  but  there  is  scope  to  strengthen  the 
evaluation.  The  report  discusses  and  quantifies 
the  most  important  provisions.  It  also  provides 
aggregate  information  on  revenue  foregone  for 
specific  types  of  taxes.  Overall,  Hungarian  TEs 
were  estimated  at  about  2.1%  of  GDP  in  2022. 
However, the Global Tax Expenditure Transparency 
in  105th  position  with 
Index  ranks  Hungary 
regards  to  the  regularity,  scope  and  quality  of  its 
TE  reports.  Hungary  scores  particularly  poorly  on 
dimension 4 (descriptive TE data) and dimension 5 
(TE assessments), which would be the most crucial 
dimensions  to  identify  whether  TEs  are  meeting 
their  policy  objectives.  Increasing  accountability 
and quality of the evaluations would help identify 
tax 
reduce 
and 
expenditures.  

inefficient  or 

ineffective 

There  are  a  high  number  of  exemptions,  tax 
incentives  and  sector-specific  taxes,  making 
the  tax  system  complex  and  distortive.  In  its 
recovery  and  resilience  plan,  Hungary  committed 
to  simplifying  the  system  by  reducing  several 
sector-specific 
taxes,  although  sector-specific 
taxes  remain  in  the  energy,  retail  and  finance 
sectors.  These  taxes  place  a  higher  burden  on 
certain firms, possibly undermining the concept of 
the single market. 

Overall,  Hungary  performs  relatively  well  in 
terms  of  tax  collection.  Although  the  VAT 
compliance  gap  rose  to  over  7%  of  the  VAT  total 
tax  liability  in  2023  after  a  steep  decrease 
registered from 2019 to 2022, it remained below 

48 

the  EU  average.  The  observed  increase  -  one  of 
the highest increases among EU Member States  - 
was likely influenced by higher non-compliance in 
the  service  sectors  and  a  rise  in  bankruptcy 
declarations (57). At the same time, Hungary’s VAT 
several 
administration 
strengths (58).  At  9.5%  in  2023,  the  level  of 
outstanding tax arrears is significantly low and has 
remained  below  the  EU  average  in  recent  years. 
However, Hungary  does  not  report  figures  for  on-
time payment rates. 

practices 

have 

the 

burden 

Hungary’s  digitalisation  efforts  have  been 
reducing 
for 
compliance 
taxpayers. Hungary has full or high e-filing rates 
for  VAT  (100%),  PIT  (99.5%),  and  CIT  (100%) 
returns.  In  line  with  its  commitments  under  the 
recovery and resilience plan, Hungary is continuing 
to  digitalise  its  tax  administration.  The  Hungarian 
tax authority provides for advanced data analytics 
and  risk-based  compliance  management,  coupled 
with nudging tools to boost  voluntary compliance. 
Hungary has been further rolling out the use of AI 
from data governance processes to data analytics. 
In  addition,  it  provides  various  online  tools  and 
services to taxpayers reducing compliance cost (59).  

The  changes  introduced  aimed  at  tackling 
aggressive tax planning, appear to have had 
a positive impact. Inward flows of foreign direct 
investment  (FDI)  as  a  percentage  of  GDP  have 
decreased to 116% in 2024, from 194% in 2023. 
While  the  percentage  of  inward  FDI  stocks,  held 
through  special  purpose  entities,  relative  to  GDP 
fell  to  55%  in  2024  (from  65%  in  2023).  As  in 
previous years, these figures suggest that Hungary 
may be used in aggressive tax planning structures, 
although to a lesser extent in 2024 than before. At 
the  same  time,  Hungary  still  does  not  levy  a 
withholding  tax  on  interest,  dividend  and  royalty 
payments.  This  may  facilitate 
low  tax  cost 
repatriation  of  invested  funds  and  raises  the  risk 
of aggressive tax planning. 

(57)  European  Commission,  Directorate-General  for  Taxation  and 

Customs Union, VAT gap in the EU - 2025 report. 

(58)  European Commission, Directorate-General for Taxation and 

Customs Union, Mind the gap - 2025 report. 

(59)  European Commission, Directorate-General for Taxation and 

Customs Union, Mind the gap - 2025 report. 

41.241.241.241.241.22025303540455050100150Tax wedge, % of total labour costsEarnings as % of the average wageSingle earner - HUSingle earner - EU averageSecond earner -  HUSecond earner -  EU average 
   
 
PRODUCTIVITY 
ANNEX 4: INNOVATION TO BUSINESS  

hindering 

Insufficient  R&D  investment  and  a  narrow 
to  constrain 
innovation  base  continue 
in  science  and 
Hungary’s  advancements 
competitiveness.  
innovation, 
According  to  the  2025  European 
Innovation 
Scoreboard  (60),  Hungary  has  fallen  from  the 
innovator  to  that  of 
category  of  moderate 
emerging innovator, despite gradual improvements 
in performance over time. Hungary’s research and 
development  (R&D)  intensity  has  stagnated  over 
the past decade, remaining significantly below the 
EU  average  (1.31%  of  GDP  in  2021  compared  to 
2.24%  for  the  EU  average).  Low  public  R&D 
investment affects the quality of the science base, 
innovative  potential. 
undermining  Hungary’s 
Science-business  linkages  remain  underexploited, 
and 
to  be 
concentrated  in  a  small  group  of  foreign-owned 
firms,  limiting  the  development  of  a  broader 
domestic  innovation  base  and  underscoring  the 
need  to  involve  more  companies  in  R&I  activities, 
particularly 
enterprises, 
particularly  SMEs,  continue  to  lag  behind  their  EU 
counterparts in the field of advanced technologies 
(e.g. AI). To tackle these persistent challenges, the 
2025  country-specific  recommendations  (CSRs) 
called for strengthening the innovation framework 
for  the  public  sector  and  business,  improving  the 
predictability  of  public  R&D  spending  as  well  as 
better targeting existing measures to SMEs (61). 

innovation  activities 

Hungarian 

continue 

SMEs. 

Excellent science 

its 

Hungary’s  persistently 
low  public  R&D 
investment  limits  scientific  progress  and 
economic 
delays 
transformation.  Public  R&D  expenditure  has 
stagnated over the past years, falling to 0.31% of 
GDP in 2024, far below the EU average of 0.72% 
and  behind  most  of  its  Central  and  Eastern 

long-term 

European peers (62). As a result, Hungary is not on 
track to meet its national target of investing 3% of 
in  R&D  by  2030 (63).  This  persistent 
GDP 
underinvestment  limits  scientific  excellence.  In 
2022,  only  5.8%  of  the  country’s  publications 
ranked among the top 10% most-cited worldwide, 
well below the EU average of 9.4%. To tackle this 
issue,  the  National  Research  Excellence  Council 
was  tasked  with  strengthening  excellence-based 
research  funding  through  the  national  research 
excellence  programme (64).  However,  this  measure 
does not address the issues identified in the 2025 
CSR  on improving the predictability  of public  R&D 
spending  and  falls  short  of  tackling  Hungary’s 
systemic underfunding of public research, which is 
exacerbated by weak monitoring and evaluation of 
science policies.  

Graph A4.1: Public expenditure on R&D (GOVERD + 
HERD) as a percentage of GDP in 2024 

Source: Eurostat 

system, 

funding  mechanisms 
research 

Fragmentation,  institutional  instability  and 
erode 
inefficient 
Hungary’s 
leaving 
scientists  with  precarious  careers,  outdated 
infrastructure and slim chances of competing 
the 
internationally.  The 
research  institutes  of  the  Hungarian  Research 
Network  (HUN-REN),  begun  in  2019,  continued  in 
2025  with  the  detachment  of  the  four  research 
institutes  dealing  with  humanities  and  human 
sciences  to  the  Eötvös  Loránd  University.  The 
creation  of  parallel  institutional  structures  (65)  as 

reorganisation  of 

(60)  2025 European Innovation Scoreboard (EIS), country profile 
Hungary, country profile - Hungary The EIS provides a 
comparative analysis of innovation performance in EU 
countries, including the relative strengths and weaknesses of 
their national innovation systems (also compared to the EU 
average). 

(61)  Council recommendations on the economic, social, 

employment, structural and budgetary policies in Hungary 

(62)  For example, public R&D investment accounts for 0.64% of 
GDP in Czechia, 0.51% in Poland, and 0.64% in Slovenia. 

(63)  National research, development and innovation strategy 

2021-2030. 

(64)  Nemzeti Kutatási Kiválósági Program (NKKP) 

(65)  Parallel structures were created at the same institutions with 
the transfer of the four research institutes to ELTE but also 

49 

00.20.40.60.81ATCZSIPLSKHUEU average 
 
 
 
  
 
 
 
 
Employment 

in 
for  0.38%  of 

(70). 
Hungary 
high-growth 
total 
enterprises  accounted 
employment in 2023, compared with 0.87% in the 
EU  and  with  much  higher  levels  in  regional  peers 
such as Slovakia (0.85%) or Poland (0.91%). Small 
(SMEs)  remain 
and  medium-sized  enterprises 
insufficiently engaged in R&I activities (71), despite 
a high proportion of non-innovators with potential 
to  innovate (72).  Since  the  end  of  2024,  several 
calls  for  proposals  have  been 
launched  for 
developing  the  innovation  activity  of  SMEs  under 
cohesion policy, amounting to more than EUR 660 
million.  The  uptake  and  eventual  impact  of  these 
calls remain to be seen.  

High  levels  of  public  support  for  business 
R&D have not delivered the expected results, 
pointing to shortcomings in the effectiveness 
instruments.  The  government 
of  existing 
implements  multiple  measures 
to  stimulate 
business  R&D,  including  indirect  support  through 
tax incentive schemes (73). However, the uptake of 
these  measures  by  firms  has  been  lower  than 
anticipated (74), and despite high levels of support, 
there  has  been  no  corresponding  increase  in 
innovation  performance  as  measured  by  patent 
applications. Rather, patenting activity has steadily 
declined  over  the 
last  decade,  with  patent 
applications  filed  under  the  Patent  Cooperation 
Treaty per billion GDP (in PPS EUR falling to 1.62 in 
2022, significantly below the EU average of 2.8.  

well  as  changes  in  the  employment  status  of 
researchers and trade union representation as well 
as  remaining  concerns  over  academic  freedom 
increased  researchers’  sense  of  unpredictability 
(66).  Furthermore,  the  lack  of  research  career 
pathway,  coupled  with  low  salaries,  significantly 
affects  the  attractiveness  of  academic  research 
careers (67). This further weakens the skills supply 
that  is  key  for  knowledge  diffusion  as  well  as 
society and the market uptake of innovation. With 
the  goal  of  strengthening  Hungary’s  knowledge-
based  economy  to  become  one  of  the  top 
innovators  in  Europe  by  2030,  the  John  von 
Neumann  programme (68)  provides  the  framework 
for the country’s research and innovation strategy. 
The programme’s mission-oriented approach is an 
important  step  toward  aligning  research  and 
innovation  efforts  with  strategic  objectives. 
However, 
evaluation 
and 
components remain underdeveloped. 

its  monitoring 

Business innovation 

capacity 

innovation 

Hungary’s 
remains 
concentrated  within  a  small  group  of  large, 
predominantly  foreign-owned  firms  and  a 
limited  number  of  domestic  manufacturers. 
Business enterprise expenditure on R&D peaked at 
1.23% of GDP in 2021 and subsequently declined 
to  0.99%  in  2024,  well  below  the  EU  average  of 
1.49%.  The  Hungarian  economy 
largely 
dependent on large foreign direct investment (FDI) 
net  flows (69)  from  big  medium-high-tech  and 
high-tech  manufacturers.  Domestic  firms  are 
predominantly  engaged  in  assembly-focused,  low 
value-added  roles  within  international  production 
networks,  while 
few  multinational 
relatively 
companies locate their core innovation activities in 

is 

at system level with the creation of the research institutes 
favoured by the government with higher institutional funding 
like the Mathias Corvinus Collegium (MCC) or Veritas.  

(66)  Tézisek a tudományért 

(70)  Enhancing labour market relevance and outcomes of 
doctoral education: Country note Hungary | OECD. 

(71)  Business enterprise expenditure on R&D (BERD) performed 
by SMEs as % of GDP has been decreasing over the last 
decade, from 0.47 % in 2013 to 0.34 % in 2023, below the 
EU average.  

(67)  The situation of researchers in Hungary and those connected 

to the country - Main findings of the research 

(68)  https://kormany.hu/dokumentumtar/neumann-janos-program. 

(69)  Inward FDI flows in 2023 reached 194% of GDP, nearly three 
times the EU average (84%) (Source: 2025 country report – 
Hungary ). 

(72)  Non-innovators with a potential to innovate account for 
39.6%, against the EU average of 17.8% (source: EIS, 
Hungary country profile). 

(73)  Hungary - Details | INNOTAX Portal. 

(74)  Enhancing labour market relevance and outcomes of 
doctoral education: Country note Hungary | OECD. 

50 

 
 
 
Graph A4.2: Patent applications to the EPO by 
country of applicants and inventors in 2024 

Source: Eurostat 

in 

Research, 

Development 

To  achieve  the  country’s  strategic  goals  of 
enhancing  innovation  and  competitiveness, 
the  2026  programme  strategy  (75)  of  the 
National 
and 
Innovation 
(RDI)  Fund  places  greater 
emphasis  on  research  excellence  and  life 
sciences 
industry  and 
the  health 
international  collaboration.  Because  of  the 
2025  CSR  on  strengthening  Hungary’s  innovation 
improve  policy 
is  essential  to 
framework, 
effectiveness  through  regular  evaluation  and 
monitoring  of  the  country’s  innovation  support 
mechanisms,  aligned  with 
international  best 
tax 
practices.  This 
incentives  and  other  fiscal  measures  to  ensure 
efficient public spending and broader participation 
in  the  innovation  ecosystem,  particularly  among 
SMEs.  

includes  assessing  R&D 

it 

is 

lack  of 

structured  public-private 
The 
insufficient 
partnerships,  combined  with 
policies and entrepreneurial culture, impedes 
Cooperation 
research 
commercialisation. 
between  academia  and  businesses 
largely 
concentrated in hubs around incumbent firms with 
links  to  universities,  notably  in  the  automotive, 
electronics  or  pharmaceutical  sectors,  resulting  in 
an  above-EU-average  proportion  of  public-private 
scientific  co-publications  (76).  By  contrast,  public 
expenditure  on  R&D  financed  by  businesses  as  a 
proportion of total public expenditure on R&D has 
steadily declined over the last decade, from 8.42% 
in  2014  to  1.94%  in  2024,  far  below  the  EU 
average  of  7.51%.  This  points  to  a  very  low 
propensity  of  firms  to  contract  with  public 

The 

labs. 

National 

research 

launched  by 

and 
results 

research 
Research, 
Development  and  Innovation  Office  (NRDI)  has 
launched  major  programmes  and  calls 
to 
encourage  university-industry  collaboration,  such 
as  the  Technology  Transfer  Company  Network 
Development  programme.  To  complement  these 
funding  efforts,  various  non-financial  support 
programmes  have  been 
the 
Hungarian  National  Innovation  Agency  in  recent 
years,  aimed  at  fostering  mentoring  activities, 
the 
entrepreneurial 
education 
commercialisation  of 
from 
universities.  The  planned  science  and  innovation 
parks (77)  are  also  expected  to  foster  knowledge 
and 
valorisation.  Nonetheless, 
communication 
and 
between 
industries  remain  insufficient,  and  SMEs  have 
limited 
in  R&D  and 
technology  transfer  activities  (78).  To  maximise 
impact,  and in  line  with  the  CSR  on  strengthening 
innovation  framework  as  well  as  better 
the 
targeting  existing  measures  towards  SMEs,  the 
effective implementation and monitoring of newly 
introduced  measures  will  be  crucial,  alongside  a 
necessary, 
rigorous 
realignment  of  existing  programmes  supporting 
science-industry collaboration.  

collaboration 
universities 

and,  when 

to  engage 

evaluation 

incentives 

Despite the continued increase in the take-up 
of  advanced  technologies,  most  businesses, 
in  particular  SMEs,  are  not  yet  fully  reaping 
the benefits due to a lack of digital skills. The 
low  level  of  digital  skills  and  the  proportion  of  IT 
specialists in employment (see Annex 13) are also 
barriers  to  the  digitalisation  of  SMEs.  In  Hungary, 
59.8% of SMEs had at least a basic level of digital 
intensity, well below the EU average of 71.4%. The 
digitalisation  of  Hungarian  SMEs  is  showing  a 
positive  trend  but  still  lagging  behind  EU  peers. 
Only 5.5% of SMEs in Hungary reached a very high 
level of digital intensity, against the EU average of 
9.1%.  With  10.4%  for  AI  adoption,  Hungarian 
enterprises  perform  significantly  below  the  EU 
average of 20%.  

(75)  NKFIH | Programstratégia 2026 

(77)  Neumann János Programme. 

(76)  9.97% of total publications in 2024, compared with the EU 

(78)  Comparative analysis of technology transfer models of 

average of 7.62. 

Hungary and Israel (Korányi, Fülöp, 2025) 

51 

0.50.100.150.200.250.300.350.400.450.500.SELUFIDKNLDEATBEIEFREU 27MTITSICYEEESPTLTCZLVPLHUSKHRELBGRO 
  
 
 
Entrepreneurial dynamism 

The  startup  ecosystem  is  expanding,  but 
venture capital availability remains unstable, 
hindering further growth. In 2024, Hungary was 
home  to  over  1600  startups  (79)  and  the  startup 
sector  has  been  growing  steadily,  with  an  annual 
growth  rate  of  around  10-15%  in  the  number  of 
new  ventures  and  funding  received  (80).  Venture 
capital 
investment  as  a  percentage  of  GDP 
progressed  well  until  2021,  but  then  fell  sharply, 
from  0.09%  of  GDP  in  2021  to  0.03%  in  2024, 
well below the EU average of 0.06%. Financing at 
seed,  startup  and 
later  stages  have  been 
decreasing over recent years, remaining below the 
EU  average. 
terms  of  deals  volume,  a 
substantial  number  is  financed  by  public  sources 
that  crowd  out  private  market  dynamism.  Heavy 
funding,  which  can  be 
reliance  on  public 
inconsistent,  adds  to  the  uncertainty.  Low  startup 
creation  volume  remains  the  ecosystem’s  biggest 
challenge. This is also due to long and complicated 
administrative processes, the lack of a risk-taking 
culture  and  talent  retention  and  development 
combined  with  weak  entrepreneurship  education 
(81).  

In 

education 

Entrepreneurship 
is 
underdeveloped  in  Hungary  and  systemic 
changes  are  needed  to  strengthen  it.  While 
there  are  several  state  and  private  initiatives 
supporting  the  development  of  entrepreneurial 
skills,  Hungary  has  no  national  strategy  for 
entrepreneurship education. The school curriculum 
is limited to economic financial literacy, integrated 
in  primary  school  mathematics  teaching  (82). 
According  to  the  latest  Global  Entrepreneurship 
Monitor  report,  entrepreneurship  education  at 
school  level  remains  weak,  with  only  21.6%  of 
people  aged  18-64  reporting  that  they  acquired 
entrepreneurship  knowledge  in  secondary  school 

(79)  Source: Dealroom. 

(83).  However,  in  recent  years,  the  ecosystem 
conditions  of  entrepreneurship  education  have 
improved  in  vocational  and  tertiary  education  (84). 
Hungary  participated  in the  Visegrad  Fund  project 
’Development  of  Entrepreneurship  competencies 
among Generation Alpha in primary and secondary 
fosters  entrepreneurial  skills 
schools,  which 
(85).  Hungary 
through  collaborative  activities 
promotes  entrepreneurship  among  graduates  in 
(VET),  by 
vocational  education  and 
providing them with a lump sum grant to help with 
their  transition  to  the  labour  market.  Several 
universities  offer  training  programmes  supporting 
young  entrepreneurs.  For  example,  the  Corvinus 
University  of  Budapest  collaborates  with  the 
Ministry  of  Culture  and 
Innovation  and  the 
Hungarian Chamber of Commerce and Industry on 
an entrepreneurship roadshow offering mentorship 
opportunities  for  secondary  education  students 
and graduates (86).   

training 

Addressing  labour  and  skills  shortages  is 
essential  for  driving  innovation  and  sustaining 
competitiveness.  The  proportion  of  the  population 
aged  25-34  who  have  successfully  completed 
tertiary  education  has  been  stagnating  over  the 
past decade  and  stood  at  32.3% in  2025,  among 
the lowest rates in the EU (see Annex 13). In 2024 
the  number  of  new  graduates  in  science  and 
engineering  per  thousand  population  aged  25-34 
was well below the EU average, at 9.13 vs 16.82. 
While  6.8%  of  students  studied  abroad 
in 
2024/25, 49% of students planned to live abroad 
(87). As in 2025, 52% of Hungarian firms cited lack 
of access to skilled staff as a barrier to investment 
the  manufacturing  and 
(55%  of 
construction sector) in contrast to the EU average 
of  79%  (88)..  Targeted  structural  reforms  to 
increase the supply of STEM graduates and upskill 
industries  and 
workers  for 
emerging  fields  like  artificial  intelligence  will  be 
vital for future labour market needs. 

technology-driven 

firms 

in 

(83)  Csákné Filep, J., Szennay, Á., Timár, G. (2025). Facing 

Traditional and Digital Disruptions: Entrepreneurship in 
Hungary. Global Entrepreneurship Monitor National Report – 
Hungary, 2024-2025. 

(80)  The Hungarian Start-up Ecosystem: A Comprehensive 

(84)  Idem. 

Overview 

(81)  Idem 

(82)  European Commission: European Education and Culture 

Executive Agency, Baïdak, N., Kocanova, D., Pierantoni, L. and 
Riiheläinen, J. M., Entrepreneurship education at school in 
Europe – 2025 – Eurydice report, Publications Office of the 
European Union, 2025, 

(85)  https://alphaentrepreneurs.eu/about/#key-activities-section  

(86)  https://www.uni-corvinus.hu/post/hir/a-fiatalok-vallalkozova-
valasat-segito-kim-mkik-kepzes-indul-a-corvinus-szakmai-
tamogatasaval/  

(87)  Gyorsjelentes_20240711.pdf 

(88)  EIB Investment Survey 2025: Hungary overview 

52 

 
 
 
Table A4.1:  Key innovation indicators 

(1) EU average for the last available year or the year with the highest number of country data. 
Source: Eurostat, DG JRC, OECD, Science-Metrix (Scopus database), Invest Europe, European Innovation Scoreboard. 

53 

R&D intensity (gross domestic expenditure on R&D as % of GDP)1.131.341.581.391.381.31:2.243.44Public expenditure on R&D as % of GDP0.440.340.360.380.370.31:0.720.64Scientific publications of the country within the top 10% most-cited publications worldwide as % of total publications of the country 5.454.845.955.79:::9.4412.31Researchers (FTEs) employed by public sector (Gov+HEI) per thousand active population2.62.23.83.83.53.2:4.3:International co-publications as % of total number of publications44.5248.5650.6750.5150.8652.19:57.24:Business enterprise expenditure on R&D (BERD) as % of GDP0.680.981.2111.010.99:1.492.70Business enterprise expenditure on R&D (BERD) performed by SMEs as % of GDP0.290.450.470.380.34::0.430.30Researchers employed by business per thousand active population2.43.35.35.85.86.1:5.9:Patent applications filed under the Patent Cooperation Treaty per billion GDP (in PPS €)2.462.451.851.62:::2.812.20Employment share of high-growth enterprises measured in employment (%):::0.430.38::0.87:SMEs with at least a basic level of digital intensity% SMEs (EU Digital Decade target by 2030: 90%)::::53.16:59.8171.39:Data analytics adoption% enterprises (EU Digital Decade target by 2030: 75%)::::53.21:40.5639.85:Cloud adoption% enterprises (EU Digital Decade target by 2030: 75%)::::37.1239.8040.8246.69:Artificial intelligence adoption % enterprises (EU Digital Decade target by 2030: 75%)::::3.687.4110.3719.95:Public-private scientific co-publications as % of total number of publications9.329.6610.6610.7810.729.97:7.62:Public expenditure on R&D financed by business enterprises (national) as % of GDP0.060.030.010.010::0.060.02Total public sector support for BERD as % of GDP0.260.350.240.190.14::0.21:R&D tax incentives: foregone revenues as % of GDP0.160.150.040.00.0::0.100.16BERD financed by the public sector (national and abroad) as % of GDP 0.100.200.200.1500.10:0.11:Venture capital (market statistics) as % of GDP (calculated as a 3-year moving average)0.010.040.080.080.050.03:0.06:Seed stage funding share (% of GDP)000.020.020.010:0.01:Start-up stage funding share (% of GDP)00.030.040.030.030.02:0.03:Later stage funding share (as % of GDP)0.010.010.010.020.020:0.03:New graduates in science & engineering per thousand population aged 25-346.8610.7517.78.4110.49.1:16.8:Graduates in the field of computing per thousand population aged 25-341.481.294.53.34.124.04:3.84:20242025EU average (1)USHungary20102015202020222023Headline indicatorScience and innovative ecosystemsR&D investment & researchers employed in businessesInnovation outputsDigitalisation of businessesAcademia-business collaboration Public support for business innovationFinancing innovationInnovative talent 
 
 
  
 
ANNEX 5: SINGLE MARKET AND INDUSTRY 

its 
the 

income  tax 

continue 
tough 
several 

particular 
in 
location  and 

to  be 
Hungarian  businesses 
business 
a 
confronted  with 
environment, 
features 
despite 
making the country an attractive location for 
central 
investment, 
geographical 
lowest 
corporate 
in  the  EU  (9%). 
The 2025 CSRs called for measures to improve the 
regulatory framework and enhance competition in 
product  markets  and  services,  in  particular  in 
retail,  by  avoiding  arbitrary  administrative 
interventions,  tailor-made 
legislation  providing 
undue  advantage  or  disadvantage  to  specific 
companies  and  market-distorting  state-supported 
transactions,  and  by 
the  use  of 
emergency measures to what is strictly necessary, 
in line with the principles of the Single Market and 
the  rule  of  law.  Business perception  of  the  future 
is  downbeat,  entry  rates  are  low  and  exits  high, 
and existing firms face constraints like high energy 
prices,  access  to  the  right  skilled  labour,  and 
increasingly 
  The  share  of 
Hungarian  firms  investing  (76%)  is  below  the  EU 
the  European 
average 
Investment  Bank  Investment  Survey  (EIBIS)  2025. 
Hungarian  businesses  have  not  expected  an 
increase  in  investment  since  EIBIS  2022  and  are 
pessimistic  about  the  political  or  regulatory 
environment,  the  economic  climate  and  business 
prospects in their sector. Regulation, use of ad hoc 
taxation  and  an  unstable  business  climate 
continue to hinder competition and innovation. 

(86%),  according 

late  payments. 

reducing 

to 

Graph A5.1: GVA by NACE in Hungary (inner circle) 
and EU27 (outer circle) 

Source: Eurostat 

Business dynamics 

stability of international supply chains and trading 
relationships,  particularly  with  the  EU  (80%  of  all 
exports).  The  automotive  industry,  with  over  21% 
of all exports and 5% of GDP, plays a crucial role 
alongside electric vehicle battery production and IT 
electronics. The Hungarian economy is very reliant 
on battery and car manufacturing, which makes up 
over  30%  of  the  manufacturing  sector.  SMEs 
represent  99.9%  of  all  firms,  70%  of  the 
workforce  and  are  responsible  for  56.8%  of  all 
gross value added in the economy. 

Business environment 

several 

challenges. 

The  Hungarian  business  environment  is  a 
relatively attractive place to do business but 
faces 
IMD  World 
Competitiveness  Rankings  show  Hungary  in  46th 
place,  up  6  places  from  2024  but  still  below  its 
performance in 2020-2022. This is largely due to 
its  relatively  good  performance  in  the  categories 
of  price  competitiveness  and  international  trade. 
Challenges  persist  in  enhancing  the  transparency, 
predictability  and  accountability  of public  decision 
making;  decreasing 
intervention  and 
bureaucracy in the economy and improving access 
to  state-sponsored  innovation  and  development 
funds for SMEs. 

state 

Hungarian  labour  productivity  remains  well 
below  the  EU  average.  In  2025,  it  was  roughly 
71% of the EU weighted average, ranking Hungary 
20th  among  EU  Member  States  (89).  Productivity 
varies  significantly  by  sector,  with  industry  and 
construction  lagging;  most  likely  a  reflection  of  a 
lack  of  exposure 
international  markets. 
Internationally  oriented  (large)  firms perform  well 
and domestic SMEs less so.  

to 

Business  entry  rates  are  low,  especially  in 
sectors  dominated  by  public  ownership. 
Business  registrations  throughout  2025  and  the 
five-year  average  remain  stubbornly  well  below 
the  EU  average  (90).  Bankruptcy  declarations 
throughout  2025  were  the  second  highest  in  the 
EU. 
are 
exacerbated  by  below-average  survival  rates  for 

Lower-than-average 

entry 

rates 

Hungary  has  a  strong 
industrial  base, 
representing  22%  of  gross  value  added. 
Economic  performance  is  closely  tied  to  the 

(89)  Productivity trends using key national accounts indicators - 

Statistics Explained - Eurostat 

(90)  Business registration and bankruptcy index by NACE 

54 

3%22%6%18%22%10%17%0%2%19%6%19%21%12%19%3%GVA by NACE in Hungary (inner circle) and EU27 (outer circle)Agriculture, forestry and fishing (A)Industry (except construction, B-E)Construction (F)Retail, transport and hospitality (G-I)Information, financial and real estate activities (J-L)Professional and administrative activities (M-N)Public administration, defence, education and welfare(O-Q)Arts, entertainment and other services  (R-U) 
 
  
 
 
 
new  businesses  over 
five  years, 
influenced by the strong presence of a few state-
owned enterprises limiting competition, innovation 
and research.  

first 

the 

The  top  barrier  to  investment  is  uncertainty 
about  the  future  (74% vs  EU  average  83%). 
Although  Hungarian  firms  tend  to  see  fewer 
barriers to investment than the EU average, other 
barriers  remain.  While  the  cost  of  energy  is  a 
barrier  for  57%  of  firms  in  2025,  this  is  18 
percentage  points  lower  than  the  EU  average 
(75%)  and  declining  from  previous  years  (for  a 
regional  picture  please  see  the  Competitive 
Regions  annex).  52%  of  Hungarian  firms  cite 
access  to  qualified  staff  as  a  barrier,  compared 
with the EU average of 79% (91).  

from  private  or  public 

Businesses  increasingly  face  problems  with 
late  payments.  Business  to  business  and  public 
sector payment gaps are both on the increase and 
above the EU average (see Table A2.1).  The share 
of  SMEs  experiencing  late  payments is below the 
EU  average  (44%  vs  48%).  However,  the  ECB/EC 
SAFE  survey  indicates  that  payment  performance 
deteriorated  markedly  in  2024,  with  53%  of 
surveyed  companies  reporting  problems  with  late 
payments 
clients, 
representing an increase of nine percentage points 
compared  with  the  previous  year.  This  has  grown 
steadily  from  a  low  of  35%  in  2021,  a  rise  of 
nearly  20  percentage  points.  The  Intrum  survey 
also  reports  an  increase  in  average  payment 
times,  both  for  B2B  and  G2B  transactions.  B2B 
transactions  in  Hungary  took  an  average  of  60 
days  to  settle  in  2024  –  5  days  longer  than  in 
2023 – while G2B invoices were paid, on average, 
within 70 days, representing an increase of 6 days 
compared with the previous year. 

Excessive regulation, ad hoc taxation and an 
unstable business climate continue to hinder 
market  entry,  competition,  innovation  and 
productivity.  With  respect  to  Hungary’s  CSR3  on 
avoiding arbitrary administrative interventions, the 
restrict  market 
government 
competition  directly 
(e.g. 
motorway  maintenance  and  development,  retail 
sales),  or  when  it  announces  the  exclusion  of 
foreign-controlled 
certain 
sectors. Among the negative consequences of this 

in  certain  sectors 

companies 

continues 

from 

to 

(91)  EIB Investment Survey 2025: Hungary overview 

55 

of 

lack 
slow digitalisation and inflationary pressures.  

competition  are 

low 

innovation, 

Several  changes  were  introduced  in  2025 
which 
impact  the  business  environment. 
Legislation  raised  several  provisions  previously 
regulated  in  emergency  decrees  to  the  level  of 
law,  including  the  banking  extra-profit  tax,  the 
special  tax  for  petroleum  product  producers,  the 
insurance surcharge and the retail tax.  

in 

to 

their 

reduce 

foreign 

law  of 

turnover 

the  establishment 

Changes  in  2025  in  retail  taxes  rules  could 
further  punish  foreign  companies.  Hungary’s 
retail  tax  system 
imposes steeply  progressive 
turnover-based  taxes  on foreign  controlled  retail 
companies operating  as 
integrated  groups  or 
linked  undertakings.  Domestic  retailers operating 
through franchise  systems  are  taxed  less  heavily, 
is  not  consolidated.  This 
as 
business 
structure prevents 
tax 
restructuring their  operations 
burdens  and  restricts  their  right  of  establishment. 
Alongside 
the 
emergency  decree,  changes  in  the  method  of 
determining  the  tax  base  for  retail  traders  (both 
online and offline) will have an important impac9t, 
especially  for  foreign  companies  engaging  with 
retail  activities  in  Hungary  without  having  a 
branch.  Not  only  the  net  revenue  from  sales  in 
Hungary, but also the total revenue (sales realised 
both in Hungary and abroad) serve as the basis of 
the tax calculation. This means the portion of sales 
attributable  to  Hungary  will  be  taxed  at  an 
effective  tax  rate  that  is  higher  than  before  and 
imposes  significant  administrative  and  financial 
burdens on platform operators. Platform operators 
are  now  included  as  taxable  entities.  A  platform 
operator  is  an  entity  that  provides  a  platform 
(such  as  a  website  or  application)  for  sellers, 
enabling them to sell goods.  

Conditions 
for  establishing  or  making 
changes  to  stores  larger  than  400  m²  are 
unpredictable  and  lack  transparency.  Rules 
regulating  product  prices  (regulated  in  2022-
2023),  promotion  requirements  (2023-2024),  and 
price  margins  (as  of  2025)  affect  the  viability  of 
foreign  retailers.  On  12  September  2024,  the 
Court  of  Justice  of  the  European  Union  ruled  in 
case  C-557/23  that  Hungarian  measures  fixing  a 
maximum price for the sale of certain agricultural 
products  and  the  obligation  to  offer  for  sale  a 
specific  quantity  of  such  products  violated 
Regulation  (EU)  No  1308/2013  establishing  a 
in 
common  organisation  of 

the  markets 

 
 
agricultural  products,  as  amended  by  Regulation 
(EU)  2021/2117.  With  respect  to  Hungary’s  CSR3 
on  enhancing  competition in  product  markets  and 
services,  in  particular  in  retail,  in  2025  the 
government further tightened the ‘plaza stop’ law, 
meaning  that  not  only the  opening  of  a  retail 
outlet  requires  the  permission  of  the authorities, 
but  also  the  rental  or  changing  of  the  interior 
layout of the outlet.   

lower 

tax  base 

A 
for  self-employed 
entrepreneurs  and  an  easing  of  the  tax 
burden  on  SMEs  support  small  enterprises: 
Self-employed  taxpayers  now  benefit  from  a 
reduced  portion  of  income  subject  to  tax  and  the 
social  contribution  base  has  been  simplified, 
transparency. 
improving 
Eligibility for Hungary’s small business tax regime 
is  also  extended.  Higher  thresholds  for  revenue, 
balance  sheet  totals  and  employee  numbers  will 
allow more companies to opt into or remain within 
the regime as they grow. This should ease the tax 
burden on expanding SMEs. 

predictability 

and 

Hungary performs strongly in the deployment 
and use of digital connectivity infrastructure. 
Fibre-to-the-premises  (FTTP)  coverage  reached 
79.9%  in  2024,  well  above  the  EU  average 
(69.2%).  Coverage  exceeded  the  EU  average  in 
rural areas (68.54%, EU: 58.78%). On 5G Hungary 
reached 85.6% in 2024, but staying below the EU 
average  of  94.3%.  For  households  in  rural  areas, 
Hungary’s 5G coverage was 57.9% in 2024, below 
the  EU’s  79.57%.  Hungary  is  also  below  the  EU 
average  in  mid-band  5G  coverage  (HU: 53.4%, 
EU: 67.72%) and demonstrates strong momentum 
in 5G adoption.  

Fixed  broadband  take-up 
indicators  are 
excellent,  but  for  mobile  below  the  EU 
average. 88.4% of fixed broadband subscriptions 
in Hungary were at speeds of 100 Mbps or higher 
in 2024, surpassing the EU’s 71.9%. For speeds of 
1 Gbps or higher, subscriptions in Hungary are also 
above  the  EU  average  (HU:  39.8%,  EU:  22.25%). 
The  copper  switch-off  process  is  progressing, 
based  on  batches  of  municipalities  already 
covered  with  fibre,  but  the  country  has  no  target 
date  for  completion.  Significant migration to  fibre 
can be observed across the country, made possible 
by widespread availability of the service. The share 
of  the  population  using  5G  SIM  cards  was  20.8% 
in 2024, lower than the EU’s 35.6%. 

Single Market 

Hungary 
is  an  open  economy,  highly 
integrated into the Single Market. The index of 
EU  trade  integration  (intra-EU  imports  +  intra  EU 
exports/GDP)  was  51.5%  in  2025,  significantly 
above  the  EU  average  (40.7%).  Hungary  relies 
heavily  on  EU  sources.  27.3%  of  value  added  is 
sourced  from  the  rest  of  the  EU,  compared  to  an 
EU average of 19.7%. Only 19% of exporting SMEs 
exported outside the EU (EU average of 41%).  

food 

Regulatory and administrative barriers to the 
Single  Market  affect  goods  and  services 
trade  and  the  freedom  of  establishment. 
Businesses  report  that  packaging,  labelling  and 
waste,  rules  such  as  discriminatory  food  waste 
requirements  (92)  and  burdensome  EPR  rules, 
create  compliance  barriers  and  differentiate 
between 
retailers  based  on  size  – 
disproportionately  affecting  foreign  operators. 
Progress  in  addressing  barriers  in  the  field  of 
business services has been limited. Restrictions on 
foreign  entry 
legal  services  are 
significant  (93).  Hungary  has  not  replied  to  the 
survey  carried  out  by  the  Commission  between 
December 2025 and February 2026 regarding the 
implementation  of 
recommendations 
issued by the Commission in 2021 (94). Recognition 
of  professional  qualifications 
long  and 
excessively  bureaucratic.  In  addition,  Hungary  has 
one  of 
regulated 
professions. 

largest  numbers  of 

to  provide 

reform 

the 

is 

Compliance  of  products  circulating  on  the 
Single  Market  (95)  is  key  to  ensure  level-
playing  field  of  law-abiding  companies  and 
safety of consumers. In Hungary, the number of 
market  surveillance  investigations  has  increased 
compared with 2019. In 2025, national authorities 
reported in the EU system for market surveillance 

(92)  EuroCommerce report 

(93)  OECD Services Trade Restrictiveness Index  

(94)  European Commission, 2021, Communication on updating 
the reform recommendations for regulation in professional 
services, COM(2021)385. 9/7/2021, Eur-lex.europa.eu.  

(95)  Part of the barriers highlighted in the Single market 

strategy (‘Terrible Ten’) and the 2026 Annual Single Market 
and Competitiveness Report. 

56 

 
 
 
(ICSMS)  a  total  of  117.8  investigations  per  one 
million  inhabitants,  lower  than  the  EU  median  of 
136.2.  Notifications  remain  limited  in  absolute 
terms, which may also be the result of insufficient 
IT  national  interoperability  to  the  ICSMS  system. 
The  upcoming  revision  of  the  Market  Surveillance 
Regulation  will  upgrade 
fully 
interoperable EU digital platform. 

ICSMS 

to  a 

the 

and 

Institution 

European 

(NSBs) 
National  Standardisation  Bodies 
Standardisation 
ensure 
System operates effectively 
helps 
remove  structural  barriers such  as  the 
“Terrible  Ten”.  Evidence  suggests  that  the 
Hungarian  Standards 
(MSZT)  faces 
persistent  resource  constraints,  risking  slowing 
limiting 
down  standardisation  processes  and 
stakeholder  participation. There 
is  a  need  to 
strengthen  the  financial  and  human  capacity  of 
the  MSZT.  Without  targeted  investment  Hungary 
risks  falling  behind  in  standardisation,  ultimately 
weakening 
industrial  competitiveness  and  an 
ability  to  fully benefit from  the  opportunities  of 
the Single Market.  

foreign 

in  Hungarian  companies,  and 

Further powers for state intervention impact 
on investment. With respect to Hungary's CSR 3 
on market-distorting state-supported transactions, 
a  government  decree  from  June  2025  empowers 
the  state  with  the  ability  to  block  transactions  in 
investors  sought  shares  or 
which 
to 
ownership 
purchase the assets the foreign buyer intended to 
acquire.  The  state  can  intervene  when  it  deems 
that  national  interest  is  at  stake.  The  new  decree 
to all 
extends 
sectors, meaning the government can acquire any 
Hungarian company targeted by foreign investors. 
The government recently blocked the acquisition of 
a  large  milk  wholesale  company  by  a  Greek 
firm. 
in  many 
sectors,  undermining  the  business  environment 
and  discouraging  investment  from  the  EU  and 
further  abroad.  This  results  in  the  acquisition  of 
companies 
state-owned 
enterprises or private firms with government ties. 

 Market  interference  continues 

the  state’s  pre-emption 

efficient 

right 

less 

by 

and 

industries 

experience 
Firms 
discriminatory  treatment  through  tailor-made 
taxes, price caps and regulations imposed at short 
notice, implemented with little notice and no prior 
consultation.  Restrictions  such  as  retail  price 
interventions,  targeted  levies  (the  Milk  Board  levy 
for  non-Hungarian  milk),  combined  with  minimum 
mandatory  product  stocks  place  disproportionate 

financial  and  operational  burdens  on  foreign 
traders  that  discourage  market  participation  (96). 
With respect to Hungary’s CSR 3 on abiding by the 
principles  of  the  Single  Market,  price  caps  and 
related  mining  fees  violating  the  freedom  of 
establishment  as  ruled  by  the  Court  of  Justice  of 
the  European  Union  in  case  C-144/24,  and export 
restrictions  in  violation  of  the  free  movement  of 
goods  as  ruled  by  the  Court  in  case  C-499/23 
affecting the production and export of construction 
products  continue,  as  well  as  increased  taxes  for 
insurance  and  pharmaceutical  companies.  In  the 
mining  sector,  further  anti-competitive  practices 
can  be  observed,  particularly  by  non-transparent 
and discriminatory tender procedures for sand and 
gravel mining sites (97). 

For  the  4th  consecutive  year,  Hungary 
performed  below  average 
in  terms  of 
implementing  Single  Market  legislation.  At 
1.1%,  the  transposition  deficit  (the  %  of  all 
directives not transposed) was in line with the EU 
average  but  above  the  1%  target  set  by  the  EU 
Council.  The  conformity  deficit  (the  percentage  of 
all directives transposed incorrectly) stood at 2.8% 
at  the  end  of  2025  (EU  average  of  1.1%) 
compared  with  0.4%  ten  years  ago.  Hungary  is 
now the worst performer in the EU in this respect. 
infringement 
forty-one  ongoing 
There  were 
procedures,  well  above  the  EU  average  of  25,  a 
figure  that  has  remained  stable  over  the  last  3 
the 
years.  Only 
infringement  proceedings  (39.7  months)  is  better 
than  the  EU  average  of  44.5  months).  In  2025 
Hungary  resolved  83.7%  of  the  SOLVIT  cases  it 
managed  as  lead  centre,  slightly  below  the  EU 
average of 84.6%. Hungary does not actively take 
part  in  EU  tools  such  as  the  Single  Market 
Enforcement  Taskforce,  designed  to  improve  the 
functioning of the single market.  

the  average  duration  of 

Hungary  has  not  signed  the  Unified  Patent 
Court  Agreement,  nor,  as  a  first  step,  joined 
the  enhanced  cooperation  framework. Firms 
established  in  Hungary  can  freely  use  inventions 
protected  by  European  patents  which  are  not 
validated in Hungary. At the same time, Hungarian 
firms  can  request  unitary  effects  for  their 
European  patents.  By  not  signing  the  agreement, 
Hungary  gives  an  unfair  advantage  to  its  firms, 
the  Single  Market, 
in 
harming  competition 

(96)  EuroCommerce report 

(97)  Infringement procedure INFR(2025)2051  

57 

 
 
weakening  the  European  unitary  patent  system 
(unitary patents are not protected in Hungary) and 
reducing  incentives  to  innovate  (firms  must  pay 
for their patent to be protected in Hungary or risk 
their  patent  being  used  for  free).  This 
is 
detrimental  to  competitiveness,  innovation  and 
growth.        

Hungary's  public  procurement  market 
is 
bustling, with an annual value exceeding EUR 
10.8 billion in 2025, equivalent to more than 5% 
of GDP. Over 40,000 tenders are issued each year, 
IT  and  public 
with  construction,  healthcare, 
services leading the way.  

Hungary  has  consistently 
improved  the 
recorded  rate  of  single  bids,  reducing  its 
share from 40% in 2021 to 24% in 2025 (98). 
However,  an  assessment  of  public  procurement 
performance  shows  that  single  bidding  remains  a 
persistent  issue  in  several  key  markets.  When 
considering  long-term  trends,  the  sectors  most 
affected  are  transport  services,  IT  services,  and 
medical equipment, pharmaceuticals and personal 
care  products  where  limited  competition  appears 
to  be  structural  rather  than  episodic.  In  addition, 
the  share  of  framework  agreements  concluded 
with  companies  belonging  to  the  same  beneficial 
owners  also  increased.  Given  that  framework 
agreements  tend  to  be  concluded  for  longer 
durations,  this  approach  has  a  particularly  strong 
impact on fair (99) competition, as it limits market 
access  for  other  potential  bidders  over  an 
extended 
market 
concentration  in  high-value  segments.  Lengthy 
decision-making procedures further undermine the 
efficiency  and  attractiveness  of  the  procurement 
system.  On  average,  the  time  between  the 
deadline  for  receipt  of  offers  (or  requests  to 
participate)  and  the  award  of  the  contract 
amounts to 109 days. 

consolidating 

period, 

While  the  above  findings  point  to  structural 
challenges,  some  developments  in  2024–
2025  indicate  some  efforts  to  improve  the 
competition.  Particularly  in  the  above  identified 
sectors (transport services, IT services and medical 
equipment,  pharmaceuticals  and  personal  care 
products),  as  two  of  the  sectors  were  selected  by 

targeted  sector 

Hungary  for 
inquiries  under 
Government  Decision  No.  1082/2024  (28  March 
2024) 
into  the  causes  of  single-bid  public 
procurement  (100).These  aim  to  diagnose  why 
competition  is  low  and  provide  recommendations 
to  correct  underlying issues,  signalling  recognition 
at institutional level that single bidding is a risk for 
efficiency  and  value  for  public  money.  The  report 
for  the  medical  equipment  concluded  that  the 
share of single-bid public procurements decreased 
in  the  market  for  diagnostic  medical  imaging 
equipment  between  2021  and  2023  and  put 
forward  recommendations  for  addressing  this.  In 
March  2025, 
to  enhance 
the  Action  Plan 
competition  in  public  procurement  was  amended 
to  introduce  six  additional  measures,  including 
strengthened  oversight  of  contracting  authorities 
that  frequently  use  simplified,  more  flexible 
the  EU 
procedures  for  procurements  below 
threshold.  Another 
the 
is 
key  measure 
commitment  to  develop  a  strategy  for  the 
professionalisation of public procurement. 

'very'  or 

Businesses’  views  on  corruption  risks  in 
public  procurement  are  above  the  EU 
average.  In  Hungary,  74%  of  companies  (EU 
average: 58%)  consider tailor-made specifications 
for  particular  companies  in  public  procurement 
procedures, and 66% (EU average: 51%) collusive 
bidding, 
'fairly  widespread'  practice. 
Among  companies  that  have  experience  in  and 
participated  in  a  public  procurement  procedure, 
36%  think  that  corruption  has  prevented  them 
from  winning  a  public 
tender  or  a  public 
procurement  contract  in  practice  (EU  average: 
25%).  Only  28%  of  businesses  perceive  the  level 
of independence of the public procurement review 
body  (Public  Procurement  Arbitration  Board)  as 
‘very’  or 
‘fairly  good’  when  reviewing  public 
procurement cases. Corruption risk sectors remain 
largely  the  same,  with  high  risks  in  construction, 
health, 
services. 
Stakeholders report increased corruption risks due 
to  an  excessive  use  of  concession  contracts  and 
report  that  many  framework  agreements  were 
concluded  with  a  single  bidder  (101).  Framework 
agreements  concluded  by  central  purchasing 
bodies have allowed certain economic operators to 
become  market  leaders  or  acquire  a  dominant 

communication 

and 

IT, 

(98)  Typical (mid-ranking) EU country.  

(99)  evaluation_of_transparency_and_integrity-

et0125155enn_2.pdf 

(100) The GVH is launching accelerated sectoral inquiries to 

investigate the causes of single-bid public procurements - 
GVH 

(101) 2026_crcb_statistical_flash_report_en_01_050226_03.pdf 

58 

 
 
 
position  at  the  expense  of  their  competitors, 
potentially  crowding  out  SME  bids.  Concerns 
remain  regarding  favouritism  in  tender  processes 
and  selective  awarding  to  political  affiliates, 
increasing corruption risks. 

by 

public 

capacity 

2021–2025. 

procurement 

Procurement 

constrained 
and 

Legislative  changes  constrain  efforts  to 
strengthen  the  professionalisation  of  public 
procurement  practitioners.  Through  training, 
certification, and incentive measures, this was one 
of  the  objectives  of  the  National  Strategy  for 
However, 
Public 
regulatory 
is 
progress 
fragmentation 
gaps.  Recent 
limited  the  role  of 
legislative  changes  have 
accredited 
consultants, 
reducing continuity between procedure design and 
dispute resolution and increasing legal uncertainty, 
particularly  in  a  context  of  staff  shortages.  While 
training  and  certification  systems  are  in  place, 
they do not fully offset the declining availability of 
experienced practitioners, highlighting the need for 
clearer  professional  roles  and  more  coherent 
support.(102)  A  new,  more 
capacity-building 
e-procurement 
user-friendly 
and 
integrated 
system  is  currently  under  development  (including 
through  the  RRP)  to  address  the  challenges  and 
accelerate the digitalisation of public procurement.  

it 

and 

award 

procurements 

still  does  not  provide 

Hungary’s  e-procurement  system  (EKR)  has 
improved  transparency,  particularly  through 
notices. 
contract 
machine-readable 
However, 
full, 
comprehensive, 
consistently  machine-
readable  public  procurement  data,  notably  for 
framework 
centralised 
agreements. Government Decision 1086/2025 (31 
March  2025)  explicitly  requires  improvements  to 
the  EKR  user  interface  and  information  access, 
with  deadlines  set  for  deploying  system  changes 
by  mid-2025  under  the  national  competition 
action plan. These developments tie into the wider 
digitalisation  and 
in 
Hungary’s Recovery and Resilience Plan, that have 
not been fully implemented.  

transparency  objectives 

and 

requirements 

criteria  are  rarely  used.  According  to  recent 
performance  data,  fewer  than  10  %  of  public 
procurement  procedures  included  environmental 
considerations  from  2019  to  2023,  and  life-cycle 
costing  (LCC)  was  applied  in  only  about  0.6  %  of 
procedures  in  2023.  This  is  despite  national 
targets  and  guidance  designed  to  promote  them 
(103),  highlighting  a  gap  between  policy  and 
practice.  Even  though  Hungary  now  has  a  Green 
Public  Procurement  Strategy  (2022–2027)  and 
government 
for  environmental 
criteria  in  certain  tenders  from  2025,  contracting 
authorities  face  challenges  applying  these  rules 
due 
expertise,  methodological 
complexity,  and  concerns  about  cost  and  audits. 
Capacity-building  events  are  organised  as 
in 
authorities  struggle  with 
practice  (104).  The  Public  Procurement  Authority 
acts  as  a  green  procurement  competence  centre 
and has developed guidelines and practical toolkits 
for  specific  product  categories,  while  recent 
government  regulations  (e.g.  Government  Decree 
235/2024)  introduce  mandatory  environmental 
requirements  in  certain  procurement  areas  from 
2025.  

implementation 

limited 

to 

the  need 

issues  highlight 

Hungary’s  eProcurement  landscape  and  data 
quality 
for 
interoperable  systems,  common  standards 
and  stronger  data  governance. Hungary’s 
centralised eProcurement service allows economic 
operators  to  use  a  single  system  to  access  all 
national  public  procurement  procedures.  However, 
cross-border procurement issues create complexity 
and barriers  to  participation  for  firms  of  other 
Member  States. The  once-only  principle  is  only 
partially implemented (see Annex 7), with Hungary 
relying on PDFs and Excel documents for complex 
public  procurement  procedures.  Buyers  across  the 
EU  still  lack  digital  access  to  relevant  evidence. 
The  establishment  of  a  dedicated  public 
procurement  data  collection  and  analysis  service 
within 
the  government  would  enable  more 
effective data-driven oversight of the procurement 
lifecycle (105). 

Green  public  procurement  is  moving  in  a 
positive  direction.  Whilst  there  is  a  policy 
tools  are  being  developed, 
framework  and 
sustainability-oriented, 
procurement 
remains  modest  and  uneven.  Environmental 

strategic 

(102) Integrity-Risk-Assessment-Report-of-the-Hungarian-Public-

Procurement-System-2023.pdf 

(103) “Sustainable public procurement: current status and 
environmental impacts” European Commission 2024 

(104) Improving contracting authorities' competences in life-cycle 
costing and green public procurement through the use of 
digital tools in Hungary | OECD 

(105) European Court of Auditors, Special Report 28/2023: Public 
Procurement in the EU. Less competition for contracts 
awarded for works, goods and services in the 10 years up to 

59 

 
 
 
 
faces 

largest 

industry, 

total  exports.  This 
from  Asian 

Hungary’s 
industrial  sector,  the 
several 
automotive 
challenges.  The  industry  contributes  25%  of  the 
is  driven  by 
country’s 
companies.  CATL 
investments 
(Debrecen), the Chinese battery giant is launching 
mass production in 2026 at its €7.3 billion facility. 
However,  a  challenging  international  economic 
climate  for  the  sector,  and  recent  domestic 
scandals are having an impact. Rising labour costs, 
technological  change  and  global  supply  chain 
constraints are a challenge. Competition for skilled 
workers  drives  wage  inflation  and  supply  chain 
disruptions  can  affect  production  schedules. 
Because  of  lower  international  demand,  major 
players  like  Audi,  Mercedes  and  BYD  are  cutting 
back production or staffing. Revelations of serious 
occupational  safety  deficiencies 
in  Samsung's 
battery  factory  in  Göd  could  have  a  profound 
impact on the domestic industry.  

Graph A5.2: Manufacturing production: total and 
selected sector, index (2021=100), 2015-2024 

Source: Eurostat 

is 

Hungary  has  yet  to  designate  a  single  point 
of  contact  for  the  Net-Zero  Industry  Act 
streamlining 
(NZIA). 
crucial 
This 
for 
communication 
among 
coordination 
stakeholders, 
to  administer  applications,  and 
facilitate Net-Zero Strategic Projects. Hungary has 
one  Net-Zero  Strategic  Project,  on  recycled  green 
steel. 

and 

Industry and economic security 

Industry  relies  on 
imported  critical  raw 
materials. Hungary’s material import dependency 
(27.8%) was above the EU average in 2023 (22%) 
making  the  country  vulnerable  to  supply  chain 
disruption. An  import  concentration  index  of  0.2 
between 2018 and 2023 is slightly higher than the 
EU average (0.18). While it is a leading producer of 
perlite  (2nd  in  the  EU  and  6th  worldwide),  it  lacks 
domestic  production  of  many  essential  materials. 
Large  imports  include  aluminium,  coking  coal  and 
fluorspar.  Recycling may offer  potential  to  reduce 
imported raw  materials.  At  7.3%,  the  circular 
material  use  rate  in  Hungary  is  below  the  EU 
average (12.2%). 

increased  electricity  prices 

Energy-intensive Industries (EEIs) have come 
under  pressure.  EEIs  account  for  11%  of 
manufacturing  gross  value  added.  Hungary  has 
seen 
large 
consumers  to  very  high  levels,  putting  EEIs  under 
pressure.  By  2024,  production  in  the  chemical 
industry and the manufacture of basic metals and 
non-metallic  mineral  products  declined  by  up  to 
one third (see graph 2). 

for 

Energy  prices  for  industrial  consumers  have 
declined from 2022-23 highs but remain well 
above 
the  EU  average.  Non-household 
consumers pay 26% more for electricity and 16% 
more for gas than the EU average, in part due to 
interconnectivity  issues  with  several  Central  and 
Easter EU countries. Renewable energy generation 
as  a  share  of  overall  energy  consumption,  at 
18.3%, is increasing but still below the EU average 
(24.6%).  (see  also  Annex  9  Affordable  Energy 
Transition). 

Government  policy  aims  to  position  Hungary 
as  Europe’s  manufacturing  destination 
for foreign  electric  car  companies.  Corporate 
tax  rates  are  low  within  designated  economic 
zones.  Infrastructure  development  grants  provide 
capital  support,  targeting  eastern  regions.  Costs 
lower compared  to  Western  European 
remain 
facilities, despite rising labour costs.  

2021, 2023, Special report 28/2023: Public procurement in 
the EU  

60 

55657585951051151252015201620172018201920202021202220232024ManufacturingManufacture of wood and of products of wood and cork, except furniture; manufacture of articles ofstraw and plaiting materialsManufacture of paper and paper productsManufacture of chemicals and chemical productsManufacture of rubber and plastic productsManufacture of other non-metallic mineral productsManufacture of basic metals 
 
        
Table A5.1:  Single Market and Industry 

Source: (1) Eurostat, (2) EIB Investment Survey, (3) EIF SME Access to Finance Index, (4) Intrum Payment Report, (5) SAFE survey, 
(6) OECD, (7) data up to 2024: Single Market and Competitiveness Scoreboard, 2025: Commission calculation based on TED data, 
accessible at the Public Procurement Data Space (PPDS) (*) the value represented here under EU average is the median, (8) Single 
Market and Competitiveness Scoreboard, (9) European Commission calculations. 

61 

POLICY AREA20212022202320242025EU-27 average68.569.470.671.270.6100.016.216.515.114.8-12.66.25.35.44.4-3.9Business environment and simplification7.67.910.98.513.034.00.130.270.220.16-0.430.080.080.080.07-0.1911.910.914.814.618.317.48.714.014.010.915.113.6from private entities in the previous or current quarter---45.448.147.1from public entities in the previous or current quarter---17.617.815.958.466.557.753.151.540.70.0520.0520.0520.0540.0540.0504033313424275554360.71.50.20.51.111.81.92.332.81.191.1893.57578.383.784.63032414141250.14120.34350.37650.27100.24740.146234.136.337.7--32.714.115.117.118.3-25.227.929.727.627.8-22.45.04.96.87.3-12.2HungaryINDICATOR NAMEBusiness environment and investmentProductivity and investmentLabour productivity (GDP per hour worked in PPP terms), % of EU271Business investment (share of GDP)1Public investment (share of GDP)1Impact of regulation on long-term investment, % of firms reporting business regulation as a major obstacle2SME liquidityEIF Access to Finance for SMEs index - loans3EIF Access to Finance for SMEs index - equity3Late paymentsPayment gap - corporates B2B, difference in days between offered and actual payment4Payment gap - public sector, difference in days between offered and actual payment4Share of SMEs experiencing late payments, %5Industry and economic securitySingle Market IntegrationEU trade integration, average(intra-EU imports + intra EU exports)/GDP, %1EEA Services Trade Restrictiveness index6Public procurementSingle bids, % of total contractors7*Direct awards, % of negotiated procedures7*ComplianceTransposition deficit, % of all directives not transposed8Conformity deficit, % of all directives transposed incorrectly8SOLVIT, resolution rate per country, %8Number of pending infringement proceedings8Energy-intensive industriesElectricity prices for non-household consumers1Electrification (electricity as a share of total energy consumption in industry)1Share of energy from renewable sources (renewable energy generation as a share of overall energy consumption)1Critical raw materialsMaterial import dependency, %1Circular material use rate1Operational cleantech manufacturing capacity in 20259 - Solar PV (c: cell, w: wafer, M:module), GW- - Electrolyzer, GW- - Heat pump assembly 1 - Battery, GW71.3 
 
 
     
 
ANNEX 6: SAVINGS, INVESTMENT AND ACCESS TO FINANCE 

Table A6.1:  Savings and Investments Union summary diagnostic 

Source: OECD (pensions), Eurostat (households' financial wealth), FISMA CMU dashboard (VC and PE), national sources (capital 
taxation). 

to 

to 

are 

channel 

increasingly 

in  Hungary 

highlighted 
‘stimulate 

Hungary  is  making  modest  progress  towards  the 
policy  goals  of  the  Savings  and  Investment  Union 
(see  Table  A6.1).  The  2025  Country  Specific 
the 
Recommendations 
(CSRs) 
challenges 
the 
development  of  capital  markets  by  increasing  tax 
and  regulatory  incentives’  and  to  ‘improve  the 
long-term  sustainability  of  the  pension  system’ 
(106). Hungarian companies rely on internal funding 
or  traditional  bank  funding.  The  domestic  capital 
remains  under-developed,  while  debt 
market 
markets 
the 
savings  mostly 
government  and  financial  institutions.  Hungarian 
in 
households 
government  bonds  due  to  tax  exemptions,  and 
investment  funds  (in  particular  bond  funds).  The 
Hungarian  banking  sector  remains  robust.  Bank 
lending  to  households  has  been  more  dynamic 
than  lending  to  companies.  Non-bank  financial 
intermediaries, which have both the funds and the 
capacity to drive capital market progress, exhibit a 
conservative asset allocation. The insurance sector 
is small, profitable and solvent with a conservative 
investment  portfolio  tilted  towards  bond  holdings. 
The  pension  funds  sector 
is  small  with  an 
investment focus on bonds. The fund management 
sector  has  nearly  half  of  its  assets in  bond  funds 
and 
real  estate  funds.  The  venture  capital 
ecosystem  remains  small  and  is  dominated  by 
public funds. 

investing 

(106) European 

2025. 

Commission, 

Specific 
Recommendation. CSR.2025.3.2  ‘stimulate the development 
increasing  tax  and  regulatory 
of  capital  markets  by 
incentives’  and  CSR  2025.1.7 
long-term 
sustainability of the pension system.’ 

‘improve  the 

Country 

Business landscape and company 
funding 

rely  on 

internal 
Hungarian  companies 
financing or traditional bank funding. The size 
and  structure  of  local  non-financial  corporations 
(NFCs) is tilted towards micro-firms and SMEs (see 
also  Annex  5).  This  has  implications  for  the 
funding  breakdown  of  the  corporate  sector. 
According  to  the  2024  EIB  Investment  Survey, 
is  a  dominant  engine  of 
internal  financing 
investment with 67% of Hungarian firms financing 
their  capital  spending  from  retained  earnings  (EU 
(107).  While  owners’  equity 
average:  67%) 
accounted  for  42.1%  of  total  corporate  funding, 
bank  loans  accounted  for  31.5%  of  all  financing 
(EU  average:  26.9%)  at  end-2024.  Market  based 
instruments,  e.g.  listed  shares  and/or  corporate 
bonds  accounted  for  only  7.2%  (EU  average: 
23.5%)  at  end-2024,  underscoring  the  fact  that 
Hungary’s  capital  market  is  less  developed.  The 
overall  level  of  NFC  funding  in  Hungary  was 
equivalent to 165.6% of GDP, which is lower than 
the  EU  average  of  226.2%  of  GDP  at  end-2024 
(see Graph A6.1). 

(107) EIB, 2024, 2024 EIB Investment Survey, p.29. 

62 

HungaryMain featuresRelative EU positioningAssets at 4.8% of GDP (32.3% in the EU)10-year real return of 0.0 (1.4% in the EU)The very low level of pension assets yield a very low real return.EUR 25 646 per capita (EUR 85 090 in the EU)o/w 18.7% in listed shares and bonds (7.6% in the EU)o/w 13.6% in investment funds (11.0% in the EU)o/w 2.9% in life insurance (13.4% in the EU)o/w 2.9% in  pension claims (13.6% in the EU)A modest share of households' assets is invested in equity and in capital markets. A tax-exempt long-term savings and investment account (SIA) known as Tartós Befektetési Számla (TBSZ) is available.VC at 0.030% of GDP (0.064% in the EU)PE at 0.170% of GDP (0.487% in the EU)Modest venture capital and private equity investments.For individuals, stock related capital gains and dividends and interest income are taxed at 15% (PIT) with additional 13% social tax (Szocho) on these incomes but only up to an annual cap - thus 28%. For corporations, capital gains are taxed at 9%, while dividends are tax exempt.No preferential tax treatment for equity investments, very high rates of capital taxation.1-34-1011-1718-2425-27Colours indicate the country's relative ranking based on five groups, ranging from the three best to the three worst performers. The relative ranking as regards an SIU diagnostic topic derives from a consistent cross-country comparison, the starting point of which is the average of the underlying main features.TopicAsset-backed pension schemesHouseholds' financial assetsVenture capital (VC)Private equity (PE)Capital taxation 
 
 
 
 
 
 
 
  
 
the first euro-based share issuance on the BSE. In 
the  regulated  market,  Gloster  (furniture)  and 
Gránit Bank were new entrants at the end of 2024 
(110).  The  BSE  also  operates  a  multilateral  trading 
facility  (MTF)  for  SMEs  called  BSE  Xtend;  and  a 
new  market  segment  for  secondary  bond  trading 
called BSE Xbond.  There was also a move by STRT 
Holding  (a  tech/startup  investor)  from  the  Xtend 
market  to  the  regulated  standard  market  in  late 
2025.  

Graph A6.2: Capital markets and financial 
intermediaries 

Graph A6.1: Composition of non-financial 
corporations’ funding 

Source: Eurostat, End-2024. 

Size and structure of the financial 
sector 

sector 

financial 

remains 
Hungary’s 
is 
predominantly  bank-driven,  and  there 
scope for future development of all non-bank 
financial  intermediaries.  The  banking  sector’s 
assets  were  equivalent  to  95.9%  of  GDP  in  Q3-
2025,  far  below  the  EU  average  of  246.1%  but 
well  above  any  other  part  of  the  domestic 
financial  system.  The Hungarian  banking  sector is 
highly  concentrated  with  the  top  five  lenders 
owning  59.4%  of  total  assets  at  end-2024  (EU 
average:  50.9%),  while  65.7%  of  the  sector  is 
domestically  owned  (Q2-2025).  The  value  of  the 
investment fund sector  stood at  30.9% of GDP in 
Q3-2025. The insurance sector, with assets worth 
under  5.3%  of  GDP  in  Q3-2025  is  small  (EU 
average:  53.9%).  Pension  fund  assets  were  worth 
around 4.8% of GDP (108) (see Graph A6.2). 

The  domestic  capital  market  in  Hungary  is 
under-developed.  The  Budapest  Stock  Exchange 
(BSE)  (109)  has  a  market  capitalisation  of  listed 
equity  at  21.9%  of  the  GDP  as  of  Q3-2025  (EU 
average: 69.9%). NFCs accounted for 44% of that 
capitalisation  at  end-2024.  The 
initial  public 
offering  (IPO)  activity  of  the  BSE  remains  rather 
subdued. For example, there was a successful IPO 
in  2023  for  Shopper  Park  Plus  (which manages  a 
significant  retail  real  estate  portfolio),  which  was 

(108) OECD, 2025, Pension Markets in Focus-2024, p. 11.  

Source: ECB, EIOPA, AMECO, End-2024. 

While there is no comprehensive government 
strategy on promoting capital markets, some 
sector-specific strategies were introduced by 
important  national  players  in  the  financial 
sector. For instance, in line with CSR 3.2 (111), the 
Hungarian  Central  Bank  (MNB)  adopted  a  seven-
point  strategy  report  to  promote  the  insurance 
sector  in  Hungary,  and  the  BSE  developed  a  new 
strategy  for  2021-2025  (a  follow-up  to  former 
2016-2020  strategy)  (112).  In  a  bid  to  stimulate 
regional markets, in November 2024 eight central 
and  eastern  European  (CEE)  stock  exchanges 
(Bratislava, Bucharest, Budapest, Ljubljana, Skopje, 
Sofia,  Warsaw,  and  Zagreb),  together  with  the 
EBRD,  signed  a  memorandum  of  understanding 
(MoU)  to  foster  joint  development  of  national 
through  closer  cooperation, 
capital  markets 
increased  market 
regulatory  alignment,  and 

(110) BSE, 2024. Annual Report 2024, p. 13. 

(111) CSR.2025.3.2 ‘stimulate the development of capital markets 

by increasing tax and regulatory incentives.’ 

(112) BSE, 2015, BSE Strategy 2016-2020; BSE, 2020. BSE 

(109) BSE, 2025, Annual Report 2024, p. 7. 

Strategy 2021-2025. 

63 

050100150200250HUEU% of GDPLoansTrade credit and advancesBondsListed sharesUnlisted sharesOther equityNon-financial corporationsFinancial corporationsNon-financial corporationsMFIsInsurance  and pension fundsOther financialsGovernmentMFIsPension fundsInsurance corporationsInvestment funds0102030405060708090100   Listed equity               Bonds                        Assets by sector% of GDP 
   
 
     
 
integration.  This  initiative  was  endorsed  by  the 
respective  finance  ministers  with  a  further  MoU 
signed 
In  April  2026,  the 
respective  regulators  also  signed  a  MoU,  thereby 
bringing all key institutions to this project. 

in  August  2025. 

Financing  through  debt  securities  is  the 
domain  of  the  sovereign  and  local  monetary 
financial  institutions.  The  outstanding  volume 
of  debt  securities  reached  83.9%  of  GDP  at  end-
2024.  The  domestic  bond  market  in  Hungary  is 
dominated  by  government  securities,  which 
accounted  for  69.5%  of  total  bonds  as  of  end-
2024,  driven  by 
the  worsening  budgetary 
pressures.  Financial  institutions,  whether  banks  or 
not,  accounted  for  13.8%  of  the  total  debt 
securities, while  NFCs accounted  for only 5.2% of 
the total bonds. 

Households’ participation in capital 
markets 

in 

increasingly 
Hungarian  households  are 
investing 
and 
bonds 
government 
investment funds (in particular, bond funds), 
while  the  share  of  cash  and  bank  deposits 
has  decreased.  On  aggregate,  Hungarian 
households  have  financial  assets  equivalent  to 
124.2%  of  GDP  (EU  average:  212.2%).  Hungarian 
households,  with  one  of  the  highest  savings-rate 
in  the  EU  (18.6%  vs  14.5%  in  2024),  had  lower-
than-average  holdings  of  cash  and  deposits, 
(24.2%)  of 
representing  nearly  a  quarter 
household  assets  (EU  average:  31.6%)  at  end-
2024. Strikingly, bonds that are incentivised by tax 
advantages  (see  below)  account  for  a  relatively 
high proportion of the total household assets while 
insurance  and  pension  funds  account  for  a  very 
low  proportion.  More  specifically,  Hungarian 
households  have  about  15.5%  of  their  financial 
wealth  invested  in  bonds  (EU  average:  2.8%), 
13.5% in investment funds (EU average: 11.0%), 
only  6.5%  in  insurance  and  pension  funds  (EU 
average:  27.8%),  and  3.1%  in  listed  shares  (EU 
average: 4.9%) (see Graph A6.3).  

The  level  of  financial  literacy  in  Hungary  is 
close  to  the  EU  average  yet  more  could  be 
done  to  help  retail-investor  participation  in 
In  2017,  the  Ministry  of 
capital  markets. 

for 

Finance (113) adopted a strategy and an action plan 
the  population’s 
improving 
(2017-2023) 
financial  awareness  (there  has  not  been  an 
updated  national  strategy  on  financial  literacy 
(114)). Other public bodies (such as the MNB, as it is 
required to do so)  and non-public bodies (such as 
the  Hungarian  Banking  Association)  operating  in 
the financial market have a range of programmes 
and  activities  to  improve  financial  awareness. 
Financial knowledge is also taught in primary and 
secondary  schools (115).  Nevertheless,  the  July 
2023  Eurobarometer  survey  showed  that  only 
16%  of  Hungarians  had  a  high  level  of  financial 
literacy,  72%  a  medium  level,  and  the  remaining 
12% a low level, compared with the EU average of 
18%  for  high  financial  literacy,  64%  for  medium, 
and  18%  for  low (116).  This  leads  to  an  overall 
financial  literacy  indicator  (the  average  of  the 
financial  knowledge  and 
financial  behaviour 
indicators)  of  44%  vs  an  EU  average  score  of 
45.5% (117). 

Graph A6.3: Composition of households’ financial 
assets 

Source: Eurostat, End-2024. 

Government  regulation  and  tax  incentives 
appear  to  favour  certain  investment options 
to 
for 

reference 

investors 

retail 

(in 

(113) In January 2023, the task of improving financial awareness 
was transferred to the Ministry of Economic Development. 

(114) Commission Communication on Financial Literacy Strategy 

for the EU, COM(2025) 681 final. 

(115) Hergár, Kovács, Németh, (2024), Status and development of 

Financial Literacy in Hungary. 

(116) European  Commission,  2023,  Flash  Eurobarometer  Survey  -
Monitoring the level of financial literacy in the EU, p. 17. 

(117) European Commission, 2025, Overview of CMU Indicators, 

Indicator 27. 

64 

050100150200250020406080100HUEUHUEUper capita (000 EUR) (lhs)% of GDP (rhs)Currency and depositsInsurance and pension fundsInvestment fundsBondsListed sharesUnlisted sharesOther equityHH Debt (liability) 
     
 
2025.CSR.3.2).  Since  2022 
the  Hungarian 
government  has  been  issuing  tax-exempt  long-
term  bonds  for  retail  investors  to  finance  the 
state  budget,  while  raising  the  withholding  tax  on 
funds and deposits from 15% to 28% (starting in 
July  2023) (118).  Under  a  new  regulation,  as  from 
October  2023,  banks  must  inform  their  clients 
about  the  potential  loss  they  may  suffer  from 
holding their money in cash instead of investing in 
government  bonds.  Moreover,  the  elimination  of 
the pillar 2 pension segment in 2011 has not been 
helpful  in  building  retail  investors’  confidence  in 
capital markets. At the same time, it is difficult to 
incentivise  retail  clients  to  invest  in  life  insurance 
or pension funds (pillar 3), if direct access to liquid 
government  bonds  is  tax  exempt,  and  offer  high 
yields  at  low  risk  (119).  Meanwhile,  the  Hungarian 
government  has  introduced  in  the  past  the  tax-
exempt long-term savings and investment account 
(SIA)  known  as  Tartós  Befektetési  Számla  (TBSZs) 
which,  according  to  MNB,  led  to  a  shift  from 
investment  funds  shares  to  TBSZs  (120).  The 
account  is  designed  for  long-term  investment 
(deposits, fund units and other securities held in a 
special  savings  account),  typically  requiring  retail 
investors  to  hold  investments  of  a  minimum 
deposit  of  HUF 25 000  (EUR  63)  for  at  least  five 
years (split into a three-year and two-year period) 
to  receive  the  maximum  tax  benefits.  After  three 
years,  personal  income  tax  on  returns  is  reduced 
from 15% to 10%, and after five years it becomes 
0%.  Multiple  TBSZs  can  be  opened  annually,  but 
only with one per provider per year, which will be 
linked  to  an  individual  trading  account.  If  an 
individual  holds  more  than  one  account,  fund 
transfers  between  accounts  are  not  permitted. 
During  this  lock-in  period,  no  new  deposits  are 
allowed,  but 
is  permitted,  allowing 
investors  to  manage  their  portfolios.  TBSZ  assets 
account  for  6%  of  GDP  (end-2024)  with  over 
385 000  TBSZ  accounts 
(4%  of  population) 
(overall,  the  SIA  is  in  the  spirit  of  the  2025  EU 
Recommendation)  (121).  Furthermore,  the  Financial 
Transaction  Tax  (SFTT)  on  securities,  which  was 
increased  in  2024,  may  act  as  a  deterrent  to 
capital  market  activity  by  increasing  transaction 

trading 

(118) EFAMA,  2024,  Household  Participation  in  Capital  Markets, 

Jan. 2024, p. 42. 

(119) MNB, 2025. Savings Report, p.17. 

(120) MNB, 2025. Savings Report, p. 25. 

(121) COMMISSION 

RECOMMENDATION 

on 
Increasing  the  Availability  of  SIAs  with  Simplified  and 
Advantageous Tax Treatment and EC SWD 2025, p.17. 

of  30.9.2025 

costs  for  investment  service  providers  and,  by 
extension, for retail users (122).  

The banking sector: resilience and 
financing of the economy 

in 

required 

The  Hungarian  banking  sector  is  resilient, 
and  well  capitalised  and  is  not  therefore 
constrained 
its  role  of  funding  the 
economy. The key capital ratios for the Hungarian 
banking  sector  are  solid  and  above  the  EU 
average, underlining the robustness of the banking 
sector  (see  Table  A6.2).  As  of  Q3-2025,  the 
aggregate  MREL  (Minimum  Requirement  for  Own 
Funds and Eligible Liabilities) level stood at 27.6%, 
level (123). 
which  was  above 
the 
Profitability,  asset  quality  and  liquidity  indicators 
are  also  above  EU  average.  However,  the  banks’ 
asset  quality  outlook  is  subject  to  increased 
uncertainty  due  to  the  current  conflict  in  the 
Middle  East  and  its  impact  on  energy  prices  and 
economic  growth.  Despite  the  continuation  of  the 
bank levy (124), return on equity stood at 18.8% at 
Q3-2025.  The  aggregate  non-performing  loans 
(NPL)  ratio  was  historically  low  at  2.1%  at  Q3-
2025.  In  terms  of  liquidity  indicators,  the  net 
stable  funds  ratio  (NSFR)  has  been  consistently 
above 130% on average for years (exceeding the 
100%  regulatory  minimum),  while  the  liquidity 
coverage  ratio  (LCR)  stood  at  168%  at  end-
September 2025 (125). 

Banking sector’s lending capacity in Hungary 
is  driven  by  loans  to  households.  In  H1-2025, 
household  loans  outstanding  grew  by  11.7% 
year-on-year  due  to  strong  demand  for  loans, 
while  the  housing  loan  portfolio  expanded  by 
nearly  15%.  The  latest  subsidised  housing  loan 
programme 
the 
government  in  September  2025  will  lead  to 

(Home  Start) 

launched  by 

(122) Effective as  of  1 August 2024,  the  Hungarian  government 
increased the SFTT rate from 0.3% to 0.45% per transaction, 
rising  from 
with 
(around 
HUF 10 000 
EUR 50).  

the  maximum  cap  per 
(around  EUR  25) 

transaction 
to HUF 20 000 

(123) EBA, 2025. MREL Dashboard – Q2 2025, p.13. 

(124) The  government  announced  that  the  tax  amount  payable 
could be reduced in line  with an increase in banks’ holdings 
of government securities. 

(125) MNB, 2025, Financial Stability Report, Nov. 2025, p.60 &62. 

65 

 
 
 
significant  demand  growth  in  both  the  credit  and 
housing  markets.  Demand  for  corporate  loans 
continued to weaken, and thus the corporate loan 
portfolio  grew  only  by  2%  year-on-year.  The 
uncertain  economic  situation  is  also  reflected  in 
investment activity, and the annual growth rate of 
the corporate loan portfolio is expected to remain 
at around 3 to 4% in 2025 and 2026 (126). 

and  2024,  the  Hungarian  government  introduced 
new  asset  allocation  rules  for  investment  funds, 
including a mandatory quota for investment funds 
to  allocate  at  least  5%  of  their  portfolio  to 
government  securities  (and  an  additional  3%  in 
short term government securities for certain types 
of funds) (129). 

Role of non-bank financial 
intermediaries 

Given  their  limited  size,  the  pension  and 
insurance  fund  sector  currently  play  a 
limited  role 
in  driving  capital  market 
development.  With  a  small  life  insurance  sector 
and limited asset-backed pension funds, the scope 
for investing into the economy is limited. The asset 
management segment is more dynamic. 

The  Hungarian  asset  management  industry 
continues  to  grow,  while  it  invests  nearly 
half  of  its  assets  in  bond  funds  and  real 
estate funds. The assets managed by investment 
fund  managers  increased  by  21.8%  at  end-2024 
year-on-year.  This  dynamic  growth 
is  mainly 
explained  by  the  surge  in  the  net  asset  value  of 
investment  funds,  mainly  due  to  capital  inflows 
into  absolute  return  funds,  equity  funds,  bond 
funds,  and  money  market  funds.  The  after-tax 
profit  of  investment  fund  managers  increased  by 
nearly  51%  for  the  same  period  in  line  with  the 
increase  in  asset  management  (127).  In  Q3-2025, 
the  largest  share  of  investment  fund  assets  was 
allocated  to  bond  funds  (26.9%),  followed  by 
real estate funds (16.3%), fund of funds (13%), 
absolute  return  funds  (11.4%),  private  equity 
funds  (10.4%),  mixed  securities  funds  (7.9%), 
equity  funds  (7.4%),  money  market  funds  (1.9%), 
and venture capital (VC) funds (0.1%) (128). In 2023 

(126) MNB, 2025, Financial Stability Report, Nov. 2025, p.5. 

(127) MNB, 2025. Report on Insurance, Funds, Capital Market Risk 

and Consumer Protection, 

(128) MNB,  2025,  Time  series of  investment  fund  managers,  Q3-
2025; Government Decree No 55/2024 entered into force on 
1 July  2024,  laying  down  that  there  would  be  four  main 
types  of  funds  based  on  their  primary  asset  categories: 
securities funds, real estate funds, venture capital funds and 
mixed  funds  (there  are  a  total  of  14  categories  of 
investment funds within the four types). 

is 

sector 

insurance 

Hungary’s 
small, 
profitable,  solvent,  and  non-life  insurance 
focused. In terms of total  premium income, non-
life is the dominant insurance segment accounting 
for  62.1%  while  life  accounted  for  37.9%  of  the 
sector  in  Q3-2025.  Regardless  of  the  windfall 
taxes that the insurance sector had to pay (like the 
banking  sector)  (130),  insurers’  return  on  equity 
(ROE)  was  at  11.1%  in  2024  (131).  The  Solvency 
Capital  Requirement  (SCR)  ratio  was  solid  at 
197.1% in Q2-2025 (EU average: 246.6%). Among 
natural catastrophe risks, flood and windstorm are 
the  most  common  in  Hungary.  Nevertheless,  the 
European  Insurance  and  Occupational  Pension 
Authority’s  (EIOPA)  protection  gap  assessment 
indicates  that  Hungary  had  a  comparatively  low 
aggregated  insurance  protection  gap  score  for 
natural catastrophes (132). 

sector 

exhibits 

total  assets  by  Q2-2025 

Given the high share of non-life business and 
its  specific  liability  structure,  the  Hungarian 
insurance 
conservative 
investment  strategies.  The  insurance  sector’s 
portfolio  is  dominated  by  lower-risk  fixed-income 
securities,  with  government  bonds  accounting  for 
45.8%  of 
(EEA: 
19%) (133).  This  may  be  a  result  of  government’s 
decision to allow insurance companies (like banks) 
to significantly reduce their ‘windfall’ tax liabilities 
by investing in Hungarian government bonds, with 
these  provisions  extended  into  2025  and  2026. 
Investment funds accounted for 40.5% (of which 
64.2%  was  in  equity  funds  and  0.1%  in  private 
equity  funds).  Equities  accounted  for  6.1%  of 

(129) Government  Decree  No  208/2023  on  investment  rules  for 
each investment fund and Government Decree No 55/2024. 

(130) NAV,  2025.  Key  Rules  on  Insurance  Tax.  According  to  the 
rules,  some  tax  can  be  reduced  if  the  insurance  company 
purchases  Hungarian  government  bonds,  maturing  after 
1 January 2030.  

(131) MNB, 2025. Report on Insurance, Funds, Capital Market Risk 

and Consumer Protection. p.17. 

(132) EIOPA, 2025. Dashboard on Insurance Protection for Natural 

Catastrophes in a Nutshell. 

(133) EIOPA, 2025. Insurance Statistics (under asset exposures). 

66 

 
 
 
insurers’ investment portfolio, corporate bonds for 
1.7%,  and  property  for  1.3%  of  the  total  assets. 
Cash  and  deposits,  held  mostly  for 
liquidity 
management  accounted  for  only  4.2%  of  the 
allocation.  Overall,  76%  of  investments  are  made 
up of domestic assets (134). 

Asset-backed  funded  pensions  remain  small 
and  fail  to  deliver  a  significant  real  return. 
Since  the  2010  reform,  Hungary  has  a  two-pillar 
pension system: the state pension pay-as-as-you-
go (PAYG) system (pillar 1) and the supplementary 
voluntary  private  pension  funds  (pillar  3)  (135).  In 
January  2011,  the  mandatory  privately  managed 
pension fund (pillar 2) was eliminated, and savings 
were transferred to the state pension system (136). 
Hungary’s  pension  system  is  facing  significant 
long-term  sustainability 
(CSR.2025.1.7). 
While  asset-backed  pension  funds  schemes  exist, 
they  remain  limited  (around  only  4.5%  of  GDP) 
and  unattractive (the  10-year  real  return  average 
earned on pension funds is 0% compared with the 
EU average of 1.7%). 

issues 

includes 
The  voluntary  pension  scheme 
several types of pension funds (137), and their 
performance 
is  monitored  by  the  MNB. 
Hungary's  voluntary  third-pillar  pension  funds 
(VPFs) offer some tax benefits if kept for a certain 
duration  (early  withdrawal  may  incur  penalties) 
and  generally  incur  low  fees.  According  to  the 
Ministry  of  National  Economy,  about  30%  of  the 
working  population  has  a  voluntary  pension  fund 
membership.  MNB  publishes  the  performance  of 
voluntary  pension  funds  on  its  website  on  a 
their 
regular  basis 
attractiveness (138).  Although  some  VPFs  offer 

to  promote 

in  order 

(134) MNB, 2025. Report on Insurance, Funds, Capital Market Risk 

and Consumer Protection, p. 24. 

(135) OECD,  2025.  Annual  Survey  on  Investment  Regulation  of 
Pension Providers. P. 26, 27; 153; 249-250; 390-391; 498. 

(136) Unless  declared  otherwise,  members  were  mandated  to 
transfer their accumulated capital to the public scheme. Only 
3% of the members chose to keep the accumulated capital 
in  the  private  scheme.  OECD,  2024.  Strengthening  the 
Hungarian Pension System, p 70. 

privately 

managed 

(137) Voluntary  pension  funds  (önkéntes  nyugdíjpénztar,  ÖNYP); 
funds 
Voluntary 
(Magánnyugdíjpénztár)  (ex-mandatory);  Pension  insurance 
products  Nyugdíjbiztosítás  (a.k.a.  NYB);  Retirement  savings 
(NYESZ); 
account 
előtakarékossági 
through 
Voluntary 
employers  (foglalkoztatói  nyugdíj).  The  latter  occupational 
pension fund is not widely used in Hungary. 

számla 
institutions 

occupational  pension 

(Nyugdíj 

pension 

(138) MNB, 2025. Voluntary Pension Fund Returns. 

67 

funds 

online  customer  service  platform  to  monitor 
investment returns, there is no centralised tracking 
in  Hungary (139). 
system  of  pension 
Furthermore, the government allowed the tax-free 
use  of  full  amount  of  savings  from  VPFs  for 
housing  purposes  (renovations,  equity  for  new 
mortgages or repayments for existing mortgages) 
as a one-off measure in 2025. These initiatives do 
not  help  the  sustainability  of  the  pension  system, 
nor support the development of the capital market. 
This  was  on  top  of  the  gradual  introduction  of  a 
‘14th  pension  month’  in  2026  by  the  Hungarian 
government (140). 

investment 

The pension fund industry has a conservative 
investment  profile,  with  a  greater  focus  on 
bonds.  In  Q3-2025  debt  securities  accounted  for 
slightly over half (51.3%) of the total assets held 
by pension funds (out of which around 80% where 
government  bonds),  while 
funds 
accounted for 34.1%, shares for 11.6%, and bank 
deposits  for  1.4% (141).  A  Government Decree  (142) 
provides  rules  on  limits  given  for  each  asset 
category (e.g. VC up to 5% (but up to 2% of shares 
of  one  VC  fund  may  be  held).  The  decree  also 
provides 
(e.g. 
proportion of investments in non-OECD or non-EEA 
Member States securities may not exceed 20% of 
investments).  Overall,  a  better 
total  foreign 
developed pensions  sector  could  help  develop  the 
domestic  capital  market.  A  2024  paper  by 
CEPS (143)  showed  that  Hungarian  pension  funds 
accounted  for  close  to  0%  of  PE  and  VC  funds 
raised annually over the timeframe 2007-2023, a 
figure that falls substantially short of the 19% for 
the  Baltic  states  or  20%  shares  for  the  Nordic 
Member States. 

for  geographical  distribution 

(139) Commission  Recommendation  of  20.11.2025  on  Pension 
tracking  systems,  pension  dashboards  and  auto-enrolment 
final;  Commission  Communication  of 
C(2025)  9300 
20.11.2025  on  Enhancing 
the  EU 
the  capacity  of 
supplementary pension sector to improve retirement income 
and supply long-term capital to the EU economy, COM(2025) 
839 final (also SWD(2025) 367 final) 

(140)A full 13th pension month was re-introduced since 2022 for 

all pensioners.  

(141) MNB, 2025, Time series of pension funds, Q3-2025. 

(142) Government Decree No 281/2001 (XII.26), on rules 

pertaining investments and operation of voluntary mutual 
pension funds, Annex 2. 

(143) CEPS, 2024, Closing the gaping hole in the capital market for 

EU start-ups – the role of pension funds, p. 2. 

 
 
 
incubation, pre-seed, and seed) are predominantly 
led  by  domestic  investors.  Later-stage  financing 
(Series  A,  B,  growth)  is  typically  led  by  foreign 
investors 
investors). 
(e.g.  European  or  US 
Hungarian  start-ups  tend  to  relocate  abroad  as 
they  scale,  particularly  at  more  advanced  stages 
of growth (e.g. especially when pursuing listing or 
IPOs  as  these  typically  require  access  to  deeper 
and  more  liquid  capital  markets).  Although  the 
Hungarian  government  has  various  measures  and 
funding  programmes  to  support  growth  and 
innovation  for  SMEs  (147),  it  may  benefit  from 
further  measures  to  meet  the  potential  financing 
needs  of  innovative  firms  (e.g.  through  improving 
the  attractiveness  of  domestic  listing  options, 
enhancing  incentives  for  scale-ups  through  co-
investment schemes). 

Venture capital ecosystem 

firms. 

Capital 

Venture 

The  Hungarian  domestic  venture  and  growth 
capital  market  is  not  developed  enough  to 
meet  the  potential  financing  needs  of 
innovative 
(VC) 
investments in Hungary averaged 0.030% of GDP 
in 2022-2024, significantly below the EU average 
of  0.064%  (144).  Private  equity  (PE)  investments 
averaged  0.170%  in  2022-2024,  well  below  the 
EU average of 0.487% (145) (see Annex 4 for more 
details).  While  Hungary  ranks  ahead  of  the  CEE 
region  in  terms  of  investment  volume  in  VC/PE 
(146),  it  lags  behind  the  EU  average  –  highlighting 
the  remaining  potential  of  the  domestic  VC/PE 
ecosystem.  

Innovation, 

state-sponsored 

Over  the  last  decade,  the  VC/PE  ecosystem 
has  been  marked  by  significant  government 
involvement. According to the Ministry of Culture 
and 
financing 
schemes  in  Hungary  (notably  through  the  Joint 
European  Resources  for  Micro  to  Medium 
Enterprises  (JEREMIE)  fund  and  state-backed 
funds  like  Hiventures)  have  accounted  for  more 
than  half  of  total  VC  investment,  while  the  PE 
segment 
funded. 
According  to  the  Ministry  of  National  Economy,  in 
October  2025  the  VC/PE  ecosystem  comprised 
around  150  funds  domiciled  in  Hungary,  out  of 
which  61  were  state-backed  funds  (registered 
capital EUR 7.29 bn). 

largely  privately 

remained 

to  conservative  estimates  by 

The  Hungarian  VC/PE  market  has  domestic 
dominance 
in  early-stage  financing  and 
foreign  dominance  at  later-stage  financing. 
According 
the 
National Ministry of Economy, domestic Hungarian 
VC/PE  investors  have  contributed  to  around  20-
30%  of  the  total  capital  invested  into  Hungarian 
start-ups. Domestic VC funds are generally smaller 
in  size  (average  size  of  state-backed  funds  is 
EUR 119 million),  which 
to 
investments. 
effectively 
(e.g. 
Indeed, 

early-stage 
financing 

finance 
early-stage 

enables 

rounds 

them 

(144) European Commission, 2025, Overview of CMU Indicators, 

Indicator 16. 

(145) European Commission, 2025, Overview of CMU Indicators, 

Indicator 11. 

(146) Invest Europe, 2024. CEE Private Equity Statistics. 

(147) For  instance,  the  Demján  Sándor  Capital  programme  (a 
strategic alliance between the Ministry of National Economy, 
the Hungarian Chamber of Commerce and Industry, and the 
National  Capital  Holding)  is  designed  to  strengthen  the 
competitiveness of Hungary’s micro enterprises and SMEs. 

68 

 
 
 
Table A6.2:  Financial sector indicators 

(1) Annualised data. EU data for credit growth and pension funds refer to the EA average. 
Source: ECB, Eurostat, European Insurance and Occupational Pensions Authority, DG FISMA CMU dashboard, AMECO. 

69 

20182019202020212022202320242025-Q3EUTotal assets of MFIs, % of GDP92.390.4106.5109.0108.699.994.495.9246.1Common equity Tier 1 ratio16.715.815.917.716.917.618.718.616.8Total capital adequacy ratio18.518.018.319.718.920.120.921.020.2Overall NPL ratio, % of all loans5.44.23.63.23.12.42.22.11.9NPL ratio, loans to NFCs4.43.84.13.33.63.43.32.83.5NPL ratio, loans to HHs9.86.86.16.05.73.93.02.92.1Return on equity ratio114.714.37.612.712.121.219.418.89.6Loans to NFCs, % of GDP17.017.018.518.117.816.615.515.429.3Loans to HHs, % of GDP14.114.616.116.314.713.513.114.243.6NFC credit growth rate, %13.614.18.910.715.26.21.24.42.5HH credit growth rate, %7.316.614.315.18.02.79.611.82.6Stock market capitalisation, % of GDP--16.417.513.017.519.021.969.9Initial public offerings, % of GDP0.000.000.010.000.000.000.00-0.06Market funding ratio33.132.535.740.139.837.839.4-49.7Private equity, % of GDP0.1590.1650.1790.1470.1570.1240.170-0.487Venture capital, % of GDP0.0450.0620.0800.0920.0770.0540.030-0.064Financial literacy, composite index-----44.0--45.5Bonds, % of HHs' financial assets12.715.315.114.513.815.815.6-2.8Listed shares, % of HHs' financial assets1.51.71.82.52.52.83.1-4.8Investment funds, % of HHs' financial assets9.28.27.88.79.411.813.6-11.0Insurance/pension funds, % of HHs' financial assets8.48.17.67.05.96.26.3-27.8Total assets of insurers, % of GDP6.36.36.55.84.64.84.85.353.9Pension assets, bn EUR---8.07.28.89.8-5813.8Pension assets, % of GDP---5.24.24.44.8-32.310y real return average of pension assets, %-----0.20.0-1.4Pension funds assets, ECB (% of GDP)---------1-34-1011-1718-2425-27Colours indicate performance ranking among the 27 EU Member States.Banking sectorNon-banking sector 
 
 
 
     
 
ANNEX 7: EFFECTIVE INSTITUTIONAL FRAMEWORK 

trust  built  on 

institutional  framework 

An  effective 
is 
essential  for  competitiveness.  This  requires 
public 
integrity,  high-quality 
legislation,  regulatory  simplification  and  efficient 
services  for  people  and  businesses.  The  2025 
country  specific  recommendations  (CSRs)  (148) 
highlighted challenges for Hungary in the following 
areas: 
framework, 
enhancing  competition  in  product  markets  and 
services  by  avoiding  arbitrary  administrative 
interventions,  tailor-made  legislation  to  prevent 
bias  in  favour  of  certain  companies  and  market-
and 
distorting 
reducing the use of emergency measures to what 
is  strictly  necessary,  in  line  with  the  principles  of 
the single market and the rule of law.  

state-supported 

transactions 

regulatory 

improving 

the 

Public trust 

Graph A7.1: Trust in the justice system, regional / 
local authorities and in government 

(1) EU-27 since 2019; EU-28 before 
Source: European Commission, Standard Eurobarometer 
surveys 

Public  trust 
in  Hungary 
in  government 
increased  slightly  (41%),  remaining  above 
the EU average (33%) (Graph A7.1). Trust in the 
justice  system  fluctuates  around  the  EU  average. 
Trust  in  regional  and  local  authorities  remains 
stable  and  above  the  EU  average.  Although  both 
(68%)  have 
businesses 
confidence in the ability of public administration to 
handle  their  data  securely  and  responsibly,  these 

(76%)  and  people 

information  on  access 

figures  remain  moderate  in  the  EU  context  (79% 
and 72% respectively). The public would like more 
transparent 
their 
personal  data (Hungary  66%; EU: 54%) (149)  while 
32%  say  they  find  public  administration  complex 
and  burdensome  (EU:  38%)  an  improvement  of 
over 15% compared to 2023 (150).  

to 

Quality of lawmaking and 
implementation 

Hungary’s  processes  for  developing  and 
evaluating  legislation  remains  below  the  EU 
average. There is scope to introduce consistent ex 
post and in-depth reviews of costs and benefits in 
the case of primary and secondary legislation. The 
performance  of  regulatory  tools  such  as  public 
consultation,  ex  ante  impact  assessment  and 
reviews  of  existing  regulations  is  broadly  similar 
for  primary  laws  and  secondary  regulations.  This 
improved 
slightly  between  2021  and2024 
following  the  implementation  of  one  of  the 
measures  in  Hungary’s  recovery  and  resilience 
plan. 

there 

is  no 

The  impact  of  all  primary  and  secondary 
legislation  on  competition  and  on  small  and 
medium-sized  businesses  remains  to  be 
impact 
assessed.  However, 
assessment  as  regards  innovation,  certain  social 
groups,  regions  or  the  public  sector  (e.g.  costs  to 
central  and 
is  no 
obligation  to  take  consultation  comments  into 
account,  to  publicly  respond  to  them  or  even  to 
refer to them in the regulatory impact assessment. 
Consequently, 
suggestions  are 
seldom considered, thereby defeating the purpose 
of the consultation process.  

local  government).  There 

stakeholders' 

is 

There 
little  oversight  of  compliance  with 
consultation mandates and exemptions are under-
used. Regulatory enforcement remains ineffective. 
Moreover, 
the  continual,  extensive  use  of 
emergency  powers  undermines  legal  certainty, 
which  affects  businesses  operating  in  the  single 
market.  This  raises  concerns,  as  important  pieces 

(148) European Commission, 2025, COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and 
budgetary policies of Hungary. 

(149) European Commission, 2026, Flash Eurobarometer surveys 
567 and 568 on satisfaction with administrative services. 

(150) Trend 2025-2023 (comparison with Flash Eurobarometer 

526, April 2023). 

70 

00.10.20.30.40.50.60.70.80.9AutumnSpringAutumnSpringAutumnSpringWinterSummerWinterSpringWinterSummerAutumnSpringAutumnSpringAutumnSpring202520242023202220212020201920182017Justice,  legal system EU-27Justice,  legal system HURegional or local public authorities EU-27Regional or local public authorities HUGovernment  EU-27Government  HU 
 
     
 
 
 
 
Table A7.1:  Hungary. Selected indicators on better regulation practices for primary legislation 

Source: OECD, 2025, Regulatory Policy Outlook 2025 and Better Regulation across the European Union 2025   

of 
legislation  circumvent  public  consultation 
requirements.  Ex  post  evaluations  have  a  very 
limited  scope,  and  in-depth  reviews  of  specific 
regulatory areas are non-existent. Moreover, there 
is  no  external  body  responsible  for  reviewing  the 
quality  of  the  impact  assessment  undertaken  by 
the ministry concerned (Table A7.1). 

Public service delivery and 
digitalisation  

Hungary’s  availability  of  applicable  digital 
public  services  for  both  businesses  and  the 
public  is  among  the  lowest  in  the  EU  (Table 
A7.2), mainly due to the low level of cross-border 
service  provision;  however,  on  the  domestic  level 
the  availability  of  services  is  high.  The  country  is 
21st  out  of  27  in  terms  of  digital  public  services 
available to people, and 20th out of 27 in the case 
of  businesses 
local 
governments face shrinking fiscal autonomy, while 
cooperation  across  municipal  boundaries  and 
between  central  and  local  government  remains 
limited.  This  has  a  detrimental  effect  on  the 
quality of public services at local level (see Annex 
18). 

(151).  At 

regional 

level, 

Hungary  has  made  good  progress  in  the 
digitalisation  and  user-friendliness  of  its 

public  services.  The  proportion  of  members  of 
the  public  who  are  satisfied  with  administrative 
services  (55%)  is  above  the  EU  average  (42%) 
whereas satisfaction among companies is lower at 
40%  (EU:  45%).  As  of  January  15,  2025,  people 
can  log  into  the  electronic  government  portal 
authenticating  themselves  by  using  the  new 
Digital  Citizenship 
in 
introduced 
September  2024  or  by 
the  client  gate+ 
(Ügyfélkapu+)  available  since  2022  –  both  of 
which  provide  secure  two-factor  authentication. 
The  DÁP  mobile  app  has  been  downloaded  by 
more  than  3  million  Hungarian  citizens  to  their 
smartphones  and  its  features  are  continuously 
expanding (152). Only 19% of people find that they 
need  to interact  with the administration  to  obtain 
services more often than expected (Figure 1).  

(DÁP)  app 

People  stated  that  time  spent  on  processing 
or waiting for responses was the most time-
consuming  aspect  of  administrative-service 
delivery  (Graph  A7.2).  Moreover,  50%  of  people 
found that their interactions with institutions could 
be  improved  by  having  more  channels  to  contact 
the  public  administration  directly,  including  in-
person  contact.  As  far  as  the  public  is  concerned, 
digital  administration  could  be  made  more 
attractive  by  user-friendly  design  (80%),  the 
possibility  of  obtaining  quick  help  (76%)  and 
mobile access (70%). 

(151) European Commission, 2025, Digital Decade 2025: Country 

(152) European Commission, forthcoming, Simplification of key life 

reports. 

events. 

71 

Tools for smart legislation: Share of possible impacts assessed for all primary laws when developing legislation 0Regulators are required to identify and quantify the benefits of a new primary law1Regulators are required to identify and assess the impacts of alternative non-regulatory options1Tools for effective implementation: when developing laws, regulators are required to:Assess the level of compliance0Identify and assess potential enforcement mechanisms0Specify the methodology of measuring progress in achieving the law's goals0Oversight of better regulation: There is an external  body responsible for reviewing the quality of RIAs and of ex post evacuations 0There are publicly available assessments of the effectiveness of RIA in modifying regulatory proposals 0There are reports on the level of compliance by government department with the requirements of RIA1There are indicators on the percentage of ex post evaluations that comply with guidelines0The effectiveness of ex post evaluations in improving the regulatory stock has been assessed in the last five years0 
 
 
 
     
 
Table A7.2:  Digital Decade key performance indicators: availability of digital public services 

(1) Digital Decade target by 2030: 100. (2) Publishing year, data was collected in the previous year 
Source: European Commission, State of the Digital Decade report 2025 

felt 

that 

For  businesses,  the  biggest  challenges  are 
understanding  the  applicable  legislation  and 
obligations,  processing  time  and  waiting  for 
responses.  A  higher  proportion  than  the  EU 
average  (Hungary  46%;  EU  32%)  of  small  and 
very  small  companies 
increased 
costs  were  a  major  obstacle. 
operational 
Administrative  challenges 
in 
lead 
business  operations  slightly  less  frequently  than 
the  EU  average  (Hungary  34%;  EU  36%).  Among 
businesses,  73%  preferred  online  services  and 
80%  stated  that  digital  services  saved  time  and 
effort.  Nevertheless,  24%  said  that  they  rarely  or 
never  used  digital  services,  despite  considering 
their workforce to be mostly or very highly digitally 
skilled.  Both people  and  businesses 
it 
important  for  public-administration services  to  be 
fast  and  accessible  through  different  channels, 
and for information to be transparent and clear. 

to  delays 

find 

Graph A7.2: Most time-consuming aspects of 
service delivery 

Source: European Commission, 2026, Flash Eurobarometer 
surveys 567 and 568 on satisfaction with administrative 
services. 

The  Digital  Hungary  Agency  implements  the 
Hungarian  Digital  Renewal  Operational 
Programme  Plus.  This  is  an  EUR  1.6  billion 
cohesion  policy programme  financed  by  the  ERDF 
and  the  ESF+,  supporting  measures  such  as 
digitalisation reforms, a pilot initiative focusing on 
10  prioritised  key  life  events.  These  will  be 

72 

feedback 

intensity,  and 

iterative  process  with 

selected  on  the  basis  of  criteria  such  as  system 
impact. 
complexity,  emotional 
Looking ahead, next year will focus on four key life 
events. The objective is to establish an interactive 
loops, 
and 
including  topic  definition,  exploration,  solution 
design, testing and implementation. The Hungarian 
RRP  contains  measures  aimed  at  improving  the 
efficiency  of  public  services,  facilitating  data-
driven  decision  making,  developing  the  electronic 
public procurement system, and driving the digital 
transformation  of  health  and  tax  administration 
(153). 

Hungary is not yet ready to enable the cross-
border  exchange  of  data  and  documents 
between  authorities  through  the  EU  once-
only  technical  system(154).  When  services  (155) 
become  accessible,  people  and  businesses  will  no 
longer  have  to  search,  download,  and  upload 
in 
information  across  e-government  portals 
different  Member  States.  Hungary  has  yet  to 
identify  the  types  of  document  and  data  to 
exchange through the system and explore ways to 
shift  from  the  submission  of  documents  to 
exchange of structured data.  

Progress  has  been  made  in  tackling  the 
challenges  facing  permitting  legislation  and 
digitalisation. There is a paradox: Hungary has a 

(153) HU-C[C9]-R[R30] Strengthening the national IT equipment 
management system to increase efficiency of public 
services; HU-C[C9]-R[R11] Development of the Electronic 
Public Procurement System (EPS) to increase transparency; 
HU-C[C8]-I[I2] Supporting the digital transformation of 
health; HU-C[C9]-R[R34] Digital transformation of tax 
compliance procedures;  

(154) European Commission, Once-Only Technical System 

Acceleratormeter, Ec.europa.eu. 

(155) Procedure types under Annex II of the 

SDGR (2018/1724/EU) and directives 2005/36/EC, 
2006/123/EC, 2014/24/EU and 2014/25/EU. 

0%10%20%30%40%50%Time forresponsesDocumentspreparationApplicationprocessissuesLegislationandobligationsTime forresponsesDocumentspreparationPeopleBusinessesEUEU-272023202420252025687378827675808680868683Digital public services for citizens (0 to 100)Digital public services for businesses (0 to 100)Access to electronic health records (0 to 100)Hungary 
 
     
 
 
  
 
digitally  advanced  construction-permitting  system 
but  faces  governance  challenges  that  have  put 
EUR 18  billion  in  EU  funds  on  hold.  Renewable-
energy  permitting  reforms  hinge  on  rule-of-law 
milestones  that  have  not  yet  been  met.  However, 
Hungary  ranks  among  the  top  performers  in  the 
World Bank's B-READY 2025 scores for regulatory 
framework quality (156).  

is  a 

decades-old 

The  Hungarian  Architecture  Act  of  2023 
replaced 
legislation, 
consolidating  provisions  on  professional 
chambers  and  laying  down  rules  on  the 
protection  of  townscapes,  monuments,  and 
architecture. The implementation phases are set 
to  continue  until  July  2027.  Hungary's  ÉTDR 
leading  electronic  construction-
system 
administration  model,  enabled  by  EU  ERDF 
funding,  whereby  all  permit  applications  must  be 
submitted to e-epites.hu. Hungary was the subject 
delaying 
of 
transposition of the Renewable Energy Directive III 
(RED III) in 2024 (157) but is not among the states 
facing further legal action. Business registration in 
Hungary  is  entirely  electronic,  efficient  and  user 
friendly. 
Its  processes  are  streamlined,  and 
registration  can  be  completed  in  a  single  day  by 
means  of  electronic  filing  using  standardised 
templates. 

infringement 

proceedings 

for 

Civil service 

Hungary  has  a  lower  proportion  of  civil 
servants  aged  50+  (37%)  than  the  EU 
average (158). Hungary continues to have a lower 
percentage  of  employees  with  post-secondary 
education  (45%)  compared  to  the  EU  average 
(55%).  The  proportion  of  civil-service  employees 
participating in education and training is above the 
EU average (159). There is room for improvement in 

(156) European Commission, 2025, World Bank Business Ready 

2025. 

(157) European Commission - Infringements decisions_260924.pdf 

(158) European Commission, Eurostat, 2026, European Union 

Labour Force Survey, Employed persons by economic activity 
(NACE Rev. 2) (2008-2026). 

(159) European Commission, Eurostat, 2026, European Union 
Labour Force Survey, Participation rate of employees in 
education and training (last 4 weeks) by NACE Rev. 2 activity 
(2008-2026). 

73 

terms  of  taking  action  to  improve  the  gender 
parity,  which  is  one  of  the  lowest  in  the  EU,  with 
only 26% of women working in the civil service.  

improve 

The  Hungarian  civil  service  could  benefit 
its 
from  targeted  measures  to 
attractiveness  and  retention  rates.  The  pay 
gap between public and private sectors remains a 
big  challenge  and  a  key  factor  in  high  turnover, 
which  is  running  at  20-30%  per  year.  Allowing 
more  homeworking  could  be  one  measure  to 
improve the attractiveness of the profession. 

Integrity  

While  the  perception  of  corruption  when 
doing business in Hungary remains very high, 
the  reported  level  of  experienced  corruption 
is  low.  The  fact  that  83%  of  companies  view 
corruption  as  widespread  (EU:  63%)  and  78% 
state that overly close links between business and 
politics  leads  to  corruption  (EU:  76%),  there  are 
systemic  concerns.  Half  of  businesses  also  see 
corruption as a problem when operating (Hungary 
50%;  EU  35%)  (160),  which  suggests  that  these 
concerns  are  real  obstacles  for  firms.  Sectors 
particularly vulnerable to corruption in Hungary are 
public  procurement,  construction,  health,  IT,  and 
communication  services 
(see  Annex  5). 
Relatively few firms have reported direct requests 
for  bribes  (Hungary  5%;  EU  10%).  Just  19%  of 
Hungarian  companies  believe  that  those  caught 
bribing senior officials are appropriately punished, 
well  below  the  EU  average  (33%)  (162).  This  gap 
suggests that limited reported exposure to bribery 
coexists with low confidence in law enforcement. 

(161) 

Few  steps  were  taken  to 
improve  the 
prevention and detection of corruption. Some 
measures were taken as part of Hungary's 2024-
2025  national  anti-corruption  strategy,  including 
soft  measures  such  as  codes  of  conduct  for  low 
and  mid-level  officials.  However,  major  measures 
involving  i)  asset  declarations,  ii)  establishing 
codes of ethics for top executives and Members of 

(160) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

(161) European Commission, 2025 Rule of Law Report. 

(162) European Commission, 2025, Flash Eurobarometer survey 
557 on Businesses' attitudes towards corruption in the EU. 

 
 
 
days  (compared  to  135  days  in  2023)  it  remains 
one  of  the  lowest  in  the  EU.  The  estimated  time 
taken  to  resolve  administrative  cases  at  first 
instance  increased  slightly  (from  125  days  in 
2023  to  131  days  in  2024)  yet  remains  among 
the  shortest  in  the  EU.  The  quality  of  the  justice 
system is good overall.  

In  terms  of  digitalisation,  Hungary  performs 
very well. Digital solutions are in place to initiate 
and  follow  proceedings  in  civil/commercial  and 
administrative  cases,  and  the  public  has  online 
access  to  published  judgments.  However,  there  is 
room  for 
in  arrangements  for 
producing machine-readable judicial decisions. The 
general  public  has  wide  online  access 
to 
judgments, which contributes to transparency. The 
Commission  is  monitoring  the  implementation  of 
the  2023  reform  aimed  at  strengthening  judicial 
independence (164). 

improvement 

to  adopt  comprehensive 

Parliament,  iii)  political  party  financing  and  iv) 
reviewing the ‘motion for revision’ procedure have 
yet  to  be  taken.  Similarly,  no  steps  have  been 
taken 
reforms  on 
regulating 
lobbying  and  revolving  doors.  The 
Integrity Authority continues to report obstacles to 
fulfilling  its  oversight  tasks  effectively  (163),  and 
the practical impact of the proposals made by the 
anti-corruption task force has so far been limited. 
Among  the  tools  applied  for  detecting  and 
deterring 
for  strengthening 
integrity in the public sector, are integrity tests and 
their  effectiveness 
lifestyle 
specifically  in  detecting  high-level  corruption  is 
limited. 

corruption,  and 

checks, 

though 

Regarding 

corruption 

in  terms  of 
Hungary  faces  challenges 
enforcement and  establishing a  track  record 
for 
the 
cases. 
investigation  and  prosecution  of  corruption,  the 
number  of  convictions  for  corruption  crimes  has 
decreased  and  there  no  progress  has  been  made 
in establishing a robust track record on high-level 
corruption.  The  lack  of  enforcement  to  tackle 
bribery  of  foreign  public  officials  is  a  persistent 
concern:  there  are  no  new 
investigations  or 
convictions.  Recent  legislative  amendments  have 
strengthened  the  framework  for  liability  of  legal 
international 
persons, 
recommendations  related  to  foreign  bribery.  The 
amendments  eliminate 
regulatory  gap 
between  active  bribery  in  the  public  and  private 
sectors, 
liability  and 
introduce a new three-tiered time limit system for 
investigations.  The  number  of  motions  submitted 
for  revision,  which  resulted  in  the  continuation  of 
investigations 
increased 
compared to the previous year. 

in  2025,  has  not 

strengthen 

corporate 

with 

line 

the 

in 

Justice 

Overall,  the  justice  system  continues  to 
perform  efficiently.  The  time  taken  to  reach  a 
decision  in  civil  and  commercial  cases  in  first-
instance  courts  has  increased  slightly, but  at  140 

(163) Through the Technical Support Instrument, the European 
Commission supports the Hungarian Integrity Authority in 
developing an AI tool to strengthen corruption risk 
assessments of public datasets (e.g., procurement and EU-
funds data) and take a data-driven approach to plan 
investigations. 

(164) For  a  more  detailed  analysis  of  the  performance  of  the 
justice  system  in  Hungary,  see  the  upcoming  2026  EU 
Justice Scoreboard and the 2025 Rule of Law Report. 

74 

 
 
 
 
SUSTAINABILITY 
ANNEX 8: INDUSTRY DECARBONISATION, CIRCULARITY AND CLIMATE MITIGATION 

to 

the 

industrial 

impacts.  The  energy, 

Hungary faces challenges in progressing with 
to  sustainable  net-zero 
the 
transition 
industry.  Hungary’s 
industry  decarbonisation 
faces  hurdles  related  to  funding,  grid  access,  and 
expertise. Transport decarbonisation lags critically, 
also  in  the  context  of  underinvestment  in  rail 
infrastructure,  and  underdeveloped  EV  charging 
infrastructure.  Hungary  performs  below  average 
on 
circular  economy  and  on  waste 
management.  Air  pollution  remains  a  persistent 
issue,  with  significant  economic,  environmental, 
and  health 
transport, 
agriculture  and  waste  management  sectors 
contribute  heavily 
emissions, 
impairing  air  and  water  quality.  Hungary  would 
benefit  from  action  to  better  integrate  measures 
on  air  pollution  in  these  key  policies.  Given  the 
wide investment gaps in the circular economy and 
in  pollution  prevention  and  control,  Hungary  has 
scope  to  further  develop  its  economic  incentives, 
fiscal measures and the polluter pays principle. In 
2025  Hungary  has  received  a  country-specific 
improve  circularity  and 
recommendation 
strengthen  waste  treatment  capacities.  Although 
several  reforms  were  adopted  before  2025, 
including  the  reform  to  bring  in  a  single  waste 
management  operator,  it  is  unclear  how  these 
reforms  address  the  recommendation.  There  is  a 
lack  of  clear  information  on  how  the  authorities 
will monitor action by the operator to meet the EU 
waste  targets.  Further  action  is  also  needed  to 
improve  the  processing  of  waste  streams,  in 
particular  bio  and  hazardous  waste,  and  to tackle 
illegal landfilling.  

to 

Industry decarbonisation 

Greenhouse gas emissions from industry 

Hungary’s manufacturing emissions intensity 
has  declined  by  one  fifth  in  the  past  five 
years (165).  Hungary’s  manufacturing 
sector 

(165) This Annex discusses the transition of Hungary's 

manufacturing industry, specifically its energy-intensive 
industries, to low-carbon and net-zero modes of production, 
which is key to preserving competitiveness on the path 
towards climate neutrality as mandated by the European 
Climate Law. A broader perspective on the current 
competitiveness challenges facing Hungary's manufacturing 
industry is provided in Annex 5. For a more detailed 

75 

is  around 

accounts  for  13%  of  its  total  greenhouse  gas 
(GHG) emissions, (without the manufacture of coke 
and  refined  petroleum products, that  add  another 
3  percentage  points)  below  the  EU  average  of 
21%  (166).  With  about  340 g  per  euro  of  gross 
value  added  in  2024,  its  emissions  intensity  of 
manufacturing  production 
the  EU 
average, having declined by 23% since 2019. With 
about 42%, the share of energy-related emissions 
in Hungary’s GHG emissions from manufacturing is 
significantly  lower  than  the  EU’s  52%,  with  the 
rest  being  process-related  emissions.  Between 
2018  and  2023, 
the  energy-related  GHG 
emissions intensity of manufacturing improved by 
about  20%.  In  this  time,  Hungary  also  increased 
the  share  of  electricity  and  renewables  in  final 
energy  use 
in  manufacturing  by  about  6 
percentage points, to 46.4%.  

Policies to promote industry decarbonisation 

Hungary’s  green  industry  transition  faces 
challenges  related  to  high  investment  needs 
and  constraints  of  grid  capacity  among 
others (167).  Apart  from  broader  competitiveness 
issues,  the  weather  dependency  of  renewable 
energy  utilisation  poses  challenges.  Funding  for 
energy  efficiency,  energy  storage,  and  new  or 
upgraded  technologies,  along  with  the  knowledge 
needed  to  manage  energy  use  and  the  transition 
of  existing  assets  towards  decarbonisation  pose 
difficulties  to  companies.  Hungary  supports  the 
establishment  of  energy  storage  systems  for 
companies – also in view to promote energy self-
sufficiency  and  thereby  reduce  pressure  on  the 
grid  –,  the  exploitation  of  geothermal  energy  and 
bioenergy,  energy  efficiency  renovations,  and 
energy innovation research and development.  

description of greenhouse gas emissions from industry, see 
European Commission (2025), 2025 Country Report - 
Hungary, Commission staff working document, SWD (2025) 
205 final, Brussels, 4.6.2025, Annex A7. Clean industry and 
climate mitigation. 

(166) Data on the manufacturing sector exclude the NACE division 
C19 – manufacture of coke and refined petroleum products, 
for better match of the sectoral data from Eurostat (gross 
value added) with those from the UNFCCC under the 
Common Reporting Format. Also see further indicators on 
industry decarbonisation, as well as the annotation for 
further information, in table A8.1 at the end of this Annex. 

(167) Source: exchange in writing (questionnaire) with national 
authorities as part of the fact-finding for the European 
Semester analysis. 

 
 
 
 
 
 
 
 
Hungary  supports 
the  development  of 
renewable energy for industrial users’ needs. 
In  2025,  it  has  initiated  the  simplification  of 
permitting  procedures  for  hydrogen  and  biogas. 
Carbon  capture  and  storage  plans  are  also  being 
targeting  the  metal  and 
developed,  notably 
mineral 
industries  along  with  petroleum  and 
energy production.  

Reduction of effort sharing emissions 

Compliance  with  effort  sharing 
through domestic measures 

limits 

Hungary is projected to overachieve its 2030 
effort sharing target (168). In 2024, greenhouse 
gas  emissions  from  Hungary’s  effort  sharing 
sectors  are  expected  to  have  been  13.8%  below 
2005  levels.  By  2030,  the  current  and  planned 
policies  and  measures  are  expected  to  reduce 
these emissions by 26.5%, resulting in a surplus of 
7.8 percentage points relative to the 2030 target, 
a 18.7% reduction. Hungary is projected to exceed 
its effort sharing emissions limits temporarily over 
the  2021-2030  period  but  could  cover  the  gap 
with  unused  annual  emission  allocations  from 
other years to achieve compliance with the Effort 
Sharing Regulation (169). 

Sustainable transport 

The transition to decarbonise road transport 
is a challenge in Hungary; achieving a shift to 
rail  would  require  significant  investment.  In 
2024, road transport generated 34% of Hungary’s 

(168) On the decarbonisation of buildings, the other key subsector 

covered by the Effort Sharing Regulation, see Annex 9. 

(169) The  national  GHG  emission  reduction  target  is  set  out  in 
Regulation (EU) 2018/842 (the Effort Sharing Regulation). It 
applies  jointly  to  buildings  (heating  and  cooling),  road 
transport,  agriculture,  waste  and  small  industry  (known  as 
the effort sharing sectors). The emissions from effort sharing 
sectors for 2024 are based on approximated inventory data. 
The  final  data  will  be  calculated 
in  2027  after  a 
comprehensive  review.  Projections  about  the  impact  of 
current  policies 
(‘with  existing  measures’,  WEM)  and 
additional  policies (‘with  additional  measures’,  WAM)  as  per 
Hungary’s 2025 reporting under Article 17 of Regulation (EU) 
2018/1999 (the Governance Regulation). Also see European 
Commission    (EC)  (2025),  Climate  Action  Progress  Report 
2025  –  Technical  Information,  Commission  staff  working 
document, Brussels, Chapter 9 (pp. 111ff.), and in particular 
Tables 25 and 26. 

effort sharing emissions, a 15% increase on 2005 
levels (170).  From  2018  to  2022,  the  share  of 
inland freight in Hungary carried by rail decreased 
by  0.4%, instead  of increasing  to  enable  a modal 
shift to rail transport (171). This is linked to the low 
level of investment in rail infrastructure per capita 
(EUR 73.4  per  inhabitant  in  2022;  EU  average: 
EUR 114.3)  (172),  and  Hungary’s  preference  to 
develop  road  transport  infrastructure  instead  of 
rail.  At  45.3%,  the  share  of  Hungary’s  rail  tracks 
that  is  electrified  was  below  the  EU  average  of 
57.4% 
to  current 
government  estimates,  rebuilding  its  TEN-T  core 
network  and  extended  core  network  railway  lines 
would  require  EUR 17 billion,  far  above  available 
funding  levels.  The  significant  rail  infrastructure 
investments  tabled  in  Hungary’s  recovery  and 
resilience  plan  have  not  been  carried  out  either. 
Hungary 
in  terms  of 
compliance  with  its  TEN-T  requirements (174)  by 
2030 and 2040.  

is  therefore  off  track 

(173).  According 

in  2023 

The process to decarbonise road transport is 
not  advancing  sufficiently  either.  For  cars,  by 
the  end  of  2025  Hungary  had  only  installed 
around 25% of the electric charging infrastructure 
mandated  for  2030.  For  trucks,  electric  charging 
infrastructure  is  largely  absent.  This  creates  the 
risk  of  significant  bottlenecks  in  the  uptake  of 
electric 
truck 
manufacturers  to  meet  their  legally  binding  sales 
target (175). Hungary does not promote the uptake 
of zero-emission trucks by providing an exemption 
from  the  infrastructure  charge  component  of  a 
toll,  a  demand-side  economic  incentive  that  is 
allowed under EU law until 30 June 2031(176). 

the  ability  of 

trucks  and 

(170) See Graph A8.1, and Table A8.1 at the end of this Annex. 

(171) EC,  Directorate-General  for  Mobility  and  Transport,  EU 
figures  –  Statistical  pocketbook  2025, 
the  European  Union,  2025, 

transport 
in 
Publications  Office  of 
https://data.europa.eu/doi/10.2832/2584130. 

(172) Calculation  based  on  Rail  Market  Monitoring  (RMMS,  2024) 
for  data on ‘rail  infrastructure investments’  and  on  Eurostat 
data for ‘population’. 

(173) Eurostat: rail_if_line_tr. 

(174) As per Regulation (EU)2024/1679. 

(175) Infrastructure | European Alternative Fuels Observatory. 

(176) Pricing | Hungarian Public Roads Nonprofit PLC – Toll Division. 

76 

 
 
 
Graph A8.1: Greenhouse gas emissions in the 
effort sharing sectors, 2005, 2023, and 2024 

Source: European Environment Agency. 

Sustainable industry 

Circular economy industry 

is  still  far  from  achieving 

Hungary 
its 
transition  to  a  circular  economy.  A  national 
circular economy strategy is under preparation but 
yet  to  be  adopted.  Hungary’s  recycling  rates  lag 
behind  the  EU  average:  only  33.6%  of  municipal 
waste was recycled (EU average: 48.1%) in 2024, 
and  23%  of  plastic  packaging  in  2023  (EU 
average:  42%)  (177).  Only  22.24%  of  construction 
and  demolition  waste  was  recycled  in  2022  (EU 
average:  79.72%)  (178).  Hungary  has  missed  the 
2020  EU  recycling  targets  and  significant  efforts 
are  needed  to  reach  the  next  targets.  No  patents 
related  to  recycling  or  secondary  raw  materials 
were  filed  in  2021  in  Hungary  (179).  Moving 
forward  with  the  transition  to  a  circular  economy 
would  require  additional  economic  incentives  for 
the  separate  collection  of  municipal  bio-waste. 
This  could  include  promoting  'pay-as-you-throw'-
based household waste charges, increasing landfill 
taxes  (180),  and  providing  dedicated  support  for 
research and innovation initiatives. 

by 

18.5% 

Although  Hungary’s  level  of  reliance  on 
primary  resources  is  below  the  EU  average, 
the country also takes fewer steps to tap the 
potential gains in the circular economy. Waste 
generation  has  increased  from  387 kg/capita  in 
2017  to  414 kg  in  2024,  still  below  the  EU 
average  of  517 kg  (181).  The  country's  level  of 
dependency  on  imports  of  materials  remained  at 
27.6%  in  2023,  slightly  above  the  EU  average  of 
22.4%  (182),  and  raw  material  consumption  per 
capita, a measure of Hungary’s material footprint, 
since 
fell 
reaching 
(183).  Resource 
in  2024 
13.234 tonnes/capita 
productivity  has  increased  significantly,  nearly 
doubling from 0.91 EUR/kg in 2019 to 1.75 EUR/kg 
in  2024  (184).  However,  Hungary  could  stand  to 
gain  from  action  to  develop  its  circular  economy. 
Employment  in  the  circular  economy  rose  by 
12% (185), 
total 
employment  in  2023,  slightly  above  the  EU 
average  of  2%.  The  use  rate  of  secondary 
materials remains limited, with a circular material 
rate of 7.7% against the EU  average of 12.2% in 
2024,  indicating  a  higher  level  of  landfilling  of 
primary resources. 

for  2.3% 

accounting 

2019, 

of 

and 

reduce  waste. 

Hungary  has  implemented  some  fiscal  tools, 
but its framework could be updated to boost 
environmental  revenue,  promote  circular 
practices 
Total 
environmental taxes amounted to EUR 4.25 billion 
in  2023,  representing  2.16%  of  Hungary’s  GDP, 
slightly above the EU average of 2.03% (186). Most 
environmental  tax  revenue  came  from  energy 
taxes, and to a lesser extent, transport taxes, with 
taxes  on  pollution  and  resources  accounting  for 
only  0.11%.  The  landfilling  tax  adopted  in  2012 
has  remained  unchanged  since  2014,  which 
means it is rather low in 2023 prices. The mining 
royalty system created in 1993 lacks transparency 
and  revenue  is  not  earmarked  for  environmental 

(177) Eurostat, Plastic packaging recycling rate, 2025. Link. 

(178) Joint  Research  Center 

(JRC),  Techno-economic  and 
environmental  assessment  of  CDW  management,  A  report 
on sustainable management of construction and demolition 
waste, 2024, Link. 

(179) Eurostat,  Patents  related  to  recycling  and  secondary  raw 

(181) Eurostat,  Municipal  Waste  by  waste  management 

operations, 2026. Link. 

(182) Eurostat, Circular material use rate, 2025. Link. 

(183) Eurostat, Material footprints, 2025. Link. 

(184) Eurostat, Resource productivity, 2025. Link. 

materials, 2025. Link. 

(185) Eurostat,  Persons  employed  in  circular  economy  sectors, 

(180) Organisation  for  Economic  Co-operation  and  Development, 
Towards a National Circular Economy Strategy for Hungary, 
2023, Link. 

2025. Link. 

(186) EC, Environmental Implementation Review, Hungary country 

report (EIR), 2025, Link. 

77 

0102030405060200520232024MtCO2eDomestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
  
 
 
purposes  (187).  Updating  these  fiscal  tools  and 
bringing in  new measures  such  as  an incineration 
tax  could  encourage  circularity.  Given  Hungary’s 
high landfilling rate, revising the landfilling tax fee 
would be particularly beneficial. In addition, levying 
incineration and new air pollution taxes could help 
mitigate  air  pollution  and  reach  the  emission 
reduction  targets.  Applying  product  charges  on 
specific  goods  and  user  charges  could  also  aid 
Hungary  in  achieving  waste  management  and 
circular  economy  goals,  while  reducing  pollution 
and enhancing nature protection. 

on 

Although 

performance 

Hungary’s 
waste 
management  is  deteriorating  despite  recent 
reforms. 
the  municipal  waste 
incineration rate, at  13.2% in 2024, is lower than 
the  EU  average  of  26.1%,  it  has  increased  from 
10% in 2010. The landfilling rate fell significantly 
from  70%  in  2010  to  48%  in  2017  but  recent 
data show a worrying rise to 53.2% in 2024, well 
above  the  EU  average  of  22%  in  2023  (188).  This 
trend  puts  Hungary  at  risk  of  missing  the  2035 
target  to  landfill  no  more  than  10%  of  municipal 
waste.  In  2023,  Hungary  adopted  a  series  of 
reforms in the waste management sector, but the 
impact  has  yet  to  be  assessed.  The  reforms 
include 
responsibility 
system (189) designed to improve waste prevention, 
re-use,  recycling  and  recovery,  and  it  covers 
several waste streams (190). 

the  extended  producer 

need  more 

targeted 
Hungary  would 
investment in the circular economy, as it faces 
an  annual  investment  gap  of  EUR 316  million  to 
achieve its circular economy objectives (191). 

Bioeconomy industry 

Hungary's  bioeconomy  is  growing  steadily 
but  not  as  quickly  as  the  overall  economy 

(192), representing only 0.88% of the country’s GDP 
in  2023.  Between  2018  and  2023,  the  value 
added  annually  by  the  bioeconomy  industry  in 
Hungary  increased  by  an average  of  4.4%,  driven 
by  the  wood  products  and  furniture  and  the  food 
and  beverages  sectors,  but  still  below  the  annual 
EU-27  average  growth  of  5.1%  (193)(194).  On 
average  annually,  over 
same  period, 
the 
in  the  bio-based  chemicals  and 
employment 
plastics  and  wood  products  and  furniture  also 
recorded modest employment growth of 1.9% and 
0.9%  respectively,  partially  offsetting  a  slight 
overall decline in bioeconomy employment. Labour 
productivity  stood  at  101.4%  of  the  national 
average in 2023, making Hungary one of the few 
countries  where  the  bioeconomy  operates  at  or 
(195). 
above  economy-wide  productivity 
However,  R&D  remains  an  area  of  concern,  with 
bioeconomy-relevant  sub-sectors  growing  at  just 
1.3%  compared  with  4.2%  for  overall  national 
R&D expenditure (196), despite Hungary's untapped 
potential.  Given  its  productive  agricultural  base, 
well-established  pharmaceutical  and  biotech 
sector,  and  fertile  SME  ecosystem 
in  food 
processing (197), Hungary holds significant potential 
to  scale  its  bioeconomy  well  beyond  its  current 
trajectory. 

levels 

Zero-pollution industry 

Air  pollution  in  Hungary  remains  a  major 
concern as it has an impact on public health, 
the  environment  and  the  economy.  While 
several  air  pollutant  emissions  have  decreased 
since 2005 (198), Hungary still ranks ninth in the EU 
on  industrial  emission  intensity  (199).  The  main 
industrial  contributors  include  the  energy  and  the 
mineral  sectors  for  nitrogen  oxides  (NOx),  waste 
management for dust, the energy sector for sulfur 
dioxides  (SO2)  and  the  energy  and  metal  sectors 
for  heavy  metal  emissions.  Though  NOx,  non-

(187) EC,  Directorate-General  for  Environment,  Camboni,  M., 
Markandya, A., Tyrer, D., Goonesekera, S. et al.,  Greening the 
European Semester – Resource and pollution taxes, Annex 6, 
Country factsheets,  2026, Link. 

(192) JRC, Jobs and wealth in the EU bioeconomy, 2025. Link 

(193) Bioeconomy  sub-sectors:  food  and  beverages;  bio-based 
textiles;  wood  products  and  furniture;  bio-based  chemicals 
and plastics. 

(188) Eurostat,  Municipal  Waste  by  waste  management 

(194) JRC, Jobs and wealth in the EU bioeconomy, 2025. Link 

operations, 2026. Link. 

(195) Ibid. Link. 

(189) EEA, Circular economy country profile – Hungary, 2024. Link. 

(190) Namely,  packaging,  electrical  and  electronic  equipment, 
certain  single-use  plastic  products,  batteries,  vehicles,  tyres, 
office paper, advertising paper, cooking oil and grease, textile 
products and wooden furniture. 

(196) JRC,  Business  expenditure  in  Research  and  Development  in 

the EU bioeconomy, 2025. Link. 

(197) Ibid. Link,. 

(198) EC, EIR, Hungary country report, 2025, Link. 

(191) EC, EIR, Hungary country report, 2025, Link. 

(199) Ibid., Link. 

78 

 
 
 
methane  volatile  organic  compounds  (NMVOC), 
particulate  matters  (PM  2.5  and  10),  and  sulfur 
oxides  (SOx)  fell  between  2010  and  2022  (200), 
industrial  air  emissions  of  PM10  and  ammonia 
(NH3) rose by 56% and 35% respectively between 
2014  and  2023  (201).  NH3  and  PM2.5  pollution 
remains  high.  Hungary  missed 
its  emission 
reduction  commitments  for  2020-2029  and  is 
projected  to  miss  the  2030  and  subsequent 
commitments  for  NOx,  NMVOC,  NH3  and  PM2.5.  Air 
pollution  results  in  1 350  years  of  life  lost  (YLL) 
inhabitants  due  to  PM2.5,  with 
per  100 000 
Health 
the  World 
concentrations 
Organization’s air quality standards. Pollution from 
nitrogen  dioxide  (NO2)  results  in  200  YLL  per 
100 000 inhabitants and ozone results in 293 YLL 
per 100 000 inhabitants (202).  

above 

The  estimated  annual  costs  of  air  pollution  from 
the  main  pollutants  (NH3,  NMVOC,  SO2,  NOx  and 
PM2.5)  exceed  EUR 6.3 billion  (203).  41%  of  these 
costs  are  attributed  to  transport,  27%  to  energy 
and 26% to agriculture. Health and environmental 
damages  from  industrial  pollutants  are  estimated 
in  2021 
to  have  costed  EUR 963.8 million 
alone (204),  highlighting 
of 
continuing  action  to  tackle  the  main  pollutant 
emissions  from  all  sources.  Overall,  energy  and 
transport  policies  do  not  address  air  pollution 
sufficiently, hampering long-term improvements. A 
notable  example  is  funding  for  energy-efficiency 
projects,  which  are  not  selected  based  on  their 
impact  on  air  pollution  and  only  receive  limited 
funding.   

importance 

the 

Hungary levies environmental taxes on some 
key air pollutants. Since 2003, Hungary charges 
an  environmental  impact  fee  on  point-source 
emissions of NOx, SOx and non-toxic dust, primarily 
from  industry  and  power  generation.  While  this 

(200) In  Hungary,  between  2010  and  2022,  NOx  have  decreased 
by 18%, NMVOC by 10%, PM2.5 by 30%, PM10 by 22%, and 
Sox by 50%. (Eurostat, Air emissions accounts, Link). 

(201) EEA,  Industrial  Reporting  under  the  Industrial  Emissions 
Directive  2010/75/EU  and  European  Pollutant  Release  and 
Transfer Register Regulation, 2026, Link. 

(202) EEA, Harm  to  human  health  from  air  pollution  in  Europe: 

tool  reliably  generates  revenue,  its  environmental 
effectiveness  is  limited  (205).    Given  Hungary’s 
persistent  air  quality  challenges,  bringing 
in 
calibrated  charges  for  NOx,  SO₂  and  PM  could 
complement  existing  measures  and  deliver  local 
co-benefits for health and climate policy (206).    

water 

industrial 

While  Hungary  has  made  some  progress  in 
pollution, 
reducing 
maintaining  these 
improvements  remains 
challenging.  The  waste  management  sector 
contributes  significantly  to  emissions  of  heavy 
metals,  nitrogen,  phosphorus  and  total  organic 
carbon, while the pulp and paper sector is a major 
source  of  phosphorus  emissions  in  water  (207). 
Between  2010  and  2023, 
reductions  were 
achieved  in  nitrogen,  total  organic  carbon  and 
phosphorus  emissions  from  industrial  sources,  as 
reported  under  the  Industrial  Emissions  Directive. 
However,  heavy  metal  (cadmium,  mercury,  nickel 
and lead) emissions from industrial releases have 
significantly  increased  over  the  same  period  (208). 
Surface  waterbodies  are  affected  particularly 
severely  by  heavy 
industry  emissions  and 
combustion  processes  (209).  Discharges  of  heated 
water 
facilities 
contribute to rising river temperatures especially in 
summer,  affecting  freshwater  ecosystems  (210).  In 
Hungary,  88.7%  of  surface  water  bodies  fail  to 
achieve  good  ecological  status  and  46%  fail  to 
achieve good chemical status (211), compared with 
the EU averages of 37.7% and 30%, respectively. 
This  highlights  the  need  for  continued,  enhanced 
and sustained measures to tackle industrial water 
pollution.  Water  pollution  by  waste  water  from 
industry  in  Hungary  imposes  direct  and  indirect 

from  power  plant 

cooling 

(205) EC,  Directorate-General  for  Environment,  Camboni,  M., 
Markandya, A., Tyrer, D., Goonesekera, S. et al.,  Greening the 
European  Semester  –  Resource  and  pollution  taxes,  2026, 
Link. 

(206) Ibid., Link. 

(207) EC, EIR, Hungary country report, 2025, Link. 

(208) EEA, Water  pollutant  releases  changes  from  2010  to  2022 
for  the  EU  Member  States,  2024, Link.  Updated  2023  data 
from the EEA. 

burden of disease status, 2025, Link. 

(209) See also the Annex on Climate adaptation, preparedness and 

(203) EC,  IEEP,  Green  taxation  and  other  economic  instruments  – 
Internalising  environmental  costs  to  make  the  polluter  pay 
(p. 32-33, Table 3), 2021, Link. 

(204) EEA,  Industrial  pollution  intensity  indicators  –  EU  large 
Industrial 

intensity,  European 

industry  water  pollution 
Emissions Portal, 2024, Link. 

environment. 

(210) OECD  Study,  Water  governance  for  climate  resilience  in 

Hungary, 2026, Link. 

(211) WISE  Freshwater  Information  System  for  Europe,  Country 
Profiles  on  Water  Framework  Directive  -  Hungary  report, 
accessed in 2026, Link. 

79 

 
 
 
costs  of  EUR 13  million  a  year  (212),  not  yet 
sufficiently borne by the polluters. 

Despite pressures on health, the environment 
and  the  economy,  Hungary’s  investments  in 
insufficient.  To 
tackling  pollution  remain 
tackle  pollution  prevention  and  control,  Hungary 
needs EUR 1.5 billion in investment each year over 
the  2021–2027  period.  The  annual  investment 
level  is  estimated  at  EUR 946  million.  Additional 
funding  could  help  improve  air  quality,  especially 
through  measures  to  promote  sustainable  energy 
and  transport  in  sensitive  areas  and  action  to 
reduce  NH3  emissions.  Meeting  national  and  EU 
pollution  prevention  and  control  targets  would 
require  an  additional  EUR 506  million  annually 
(213).  

(212) EC,  IEEP,  Green  taxation  and  other  economic  instruments  – 
Internalising  environmental  costs  to  make  the  polluter  pay 
(p. 35-36, Table 5), 2021, Link. 

(213) EC, EIR, Hungary country report, 2025, Link. 

80 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1:  Key clean industry and climate mitigation indicators: Hungary 

Sources and notes: Industry decarbonisation: All data are from Eurostat; data following the UNFCCC Common Reporting 
Format (CRF) are from the European Environment Agency (EEA), republished by Eurostat. (1) Sectors covered: all divisions of 
section C - Manufacturing - of the NACE Rev. 2 statistical classification of economic activities, except C19 (manufacture of coke 
and refined petroleum products). (2) GHG emissions as per UNFCCC Common Reporting Framework (CRF) categories 1.A.2 - fuel 
combustion in manufacturing in industries and construction (that broadly correspond to the broadly correspond to the NACE 
sections C - Manufacturing and E - Construction, excluding C-19),  and CRF2 - industrial processes and product use. The figures 
shows the emissions in the 1.A.2 category as a share of the sum of CRF1.A.2. and CRF2 emissions. (3) Sectors covered: CRF 1.A.2 
as described above. Gross value added (GVA) data in the denominator aligned in sectoral coverage, in 2020 prices. (4) Sectors 
covered: NACE section C excluding C19. (5) Nominator: NACE divisions C17, 20, 23, 24; denominator: NACE section C excluding 
C19 (see above). (6) GVA (denominator) in 2020 prices. Reduction of effort sharing emissions: Data source: European 
Environment Agency, greenhouse gas data viewer; European Commission, Climate Action Progress Report, 2025. For details, see 
the footnote in the "Reduction of effort sharing emissions" section. Sustainable road transport: (7) Source: Eurostat; (8) Source: 
European Alternative Fuels Observatory; (9) Source: Eurostat. For all climate mitigation indicators, the trend arrows compare the 
latest available data (year t) with the data four years earlier (t-4). Sustainable industry: Bioeconomy value added, employment 
and productivity: JRC, Developments of Economic Growth and Employment in Bioeconomy Sectors across the EU. Bioeconomy 
R&D business expenditure: JRC, Business expenditure in Research and Development (R&D) in the EU bioeconomy. Damage cost for 
industrial pollution: EEA, The costs to health and the environment from industrial air pollution in Europe, 2024. Water industrial 
pollutants releases: EEA, Industrial releases of pollutants to water and economic activity in the EU-27, 2024. Water chemical 
status: WISE, Surface water bodies: Chemical status, 2024 and WISE Groundwater bodies: chemical status, 2024. Other indicators: 
Eurostat. For circular economy indicators, the trend arrows compare the latest available data (year t) with the data two years 
earlier (t-2). 

81 

Climate mitigationTrendIndustry decarbonisation201820192020202120222023202420182023GHG emissions intensity of manufacturing production, g/€ (1)456438446419341321336330-Share of energy-related emissions in industrial GHG emissions (2)41.141.139.841.743.742.3-55.557.9Energy-related GHG emissions intensity of manufacturing and construction, g/€ (3)211.9204.2207.4204.8178.3163.1-203.9163.0Share of electricity and renewables in final energy consumption in manufacturing, % (4)38.239.839.740.743.645.446.442.843.9Energy intensity of manufacturing, GWh/€ (4)1.881.851.981.981.731.701.831.271.05Share of energy-intensive industries in manufacturing production, % in GVA (5)14.9513.9314.2616.4912.5511.2110.35--GHG emissions intensity of production in sector [...], g/€ (6)- paper and paper products (NACE C17) 608          618          576                 526            541                  464           492             722             619            - chemicals and chemical products (NACE C20) 2,186        2,375       2,444              2,558         2,694                3,260         4,205          --- other non-metallic mineral products (NACE C23) 2,708        2,701       2,687              2,439         2,303                1,963         2,099          2,495           2,352          - basic metals (NACE C24) 1,959        1,954       2,305              1,741         1,975                886           436             2,842           3,099          Reduction of effort sharing emissions201820192020202120222023202420182023GHG emission reductions relative to base year, % -3.6-8.1-14.8-13.8- domestic road transport14.921.84.215.424.715.615.4-1.4-5.6- buildings-30.8-32.8-29.5-25.3-35.2-43.4-43.6-20.3-33.520052021202220232024TargetWEMWAMEffort sharing: GHG emissions, Mt; target, gap, %47.846.144.040.741.2-18.7%-15.2%-26.5%Sustainable road transport2018201920202021202220232024202520182021New zero-emission vehicles, electricity motor, % (7)0.951.162.383.534.225.387.041.038.96Number of publicly accessible AC/DC charging points (8)--121726343329331741755083446956n/aShare of electrified railways, % of total (9)39.6940.1839.9540.8340.7445.2945.2755.4756.49Sustainable industryTrendEU-27Circular economy transition20182019202020212022202320242018latest dataMaterial footprint, tonnes per person15.516.214.014.214.714.813.214.813.7Circular material use rate, %6.9            5.5           5.1                  5.0             4.9                    6.8             7.311.612.2Resource productivity, €/kg0.9            0.9           1.0                  1.1             1.3                    1.5             1.72.13.0Employees in circular economy2.6            2.62.6                  2.8             2.3                    2.3             -2.12.0Patents in circular economy23.0           1.0                  -            12.312.0Recycling rate            37.4           35.9                  32.0             34.9                   32.8            33.4 33.6            46.4048.1Plastic recyling 30%33%25%27%28%23%-41%42%Construction and demolition waste (CDW) recovery 99-988889Bioeconomy industry 2018201920202021202220232024CAGR 2018-202320182023Value added, million EUR9,5479,8419,71710,88911,67612,396-4.4%642,438863,436Employment, total number of people employed377,335372,572370,368356,939343,576343,162--1.6%17,649,04017,085,642ProductivityValued added per worker, thousand EUR25.326.426.230.534.036.1-6.1%36.450.5Valued added per worker, % of national average101.098.8102.1108.7112.8101.4--62.270.7R&D business expenditureTotal bioeconomy (biomass producing and converting sectors)2242192373231992421.3%15,67223,335Total R&D business expenditure1,5511,6211,6791,9101,6901,982-4.2%196,587259,525Zero pollution industry201820192020202120222023202420182021Damage cost for industrial pollution6.46.26.56.6---414.9352.7Water industrial pollutants releases 2021change (2010)2021change (2010)2021change (2010)2021change (2010)5,827        75%4,472,300        -15%-                   -13%511,780      -14% Water chemical statusGood584                 Good (%)0.5                    Poor488.0Poor (%)46%EUTOCPhosporusHungaryHungaryCd, Hg, Ni, Pbnitrogen 
 
 
  
 
 
ANNEX 9: AFFORDABLE ENERGY TRANSITION 

This  annex  outlines  the  progress  made  and 
the  ongoing  challenges  faced  in  increasing 
energy  affordability,  while  advancing  the 
transition 
the 
implementation  of  past  energy-related  country-
specific recommendations. 

to  net  zero. 

reflects 

It 

The  2025  energy-related  country-specific 
recommendation  for  Hungary  calls  for 
harmful  fossil  fuel  subsidies  to  be  phased 
out and for diversification to be accelerated 
in order to phase out dependence on Russian 
energy  sources.  It  also  calls  for  flexibility  and 
competition  to  be  increased  in  the  electricity 
sector, in particular by strengthening the balancing 
market  and  boosting  cross-border  electricity 
trading. 

In  Hungary,  progress  in  addressing  these 
remains  uneven.  While 
recommendations 
significant  steps  have  been  taken  to  make  the 
electricity  system  more  flexible, 
in  particular 
through  support  schemes  for  electricity  storage 
and  plans  to  join  EU  cross-border  balancing 
platforms,  dependence  on  Russian  fossil  fuels 
remains high. Hungary continues to rely heavily on 
Russian  gas  and  oil  imports  despite  having  made 
some diversification efforts by signing new supply 
agreements  with  alternative  partners,  and  it  is 
expected to remain dependent on Russian nuclear 
fuel  for  its  existing  reactors  in  the  coming  years. 
Some measures have also been taken to increase 
cross-border  electricity 
trading,  but  Hungary 
suffers  from  structural  constraints in  the  regional 
grid, which continue to limit further integration and 
competition in the electricity market. 

Energy prices and costs 

artificially 

framework’) 

While  utility  price  caps  (or  the  ‘universal 
kept 
service 
household energy bills in Hungary well below 
the  EU  average (214),  electricity  prices  for 
industrial  consumers  remain  among  the 
highest in the EU. In the first half of 2025, both 
household  electricity  and  gas  prices  in  Hungary 
remained  stable,  and  significantly  below  the  EU 
average, at EUR 0.1040/kWh and EUR 0.0307/kWh 

(214) Hungary Today. 

the 

throughout 

respectively  (both  the  lowest  in  the  EU).  On  the 
other  hand,  retail  electricity  prices  for  industrial 
consumers  decreased 
first 
semester  of  2025  but  remained  above  the  EU 
average and on par with average prices reached in 
the first semester of 2024. For gas, prices for non-
household  consumers  have  remained  in  line  with 
the  EU  average.  However,  electricity  industrial 
prices  (EUR  185/MW)  increased  and  remained 
above  EU  average  (EUR  164/MWh).  While  53%  of 
the electricity price for industry is accounted for by 
wholesale  cost,  network  cost,  carbon  cost,  and 
taxes  represent  respectively  27%,  10%  and  10% 
of  the  electricity  bill.    Overall,  gas  and  electricity 
prices  in  Hungary  remained  unbalanced,  partly 
because the fiscal burden on industrial consumers 
was  greater  for  electricity  than  for  gas.  For  large 
businesses,  electricity  was  3.4 
times  more 
expensive than gas in the first half of 2025, with 
taxes  and  levies  (excluding  VAT)  accounting  for 
10%  of  electricity  bills  and  7%  of  gas  bills (215). 
Excluding  taxes  and  levies,  the  electricity-to-gas 
price  ratio  would  have  decreased  to  3.3.  On  the 
other  hand,  VAT  accounted  for  over  21%  of 
household  electricity  and  gas  bills,  and  taxes  and 
levies  averaged  26%  for  both,  resulting  in  a 
similar electricity-to-gas price ratio of 3.4, with no 
impact when fiscal elements were excluded (216). 

(215) While at the same time VAT paid in Hungary by industrial 

consumers was on average 20% for electricity and 21% for 
gas. 

(216) Analysis based on Eurostat data from the first half of 2025. 

82 

 
 
 
 
 
 
Graph A9.1: Electricity and gas prices for 
household and non-household consumers, first 
half of 2025 

significant  ramp-up  of  thermal  generation  to 
balance supply and demand, either domestically or 
through  neighbouring  markets.  As  a  result,  price 
spreads (219) in Hungary averaged EUR 155/MWh in 
2025 – significantly givenabove the EU average of 
EUR 121 per megawatt-hour. 

Graph A9.2: Low-carbon electricity generation vs. 
electricity wholesale prices, 2025 

(i) For household consumers, the consumption band is DC for 
electricity and D2 for gas. (ii) For non-household consumers, 
the consumption band is ID for electricity and I4 for gas. VAT 
and recoverable charges are not displayed for non-household 
consumers as these are typically recovered by businesses. 
This also applies to the ‘% of taxes and levies’, which is shown 
excluding VAT and recoverable charges for non-household 
consumers. (iii) ‘Without taxes and levies’ indicates the retail 
price excluding all taxes and levies. It always includes the 
energy/supply and network cost components, which are not 
disaggregated in Eurostat’s six-monthly price dataset. 
Source: Eurostat 

EUR 110/MWh 

electricity 
in 

prices 
Hungary’s  wholesale 
2025 (217), 
averaged 
compared  to  an  EU  average  of  EUR 85  per 
megawatt-hour,  remaining  the  third  highest 
in the EU. Despite a decreasing share, fossil fuels 
accounted  for  24%  of  Hungary’s  electricity 
generation  in  2025,  with  fossil  fuels  maintaining 
their  structural  role  as  the  dominant,  and  costly, 
marginal  price-setting  technology  (68%  of  price 
setting  hours  for  24%  electricity  generation). 
Driven  by 
rising  natural  gas  procurement 
costs (218),  average  day-ahead  electricity  prices  in 
Hungary  increased  by  8%  in  2025.  Hungary  also 
remains exposed to pronounced price spikes during 
peak-demand  hours,  reflecting  declining  solar 
output in the evening and early morning, combined 
with  limited  non-fossil  flexibility.  This  leads  to  a 

Unavailable data for Cyprus and Malta. Wholesale price is 
given as average of day-ahead electricity prices over 2025. 
EU-27 average is calculated as consumption-weighted. EU 
low-carbon share is calculated out of total EU electricity 
generation. Low-carbon share by country is calculated out of 
total public electricity generation. Low-carbon includes 
renewables and nuclear. 
Source: Eurostat 

Flexibility and electricity grids 

current 

completed 

Hungary’s 
level  of  electricity 
interconnection  is  already  39%,  which  is 
above  the  15%  EU  target  for  2030.  The 
feasibility  study  for  a  new  interconnector  with 
Romania  was 
in  April  2025. 
Construction has started and the project should be 
two  new 
finalised  by  2029.  Additionally, 
interconnectors  with  Romania  and  Slovakia  were 
included  as  part  of  the  second  Union  list  of 
projects of common interest (PCIs) and projects of 
mutual  interest  (PMIs)  and  two  smart  grid  PCIs, 
TUNE  (HU,  SI,  SK)  and  Selena  (CZ,  HU,  SK),  which 
aim  to  increase  controllability,  strengthen  the 
power network and modernise the distribution grid. 

(217) ENTSO-E. 

(218) The short-run marginal costs of gas in the EU increased from 
EUR 96  per  megawatt-hour  in  2024  to  nearly  EUR 103  per 
megawatt-hour  in  2025.  Short-run  marginal  costs  are  the 
sum  of  the  variable  costs  associated  with  producing 
electricity  using  hard  coal  and  fossil  gas.  These  are  fuel 
costs, carbon costs and variable operating and maintenance 
costs. 

Hungary  has  taken  some  measures  to 
address 
country-specific 
2025 
recommendation  (CSR)  on  boosting  cross-

the 

(219) ‘Spread’  refers  to  the  difference  between  the  highest  and 
lowest hourly day-ahead electricity prices in a single day. 

83 

 
 
 
 
 
border  electricity  trading.  Capacity  made 
available  for  cross-zonal  electricity  trading  seems 
to  have  increased  in  the  past  few  years  and  is 
levels (220).  Keeping 
approaching  the  required 
sufficient  capacity  available 
for  cross-zonal 
electricity  trading  is  essential  to  avoid  economic 
welfare  losses (221)  and  acute  cross-zonal  price 
divergence.  For  example,  in  2024,  the  sharpest 
periods  of  price  divergence  between  Hungary  and 
Austria  occurred  when  the  available  cross-zonal 
capacity  was  lowest.  Hungary  is  part  of  the  Core 
capacity  calculation  region (222),  where  structural 
constraints  on  cross-border  capacity  availability 
persist,  limiting  trade.  Internal  grid  congestion  in 
neighbouring  countries,  rather  than  in  Hungary,  is 
the main obstacle to increasing the use of existing 
cross-border infrastructure in Hungary. 

of 

implementation 

While 
grid-related 
reforms  in  Hungary  has  progressed,  grid 
in  substantial 
resulted 
congestion  has 
connection  queues,  slowing  the  uptake  of 
renewables  and  highlighting  the  need  for 
significant  investment  in  the electricity  grid. 
Following  the  2024  surge  of  over  10 GW  in 
renewable  applications,  the  government  and  the 
transmission  system  operator  (MAVIR)  enacted  a 
regulatory  reset  to  manage  speculative  projects 
through  an  ‘order-of-preference’  system  under 
Government  Decree  54/2024  (no  longer  in  force). 
This 
financial 
including  an  additional  security 
guarantees, 
payment  of  5%  of  the  benchmark  investment 
value (223), and prioritises developers who integrate 
battery  energy  storage  or  other  balancing 
capacities (224).  In  the  last  grid  capacity  allocation 

significant 

requires 

system 

(220) As  per  EU  legislation,  Member  States  are  to  ensure  that  at 
least 70% of technical cross-border capacity is available for 
trading.  According  to  the  Hungarian  authorities,  from 
1 January 2026, MAVIR provides 70% minimum capacity on 
all its network elements. 

(221) ACER estimates that meeting the 70% threshold in the Core 
region  would  have  provided  at  least  EUR 580  million  in 
additional economic welfare. 

(222) Core  is  the  capacity  calculation  region  (CCR)  which  covers 
central  European  countries,  namely  Belgium,  Czechia, 
Germany, France, Croatia, Hungary, the Netherlands, Austria, 
Poland,  Romania,  Slovenia,  Slovakia  and,  once  connected, 
Ireland. A CCR is a group of countries which calculate cross-
border electricity trade flows together. 

(223) Order of preference and a new capacity allocation regime in 
the Hungarian green energy market – Wolf Theiss – Leading 
Lawyers in CEE&SEE. 

(224) Hungary to open doors for new power plant projects as new 

capacity allocation system takes shape – Lexology. 

procedure,  under  Government  Decree  54/2024, 
network licensees refused all grid access requests 
except  in  certain  cases  (e.g.  wind  power  plants). 
The  Government  has  laid  down  new  rules  for  the 
determination  and  allocation  of  free  capacities 
under the Electricity Act, the related implementing 
regulation,  and  Ministry  of  Energy  Decree  No. 
11/2025. The reform also suspended the previous 
biannual  capacity  allocation  process,  leading  to  a 
pause  in  general  grid  tenders  throughout  2025. 
The  connection  of  producers  to  the  high  and 
medium  voltage  networks,  with  the  exception  of 
power plants that have a significant impact on the 
operation  of  the  electricity  system  and  power 
plants connected to the electricity network without 
any  feed-in  power, is  only  possible  through  a  call 
for  tenders  published  no  later  than  every twenty-
four  months.  As  planned,  starting  in  2026,  the 
Hungarian 
is 
launching a new national tender process based on 
these  updated  financial  and  technical  criteria.  To 
manage  immediate  technical  constraints,  network 
system  operators61  has  implemented  flexible 
connection  contracts,  allowing  projects  to  connect 
to  the  grid  on  the  condition  that  they  accept 
curtailment during system congestion. The current 
situation  in  Hungary  demonstrates  how  strain  on 
the grid and a lack of system flexibility present a 
barrier to future renewable growth. 

regulatory 

authority 

(MEKH) 

By  further  supporting  the  uptake  of  non-
fossil  flexible  assets  and  plans  to  join  EU 
cross-border  power  balancing  platforms, 
Hungary  has  taken  significant  steps  to 
address 
improving 
the  2025  CSR  on 
flexibility  and  competition  in  the  electricity 
sector  by  strengthening 
the  balancing 
market.  While  the  Hungarian  electricity  system 
currently  shows  significant  untapped  flexibility 
potential,  electricity  storage-related  reforms  and 
schemes have recently seen a major uptake. These 
include:  the  Recovery  and  Resilience  Facility-
backed  battery  energy  storage  system  (BESS) 
in  early  2024 
launched 
support 
(METÁROLÓ),  which  supports  the  installation  of  a 
pipeline  of  approx.  440 MW  /  885 MWh  of  new 
storage capacity by 2026; (MEKH Decree 17/2023, 
which  seems  to  be  translating  into  projects  and 
demos, e.g. MET 40 MW / 80 MWh; MVM pilots); a 
Modernisation  Fund-backed  project  for  38 MW  / 
100 MWh; grants for hybrid projects (up to 66% of 
‘Napenergia  Plusz’ 
eligible  costs)  under 
the 
programme;  a  dedicated 
residential  energy 
storage  programme  (budget  of  HUF 100  billion). 
Additional  incentives  are  available  through  the 

scheme 

84 

 
 
and 

heat 

rules 

Lastly, 

electricity 

Jedlik  Ányos  plan,  enabling  SMEs  to  secure  30-
50%  non-refundable  capex  subsidies  for  behind-
the-meter 
storage 
installations.  Furthermore,  a  corporate income  tax 
deduction introduced in 2024 allows companies to 
deduct  up  to  50%  of  eligible  costs  for  new 
electrical  energy  storage  investments.  New  BESS 
installations  will  also  benefit 
from  partial 
exemption  from  network  charges  until  the  end  of 
increase 
new  2025 
2026. 
transparency,  facilitating  the  increased  use  of  co-
located  solar-plus-storage  or  wind-plus-storage 
on-site 
projects, 
and 
consumption.  Despite 
comprehensive 
initiatives  and  the  government’s  ambition  to 
achieve 1 GW storage capacity by 2030, according 
to  MAVIR  Zrt.’s  data,  the  total  capacity  of  non-
residential energy storage had reached 412.1 MW 
as  of  April  1,  2026  (225).  Regarding  balancing, 
Hungary  plans  to  join  the  EU  cross-border  power 
balancing  platforms  PICASSO  and  MARI  as  of 
September 2026. This will enable the exchange of 
balancing  energy  products  within  a  harmonised 
framework,  helping,  among  other  things,  to  lower 
costs and reduce regulatory burdens. 

flexibility 
these 

improving 

from 

derives 

The lack of flexibility in Hungary’s electricity 
system  also 
persisting 
regulatory  barriers  to  wholesale  market 
access.  Although  Hungarian  law  allows  all  types 
of  actors  to  access  wholesale  markets,  demand-
side response is quite limited and is made through 
suppliers,  whereas  access  to  the  ancillary  service 
market 
to  assets 
installed at distribution level (226). 

involves  specific  barriers 

Consumer  empowerment  and  demand-side 
response  in  Hungary  remain  very  limited, 
mainly  due  to  energy  price  caps  that 
suppress  cost-reflective  price  signals  and 
limited  access  for  industrial  consumers  to 
consumption  data.  Today,  while  household 
consumers 
dynamic-price 
access 
contracts,  access  is  conditioned  to  the  opt  out  of 
the  universal  service  coverage,  which  made 
dynamic contracts fundamentally unappealing and 
led  to  a  proportion  of  fixed-price  contracts  for 
households of 100%, compared to an EU average 
of 59% (227). In general, uniform regulated pricing 

have 

to 

provides  no  incentive  to  shift  consumption  to 
lower-price  hours.  According  to  the  Hungarian 
authorities, only 12% of consumers had access to 
smart  meters  in  2025.  The  fact  that  data  from 
transmission  system  operators  and  distribution 
system  operators  are  insufficiently  granular  and 
are  not  exchanged  promptly  enough  further 
constrains the ability of non-household consumers 
to  optimise 
load  profiles  and  participate 
effectively in demand-side response. 

The  development  of  energy  communities  is 
hampered  both  by  poor  grid  access  and  by 
regulatory  and  financial  barriers.  Hungary’s 
first  energy  community  was  registered  in  2023. 
The  aim  of  the  Hungarian  energy  strategy  is  to 
ensure  that,  by  2030,  at  least  one  renewable 
energy  community  operates  in  each  of  Hungary’s 
175  subregions.  Hungary  has  adopted  legislation 
that  simplifies  the  granting  of  permits  for 
renewable  energy  communities.  There  are  17 
energy  communities  in  Hungary  (228)  and  the 
percentage  of  households  generating  electricity  is 
6.4% (229). 

Renewables and long-term contracts 

the 

consumption, 

calculated  using 

Within Hungary’s final energy mix, the share 
of renewables remains below the EU average 
in  all  categories  and  relatively  far  from  its 
national  energy  and  climate  plan  (NECP) 
targets. In 2024, the share of renewables in final 
the 
energy 
Renewable  Energy  Directive  methodology,  was 
18.2%,  among 
the  EU  and 
significantly below the EU average of 25.2%. This 
share still falls short of Hungary’s NECP target of 
30%  by  2030,  while  this  contribution  is  itself 
significantly  below 
in 
accordance with the formula set out in Annex II to 
the  Governance  Regulation (230).  Renewables 
accounted for 22.6% of energy demand in heating 
and cooling, and for only 7.9% of energy demand 
in transport. These levels place Hungary below the 
EU  average  for  both  sectors  and  year-on-year 

the  34% 

required 

lowest 

in 

(225) MAVIR 

(226) The smartEn Map Wholesale Markets, January 2025. 

(228) MEKH 

(229) Electricity country sheets – 2025 monitoring report. 

(230) Commission assessment of Hungary’s final updated national 

(227) Electricity country sheets – 2025 monitoring report.  

energy and climate plan. 

85 

 
 
 
progress  remains  marginal  (+ 0.4%  compared  to 
2023, in both cases). 

capacity by 2030. There are no significant changes 
to the installed capacity of other renewable energy 
sources. 

to 

source 

largely  stagnant. 

investment  grants 

renewable  energy 

(RES) 
While 
deployment 
in  Hungary, 
is  progressing 
increased  intermittent  generation  requires 
faster  development  of  non-fossil  flexibility 
solutions  to  stabilise  the  system  and  better 
capture  the  benefits  of  cheap  renewables. 
Hungary’s renewable electricity expansion is being 
driven  overwhelmingly  by  solar  PV,  which  raised 
the  RES  share  in  the  power  mix  from  31.4%  in 
2024  to  35.5%  in  2025 (231),  while  wind  energy 
remains 
In  2025,  28%  of 
electricity  was  produced  by  solar  energy,  the 
highest percentage in the EU. Biomass represented 
5%, wind 1.5% and hydro less than 1%.  Hungary 
has  doubled  its  target  for  solar  PV  in  its  final 
updated  NECP.  By  2030,  Hungary  aims  to  have 
12 GW  of  solar  PV  capacity.  To  support  this 
launched  the 
in  2024  Hungary 
development, 
Napenergia  Plusz  programme,  which  offers 
significant 
residential 
customers.  Currently,  approximately  5 GW  of 
utility-scale  solar  PV  is  supported  by  the  KAT 
(feed-in  tariff)  and  METÁR  (feed-in  premium) 
schemes, with costs funded by large energy users. 
However,  despite  wholesale  prices  remaining  high 
by  EU  standards,  new  renewable  auctions  have 
stalled. 
to  market 
cannibalisation:  the  capture  price  for  solar  has 
plummeted  from  201%  of  the  baseload  price  in 
2022 
in  2025,  significantly 
undermining  the  business  case  for  new  projects. 
Instead,  the  government  aims  to  support  the 
deployment  of  energy  storage  under  the  various 
schemes  discussed  above.  Installed  capacity  for 
renewables  in  Hungary  represented  9,201  MW  in 
2025,  an  increase  of  12.3%  compared  to  2024 
(8,190  MW).  Installed  capacity  for  wind  energy 
remained  flat  at  325  MW  in  2025  (unchanged 
from  2024),  whilst  installed  capacity  for  solar 
grew  notably 
to  2024), 
reaching  8.3  GW(232).  However,  the  outlook  for 
wind  development 
recently 
improved,  partly  due  to  the  reform  commitments 
that  Hungary  made  in  its  recovery  and  resilience 
plan. The first new wind farm is expected to start 
operation  by  the  end  of  2029.  Hungary  has  a 
installed 
modest  target  of  1.2 GW  for  wind 

(+14.1%  compared 

in  Hungary  has 

largely  due 

just  55% 

This 

to 

is 

(231) Eurostat (nrg_cb_pem). 

(232) MAVIR. 

86 

Graph A9.3: Hungary’s installed renewable 
capacity vs electricity generation mix 

Electricity mix is given as net electricity generation (gross 
electricity production minus consumption of power stations’ 
auxiliary services). Electricity produced in pumped hydro 
plants is excluded from total net electricity production, as it 
was previously counted as electricity produced from another 
source. 
“Other” includes renewable municipal waste, solid biofuels, 
liquid biofuels, and biogas. 
Source: IRENA, Eurostat 

Hungary  has  taken  several  important  steps 
towards  improving  the  legal  framework  on 
RES  permitting,  also  with  a  view  to 
implementing  the  recovery  and  resilience 
plan. These include: (i)  designated  areas for wind 
energy  development  where  permitting  would  be 
launch  of  a  process  to 
simplified; 
streamline and improve the one-stop shop in place 
(public  consultation  and  cross-ministerial  working 
group); and (iii) new transparency rules facilitating 
co-located renewable and energy storage assets. 

(ii)  the 

The power purchase agreement (PPA) market 
in  Hungary  is  currently  in  its  very  early 
stages, with only a few dozen megawatts of 
capacity being contracted. In 2025, the country 
accounted  for  only  2%  of  all  the  deals  signed  in 
the EU and Norway. Of the total of eight PPA deals 
publicly  announced,  four  are  solar  PV  (approx. 
80 MW PV), two are on-site PV PPAs and two are 
cross-border  PPAs  (one  of  them  wind)(233).  PPA 
contracts  are  at  a  disadvantage  to  contract-for-
difference 
energy 
producers  must  pay  an  additional  income  tax, 
whereas the participants in CfD are exempted. This 
rule was slightly amended in early 2024, as a new 

(CfD)  auctions  because 

(233) Pexapark Renewables Market Outlook 2026. 

 
 
 
 
from 

regulation  exempts  power  plants 
the 
payment of this tax if their capacity is over 5 MW 
and they are implemented through an on-site PPA 
contract  and  do  not  feed  into  the  electricity 
network.  Nonetheless,  corporate  PPA  demand  is 
expected to remain relatively low. 

Energy efficiency 

In  2024, 

Hungary  has  made  significant  progress  in 
final  energy 
energy  efficiency. 
consumption  (FEC)  decreased  compared  to  2023, 
to  16.9 Mtoe,  continuing  the  decline  since  2019. 
Hungary’s  FEC  in  2024  was  in  line  with  the 
trajectory  to  its  expected  contribution  in  2030.  A 
significant  medium-term  decrease  in  FEC  can  be 
observed  in  all  three  sectors:  in  2024  industry 
displayed  a  7.3%,  transport  a  1.2%,  services  a 
21.7 % and residential a 6.9% reduction compared 
to 2019. 

Residential  FEC  will  have  to  be  further 
reduced if Hungary is to meet its LTRS (long-
term  renovation  strategy)  reduction  targets 
by  2030,  which  set  a  20%  reduction 
(compared to 2018 levels). The 6.9% reduction 
from 2019 to 2024 has been driven by the energy 
savings  achieved  through  various  means  and 
measures, which overcompensated  for the impact 
in  the 
of  having  new  buildings  constructed 
meantime(234)().  Given  that  40%  of  final  energy 
consumption 
buildings 
(highlighting  the  importance  of  the  sector  to 
increasing energy security), Hungary is encouraged 
to  submit  its  draft  national  building  renovation 
plan  pursuant  to  the  recast  EPBD(235)  in  order  to 
ensure  a  clear  and  predictable  pathway  towards 
an  energy-efficient  and  decarbonised  building 
stock.  Government  price  caps  also  impedes  the 
uptake  of  financial  instruments,  loans  and  energy 
service companies (ESCOs)  to increase the energy 
efficiency of residential buildings. 

in  Hungary 

in 

is 

Heating 
for 
cooling 
84% (236)of  the  country’s  residential  final 

accounted 

and 

in 

consumption 

energy 
2023,  with 
renewables  supplying  23% (237)  of  the  total 
energy  used  for  heating  and  cooling  in  all 
sectors. Around 12 000 heat pumps were sold in 
2023,  a  decrease  of  25%  compared  to  the 
previous  year,  taking  the  total  stock  of  installed 
heat  pumps  to  around  48 000 (238).  Electricity  in 
Hungary  was  3.4  times  more  expensive  than  gas 
in  the  first  half  of  2025.  This  means  that  end 
users  save  energy but pay  more  if they  choose  a 
heat pump for heating. 

Security of supply and diversification 

in 

far 

contracts 

Hungary  has  taken  limited  measures  to 
address  the  2025  CSR  on  accelerating  the 
diversification  of  fossil  fuel  supply  to  phase 
out  dependence  on  Russian  sources.  In  2025, 
Hungary  imported  volumes  of  Russian  gas  well 
above its 4.5 bcm long-term contract, with official 
statements  by  the  Hungarian  authorities  in  early 
December  indicating  that  Hungary  had  received 
7.5  billion  cubic  metres  of  gas  through  the 
TurkStream  pipeline  so 
that  year. 
Nevertheless, in December 2025 Hungary did sign 
a  framework  agreement  with  Azerbaijan  for  the 
purchase of up to 800 million cubic metres (mcm) 
of  natural  gas  over  two  years,  along  with  other 
long-term 
in  2025  with 
alternative suppliers, e.g. Engie (400 mcm per year 
from 2028 to 2038) and Shell (200 mcm per year 
from 2026 to 2036). For crude oil, more than 90% 
of  Hungary’s  imports  in  2025  originated  from 
Russia  (vs  74%  and  85%  in  2023  and  2024 
respectively), due to a temporary derogation from 
the  EU  sanctions.  The  vast  majority  of  crude  oil 
imports  currently  delivered  via  the  Druzhba 
pipeline  could  be  offset  by 
increased  flows 
through 
the  Adria  pipeline,  which  connects 
Hungary to the oil terminal in Omišalj, Croatia. This 
was effectively demonstrated between 27 January 
and  23  April  2026,  when oil  flow  on the  Druzhba 
pipeline  was  interrupted  (due  to  damage  on  the 
infrastructure  following  Russian  airstrikes),  and 
Hungary’s  entire  oil  needs  were  covered  by  non-
Russian  crude  oil  delivered  via  the  Adria  pipeline, 

signed 

(234) Based on the breakdown tool of the ODYSSEE-MURE EU 
project available at https://www.indicators.odyssee-
mure.eu/decomposition.html. 

(237) Eurostat, 2025. 

(235) Delay might occur due to recent government change. 

(238) Source: European Heat Pump Association. 

(236) Eurostat, 2025. 

87 

 
 
 
 
without jeopardising security of oil supplies in the 
country.  However,  Hungary  has  no  incentive  to 
reduce  its  crude  oil  imports  from  Russia  as  Urals 
trade at a discounted rate compared to Brent and 
the  extra  profit  made  by  Hungary’s  oil  company 
MOL  Group  is  absorbed  in  windfall  taxes  for  the 
government  and  additional  earnings  for  the 
company (239).  Despite  having  strengthened  its 
energy  ties  with  Russia  following  Russia’s  war  of 
in 
aggression 
continuously  increasing  imports  of  Russian  gas 
and  oil,  Hungary  will  be  required  under  EU  law to 
phase  out  Russian  gas  imports  by  2027  and  to 
develop  a  national  diversification  plan  to  end  its 
reliance on Russian oil by the end of 2027 (240). 

against  Ukraine, 

resulting 

Hungary  will  remain  fully  dependent  on 
Russian  nuclear  fuel  for  its  existing  Paks 
reactors until at least 2028, even as it takes 
incremental  steps  to  diversify  supply.  In 
particular,  in  October  2024  the  Paks  operator 
concluded  an  agreement  with  an  alternative 
supplier,  Framatome,  for  deliveries  beginning  in 
2027, and in late 2025 Budapest signed a broader 
cooperation agreement with the United States that 
includes  the  purchase  of  US  nuclear  fuel  and 
technology for use at Paks. However, official plans 
envisage  the  continued  use  of  Russian-sourced 
fuel  until  the  end  of  2028,  followed  by  a  mix  of 
Russian-French  and  US  fuel  elements.  In  this 
context, and in line with the REPowerEU road map 
adopted on 6 May  2025, it remains important for 
Hungary to develop a comprehensive national plan 
with  clear  timelines  and  regulatory  measures  to 
fully phase out its dependence on Russian nuclear 
fuel. 

In  response to  rising  energy prices  following 
the  regional  crisis 
in  the  Middle  East, 
Hungary  has  imposed  fixed  retail  prices  for 
petrol 
(615 
(595  HUF/litre)  and  diesel 
HUF/litre), alongside temporary reductions in 
excise  duties  to  EU  minimum  levels  and  the 
release  of  strategic  petroleum  reserves,  and 
released  352  million  litres  of  petrol  and  610 
million  litres  of  diesel  from  strategic  reserves  to 
caps.  Hungary  has  also 
maintain 
implemented  an  export  ban  on  crude  oil,  petrol, 
and diesel and reduced excise duties to EU minima 

these 

(239) MOL Group Integrated Annual Report 2024. 

(240) Russian gas imports: Council gives final green light to a 

stepwise ban – Council. 

until  1 May  2026. Hungary  contributed  to the IEA 
collective  action  to  release  400  million  barrels  of 
emergency oil reserves. 

Fossil fuel subsidies 

in 

Hungary  has  taken  no  measures  to  address 
the  2025  CSR  on  taking  concrete  steps  to 
phase  out  fossil  fuel  subsidies,  in  particular 
those  related  to  excise  duties  on  diesel  and 
the 
those  hindering  electrification 
residential  sector.  In  2024,  environmentally 
harmful(241) fossil fuel subsidies without a planned 
phaseout  before  2030  decreased  to  0.7%(242) of 
Hungary’s  GDP (243)(above 
the  EU  weighted 
average  of  0.32%).  However,  this  decline  is  only 
due to lower utility costs in 2024. Hungary did not 
introduce any phaseout date or phaseout plan for 
its different ongoing fossil fuel support measures. 
The  utility  cost  reduction  programme,  a  VAT 
reduction  for  district  heating  using  natural  gas, 
and  excise  tax  refunds  for  agricultural  use  of 
diesel  remain  in  place  as  fossil  fuel  subsidies 
without a planned phaseout before 2030 which do 
not specifically address, in a targeted way, energy 
poverty  or  genuine  energy  security  concerns. 
Additionally,  Hungary’s  2023  effective  carbon 
rate(244) averaged  EUR 50.6  per  tonne  of  CO₂, 
below the EU weighted mean of EUR 84.806. 

(241) Explicit fossil fuel subsidies (e.g. direct transfers) and implicit 
fossil fuel subsidies (i.e. tax expenditures linked to forgone 
tax revenues that have an identifiable fiscal impact for the 
central budget) that support fossil fuel energy production, 
transmission and/or consumption. 

(242) European Commission calculation based on Study on energy 
subsidies and other government interventions in the EU – 
2025 edition, Enerdata. 

(243) 2024 gross domestic product at market prices, Eurostat. 

(244) The effective carbon rate is the sum of carbon taxes, ETS 
permit prices and fuel excise taxes, representing the 
aggregate effective carbon rate paid on emissions. 

88 

 
 
 
 
ANNEX 10: CLIMATE ADAPTATION, PREPAREDNESS AND ENVIRONMENT 

among 

farming 

practices 

governance 

Hungary faces significant environmental and 
climate  adaptation  challenges,  in  particular 
regarding  water  resilience  but  also  climate 
adaptation 
others. 
Regional  and  seasonal  water  imbalances  have 
heightened  drought  and  flood  risks. Chemical  and 
nutrient  pollution,  hydromorphological  pressures, 
abstraction  and  climate  change  contribute  to  the 
ecological  and  chemical  deterioration  of  water 
bodies.  Water  demand  is  increasing,  driven  by 
illegal  abstraction. Climate adaptation governance 
overall  suffers  from  shortcomings,  including  the 
lack  of  a  monitoring  and  evaluation  system. 
Ageing  drinking  water  and  wastewater  systems 
pose  significant  threats  to  public  health  and  the 
environment. Additionally, nature deterioration and 
land  artificialisation  negatively  impact  economic 
activities  and  undermine  Hungary’s  resilience. 
Sustainable 
remain 
underdeveloped,  with  agriculture  contributing 
ecosystem 
pollution 
significantly 
degradation.  Overall,  environmental  capacity  and 
investment  needs  are  insufficiently  addressed.  In 
2025,  the  country-specific  recommendations  to 
Hungary  highlighted  the  need  to  improve  water 
resilience  through  natural  water  retention  and 
enhanced administrative capacities. Among others 
(245), a ‘Water to Landscapes’ programme has been 
announced  to  tackle  these  issues,  but  there  is  a 
lack  of  clear 
the  strategy, 
information  on 
particularly concerning the development of natural 
water  retention through green  infrastructures  and 
nature-based  solutions  (246).  More  details  are 
needed regarding the supported measures and the 
implementation  timeline  in  all  affected  policy 
fields.  Additionally,  little  information  is  available 
about  actions  taken  to  reduce  water  pollution,  or 
curb  illegal  abstraction.  Regarding  administrative 
capacities,  the  formation  of  an  interministerial 
committee  is  a  positive  first  step,  but  much 
remains to be done to improve coordination and to 
provide targeted financing and the required green 
skills. 

and 

to 

(245) Hungary launched in October 2025 a call for proposals under 
the  Cohesion  Policy’s  Environment  and  Energy  Efficiency 
Operational  Programme  +,  focusing  on  nature-based  water 
retention capacities in municipalities. However, this measure 
is  still  at  an  initial  phase,  and  it  is  not  clear  how  it  will  be 
articulated with the “Water to Landscape” programme. 

Climate adaptation and preparedness 

2025  again  demonstrated  that  Hungary  is 
year’s 
getting  warmer  and  drier.  The 
temperature  average  exceeded  the  1991-2020 
average  by  1.0 °C,  making  2025  the  seventh 
warmest  year  since  1901.  Through  most  of  the 
year,  temperatures  were  well  above  usual  levels. 
Following  a  severe  drought  in  2024,  even  less 
precipitation  fell  in  2025.  Thereby,  on  average, 
2025  became  the  fourth  driest  year  for  the 
country since the turn of the 20th century (247). 

Hungary’s  key  climate  change  related  risks 
in  precipitation  and 
are  from  changes 
temperature,  alongside  increased  extreme 
weather  events.  These  changes  influence  water 
circulation,  leading  to  summer  water  shortages 
and  less  snowfalls  in  winter  –  while  critical 
shortfalls  of  precipitation  are  also  observed  in 
winter  months,  contributing  to  water  stress  over 
the  year.  Droughts,  particularly  in  spring  and 
summer,  affect  river  regimes  and  deteriorate  the 
quality  of  surface  water  bodies  while  depleting 
underground  water  resources.  These  conditions 
negatively impact agriculture, forestry, fishing and 
protection,  and  water 
aquaculture,  nature 
management,  with 
irrigation  demands 
rising 
during  dry  periods.  Industrial  establishments  and 
energy  production  are  also  at  risk  of  damage. 
Climate  changes  further  shift  ecological  zones, 
reduce  biodiversity,  decrease  CO2  absorption,  and 
lead  to  the  spread  of  invasive  species  and  new 
in  flash 
diseases.  Heavy  precipitation  results 
floods, river floods, storm damage, and geological 
hazards  like  mudslides.  Prolonged  heat  waves 
cause health issues, including excess mortality and 
cardiovascular  problems,  especially  in  vulnerable 
groups, while increased UV exposure raises cancer 
rates. Studies have shown that in the last 30 years 
the  most  severe  heat  waves  caused  a  daily  12-
52% excess mortality (248). 

Large  wildfires  have  not  been  a  prominent 
hazard  in Hungary,  but a  growing  number  of 
smaller  grass  and  bush  fires  call  for 
vigilance.  The  recent  rise  of  heatwaves  and 

(247) HungaroMet,  A  hetedik 

legmelegebb  és  a  negyedik 

legszárazabb év 1901 óta, 16. January 2026. 

(246) Including,  among  others,  clear designation of  suitable  areas 
for water retention and revision of rules governing land-use 
conversion. 

(248) See  Climate  ADAPT  country  profiles:  Hungary,  General 
impact  and  vulnerability 

aspects  of  climate  change 
assessment, accessed on 16 February 2026. 

89 

 
 
 
 
 
in 

fires, 

spring 

droughts  is  increasingly  conducive  to  wildfire  risk 
in  Hungary  and  contributes  to  a  rising  number  of 
vegetation 
and 
notably 
summer (249).  A  fresh  scientific  assessment  of 
vegetation  fire  susceptibility  in  the  Carpathian 
basin identifies the counties of Heves and Borsod-
Abaúj-Zemplén in the north-east of the country as 
high-risk  clusters  in  the  studied  cross-border 
region, highlighting the role of cultivated fields and 
settlement  proximity  among  the  socio-economic 
factors  of  fire  risk  (250).  The  authorities  have  run 
awareness raising projects (251); wildfire prevention 
and  mitigation  measures  have  been  supported 
with common agricultural policy (CAP) funding (252). 

Climate  adaptation 
in  Hungary  requires 
investment  of  more  than  0.5%  of  GDP  per 
year  (comparable  to  the  EU  average  of 
0.5%_.  A  recent  study  commissioned  by  the 
European  Commission (253)  estimates  investment 
needs  for  Hungary  of  almost  EUR 1.4  billion  per 
year (254)  up  to  2050  in  climate  adaptation:  first 
and foremost in infrastructure (about 47% of the 

(249) See Ministry of the Interior, National Directorate-General for 
Disaster  Management 
(Belügyminisztérium.  Országos 
katasztrófavédelmi  főigazgatóság),  Professional  conference 
on  the  prevention  of  forest  fires,  05  November  2025,  and 
National  Food  Chain  Safety  Office  Forestry  Directorate 
(Nemzeti 
Erdészeti 
Igazgatósága),  FIRELIFE  erdőtűz-megelőzési  projekt,  Hazai 
erdőtüzek,  accessed  on  16 February  2026.  Also  see  Arató, 
László  (2023),  Forest  and  bushfires  in  Hungary:  the  canopy 
rarely burns, but the situation is still serious, European Data 
Journalism Network, 07 November 2023. 

Élelmiszerlánc-biztonsági 

Hivatal 

(250) Manczinger,  Melinda,  László  Kovács,  and  Tibor  Kovács 
(2025),  Fire  susceptibility  assessment  in  the  Carpathians 
using  an  interpretable  framework,  Scientific  Reports  30207 
(2025). 

(251) See  National  Food  Chain  Safety  Office  Forestry  Directorate 
Erdészeti 

(Nemzeti 
Igazgatósága), FIRELIFE erdőtűz-megelőzési projekt, ibid. 

Élelmiszerlánc-biztonsági 

Hivatal 

(252) See Agroinform.hu, 2024, ‘A KAP támogatások az erdőtüzek 

megelőzésére fókuszálnak’, 05 August 2024. 

(253) European  Commission 

(EC) 

(2026),  Assessment  of 
adaptation  investment  needs,  Table  25.  The  study  provides 
detailed  estimates  of  adaptation  investment  needs  at  the 
level  of  the  EU  and  Member  States  per  type  of  measure, 
based on a comparative methodological framework outlined 
in four accompanying methodological reports. 

(254) This is about 0.7 per cent of Hungary’s GDP of 2024 in EUR, 
206 bn. For the entire period until 2050, the study finds that 
the  net  present  value  of  investment  needs  for  Hungary 
amounts to about 0.5% of cumulative GDP until 2050, using 
the  GDP  growth  projection  of  the  European  Commission’s 
2024 Ageing Report. 

90 

total),  followed  by  ecosystems  (ca.  33%)  and  the 
food sector (ca. 11%). 

report 

the  update 

information  system 

Hungary  has 
identified  climate  change 
vulnerabilities in its energy networks but not 
in other critical sectors yet. Climate adaptation 
is governed by the second national climate change 
strategy (NCCS-2) (255), translated into consecutive 
three-year  national  climate  change  action  plans. 
The NCCS-2 was evaluated in 2022-23. Based on 
this  Evaluation 
is  being 
conducted currently by the Ministry responsible for 
climate  policy  and  its  affiliated  institute.  The 
geographic 
‘Natér/NAGIS’, 
managed by the National Adaptation Centre of the 
Hungarian  meteorological  service  ‘HungaroMet’,  is 
the  primary  tool  to  support  policy  decisions  on 
climate adaptation. With the use of NAGIS, a major 
climate  change  vulnerability  assessment  was  last 
conducted between 2020 and 2023 as part of the 
the  climate  change  strategy, 
evaluation  of 
focusing  on  critical  infrastructure  and  notably 
energy supply (electricity, gas, and district heating) 
(256).  In  2024,  an  EU-wide  assessment  has  found 
is  highly 
that  Hungary’s 
vulnerable  to  climate  risks,  including  particularly 
high  risk  on  the  TEN-T  inland  waterway  network, 
and  a  high  risk  of  river  flood  and  heatwave 
vulnerability on its entire TEN-T rail track network. 
Likewise,  Hungary’s  main  airport  is  found  to  be 
among  Europe’s  10  largest  high-risk  airports 
both 
heatwaves, 
to 
vulnerable 
passengers and freight (257). 

transport  system 

regarding 

(255) The  strategy  was  adopted  in  2018,  see  the  parliamentary 
decision  No.  23/2018  of  Oct.  31  [2018]  on  the  second 
national  climate  change  strategy  concerning  the  period 
between  2018-2030,  with  an  outlook  to  the  period  until 
2050.  Climate  mitigation  is  one  of  the  three  pillars  of  the 
plan;  the  others  are  the  national  decarbonisation  roadmap 
and  the  climate  change  awareness  raising  action  plan. 
During  2022-23,  the  strategy  was  revised,  apparently  as 
part  of  the  updated  national  energy  and  climate  plan,  thus 
mainly affecting climate mitigation. The revision has resulted 
in an evaluation report (see Climate-ADAPT, country profiles: 
Hungary,  Overview  of 
institutional  arrangements  and 
governance  at  the  national  level,  accessed  on  16 February 
2026), that appears not to have been made public though. 

(256) See  Climate  ADAPT  country  profiles:  Hungary,  Overview  of 
institutional  arrangements  and  governance  at  the  national 
level,, accessed on 16 February 2026. 

(257) Schade,  W.,  et  al.,  2024,  Support  study  on  the  climate 
adaptation and cross-border investment needs to realise the 
TEN-T  network,  European  Commission,  Directorate-General 
for  Mobility  and  Transport,  Publications  Office  of  the 
European Union, 2024. 

 
 
 
A  weak  flank  of  adaptation  decision-making 
in Hungary is implementation monitoring and 
evaluation. Data are collected by sectoral players 
but  without  being  part  of  a  broader  framework. 
The  evaluation  of  the  second  national  climate 
change  strategy  has  highlighted  the  need  for  a 
comprehensive  climate  monitoring  and  evaluation 
system integrating these. Such a system has been 
planned  since  the  review  but  without  concrete 
steps to put it in place (258). 

A review of Hungary’s climate law, including 
provisions on adaptation, has been called for 
by  a  constitutional  court  decision.  On  4 June 
2025 Hungary’s constitutional court annulled parts 
of  law  No 2020/XLIV  on  climate  protection  (with 
effect of 30 June 2026). In particular with regards 
to  climate  adaptation,  the  judges  noted  that  the 
legislator  did  not  specify  the  instruments  for 
climate adaptation and for increasing resilience to 
climate  change  (along  with  climate  mitigation 
instruments).  The  ruling  also  stated  the  lack  of 
regular  reviews  and  updates  of the  objectives  set 
out  in  the  law  and  noted  that  key  principles  are 
only  set  in  non-legislative  documents,  impeding 
the  enforcement  of  commitments.  On  the  civil 
society  side,  water  and  food  resilience  and  local 
government/community-level  adaptation  have 
been  identified  as  key  areas  where  the  climate 
adaptation framework and instruments particularly 
need strengthening (259). 

The  overall  insurance  protection  gap  for 
natural  catastrophes  does  not  appear  to 
raise concern, but this is masking challenges. 
Among the three perils fuelled by climate change – 
floods,  wildfires,  windstorms 
–  Hungary’s 
insurance protection gap is medium to low. Among 
the above risks, flood and windstorm are the most 
prevalent  (260).  Based  on  historical  losses  since 
1980, 
been 
manageable.  Property  insurance  is  provided  by 
private 
natural 
catastrophe  risks  either  in  a  basic  package  or  as 

damages 

insurers, 

covering 

these 

these 

from 

have 

(258) See Climate ADAPT country profiles: Hungary, ibid. 

(259) Greenpeace  Magyarország,  2025, 

‘Az  Alkotmánybíróság 
szerint  alaptörvényellenes  a  klímatörvény,  a  Greenpeace  új, 
ambiciózus és igazságos törvényt követel’, 04 June 2025. 

(260) Unless  referred  to  the  OECD,  this  section  draws  on 
information  from  the  European  Insurance  and  Occupational 
Pensions  Authority 
insurance 
prtection  gap  for  natural  catastrophes,  last  accessed  on 
16 February 2026. 

(EIOPA)’s  dashboard  on 

91 

optional additions. But insurance is not mandatory. 
Risks  and  costs  are  highly  concentrated  in  non-
insured  properties,  and  insurance  premiums  are 
not  aligned  with  flood  risk.  Hungary  maintains  a 
force majeure fund as part of the general budget 
to support local governments through grants in the 
event  of  natural  catastrophes.  Concerning  the 
exposure  of  crops  to  climate-related  hazards,  the 
government  operates  a  damage-mitigation  fund 
co-financed  by  farmers  and  subsidises  crop 
insurance.  Still, 
insurance  coverage  of  crops 
against natural disasters has been below 50%. 

Hungary  acts  with  neighbours  to  brace  for 
heatwaves  and  reinforce  water  retention 
through local projects among others. Under the 
‘Cool  zone’  project,  Hungary’s  Debrecen 
LIFE 
cooperates  with  neighbouring  Oradea  in  Romania 
to  identify  hotspots  of  vulnerability  to  the  urban 
island  heat  effect  and  implement  adaptation 
interventions, aimed to serve as a model for urban 
areas  in  the  broader  region  (261).  The  RESTORIVER 
project is being implemented with players from all 
the  Danube’s  riparian  countries  downstream  of 
Austria, except Moldova, to restore riverbanks and 
riparian areas along the Danube and its tributaries 
through  water  retention  measures.  In  November 
2025,  under  the  lead  of  HungaroMet,  Hungary 
launched  the  creation  of  a  national  adaptation 
network  as  part  of  the  AdaptationHubs  Horizon 
Europe  mission,  which  aims  to  build  similar 
networks in all 27 EU Member States cooperating 
within  and  across  countries.  The  share  of 
Hungary’s population covered by the EU Covenant 
of Mayors signatories has been steadily increasing, 
reaching 78% in 2024, more than twice the EU-27 
level  of  34%.  This 
indicates  a  growing 
commitment  among  Hungary’s  municipalities  to 
climate resilience. By 2024, 60% of the signatories 
had  submitted  a  sustainable  energy  and  action 
plan  (SECAP)  on  time,  within  two  years  of  their 
initial  commitment  to  the  EU  Covenant.  At  the 
same time, only 22% of the signatories submitted 
any  monitoring  reports  within  the  recommended 
timeframe. 

(261) See  Municipiul  Oradea,  2025, 

in 
combatarea  valurilor  de  caldura  urbana  prin  proiectul 
european LIFE COOL ZONE.’, accessed on 16 February 2026. 

‘Oradea,  oras  pilot 

 
 
 
Water resilience 

for  67%  of 

Hungary faces significant water scarcity and 
climate  risks,  raising  water  demand  and 
illegal  abstraction,  with 
regional  and 
seasonal  disparities.  In  2023,  Hungary’s  low 
water  productivity  (262)  shows  inefficiencies  in 
water  use,  notably  in  abstraction-heavy  sectors 
like  energy.  This  poses  competitiveness  risks, 
especially  in  peak  seasons.  In  2023,  electricity 
freshwater 
cooling  accounted 
abstraction  (263).  From  2014  to  2023,  abstraction, 
mainly from surface water, increased by 21% (264), 
driven  by  agriculture  (265).  Hungary  has  the  EU's 
second  highest  share  (20%)  of  groundwaters 
failing  to  reach  good  quantitative  status  due  to 
heavy  abstraction  pressures  (266).  All  groundwater 
bodies  are  affected  (267),  worsened  by  unreported 
illegal  abstractions  (268).  17.3%  of  groundwater 
bodies  currently  in  good  status  are  at  risk  of 
deteriorating  (269).  The  agriculture,  water  utilities, 
transport  and  energy  sectors  are  heavily  water-

(262) Water productivity indicates the economic value created for 
each  water  unit.  In  Hungary,  it  stood  at  EUR 29/m³  of 
abstracted water, below EU-27 average (EUR 153/m³). 

(263) European  Environment  Agency  (EEA),  Water  abstraction  by 

economic sector, 2000-2023, 2025. Link 

(264) Surface  water  represented  86%  of  abstraction  in  2023 
(Eurostat,  Annual  freshwater  abstraction  by  source  and 
sector, 2025). Link. 

(265) Agriculture  represented  an  increase  of  87%  from  2018  to 
2023  (EEA,  Water  abstraction  by  economic  sector,  2026 
Link). 

(266) EC, Staff working document (SWD) on the implementation of 
the  third  River  Basin  Management  Plans  (RBMP),  second 
Flood Hazard and Risk Maps (FHRM) and second Flood Risk 
Management Plans (FRMP), EU overview, 2025. Link. 

(267) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 
FHRM  and  second  FRMP,  Member  State:  Hungary,  2025. 
Link. 

(268) Only  10%  of  wells  are  officially  authorised  (OECD,  Water 
governance  for  climate  resilience  in  Hungary,  2026,  Link  – 
the  report  was  part  of  a  TSI  project  jointly  initiated  by  the 
Ministry of  Public  Administration and Regional  Development 
and  the  Ministry  responsible  for  water  management.).  From 
2013 to 2018, unauthorised groundwater water abstraction / 
year averaged 7% of the Lake Balaton’s volume or 81% of 
Lake  Tisza  (State  Audit  Office  of  Hungary,  Report  on  the 
implementation of the National Water Strategy - Agricultural 
water needs, sustainable water use, 2025. Link.) 

(269) In Hungary’s 2nd RBMP, only 10.8% were at risk of being in 
poor quantitative status. EC, SWD on the implementation of 
the  third  RBMP,  second  FHRM  and  second  FRMP,  Member 
State: Hungary, 2025. Link. 

in 

on 

risks 

traditional 

dependent (270). However, large regional disparities 
local 
persist,  highlighting  drought 
ecosystems  and  economic  activities,  such  as 
agriculture,  public  water  supply  and 
river 
transportation  (271).  Flood  risk  is  also  substantial 
(272), as 25% of Hungary is situated on floodplains. 
Despite  growing  climate  risks,  the  country  relies 
heavily 
flood  management 
infrastructure.  Most  flood  risk  measures  focus  on 
protection,  with  limited  prevention,  preparedness 
or  recovery  strategies,  showing  less  diversity 
compared  to  other  Member  States.  Hungary  did 
not  report  on  emergency  planning  measures  (273). 
To address these challenges, the Technical Support 
Instrument  (TSI)  is  aiding  Hungary  in  improving 
water 
climate 
for 
adaptation and water resilience (274). The European 
Commission  also  provided  an  assessment  of  the 
implementation  of  Flood  Directive  in  Hungary, 
identifying  potential  areas  of  improvements  in 
flood risk management (275). 

governance 

enhanced 

Water quality in Hungary is a major concern. 
Nutrient  pollution,  hydromorphological  pressures, 
abstraction  and  climate  change  affect  all  surface 
waters. Over 70% of these waters are classified as 
heavily  modified  or  artificial,  the  second  highest 
among  EU  Member  States  (276),  reflecting  an 
overreliance  on  built  infrastructures  over  natural 
(277). 
features 
Consequently,  88.6%  of  surface  waterbodies  fail 
to  achieve  good  ecological  status,  far  above  the 
58.3% EU average (278), restricting access to high-

water  management 

for 

(270) EEA,  Water  abstraction  by  economic  sector,  2000-2023, 

2025. Link 

(271) Joint  Research  Centre  (JRC),  Rossi,  et  al.,  European  Drought 

Risk Atlas, 2023. Link. 

(272) EC, Flood risk area viewer, accessed in 2026. Link. 

(273) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 

FHRM and second FRMP, EU overview, 2025, Link. 

(274) EC,  Hungary  -  Reforms  and  Investments,  2024  TSI  Reform 
support project ‘Accelerating climate adaptation measures in 
water management’, accessed in 2026. Link. 

(275) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 
FHRM  and  second  FRMP,  Member  State:  Hungary,  2025. 
Link. 

(276) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 

FHRM and second FRMP, EU overview, 2025, Link. 

(277) As  defined  in  EC,  EU  Green  Infrastructure  Strategy,  2013. 

Link. 

(278) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 
FHRM  and  second  FRMP,  Member  State:  Hungary,  2025. 
Link. 

92 

 
 
 
from 

emissions 

quality water for human use. Furthermore, 46% of 
surface  waters  fail  to  achieve  good  chemical 
status(279),  due  to  chemical  and  heavy  metal 
pollution 
and 
industrial 
combustion  processes.  In  addition,  about  20%  of 
groundwater  bodies  are  contaminated  by  urban, 
industrial  and  agricultural  sources,  above  the  EU 
average  of  16%,  with  another  19%  at  risk  of 
failing  good  status  by  2027.  Key  groundwater 
pollutants (nitrates, sulphates and ammonium) are 
on  the  rise.  Overall,  abstraction  and  pollution  are 
major pressures on groundwater quality. 

situation 

(282).  The 

Ageing  water 
infrastructure  exacerbates 
challenges.  Drinking  water  quality  remains  a 
serious concern in certain settlements (280), where 
Hungary is still far from achieving compliance (281). 
Moreover, secondary water pollution has increased 
significantly  due  to  the  ageing  water  drinking 
system 
is  particularly 
concerning  as  Hungary’s  investments  in  water 
infrastructure  are  organised  to  meet  current 
demand rather than long-term sustainability goals, 
lacking 
thorough  assessment  and  adequate 
funding  to  modernise  the  network  (283).  While 
Hungary 
including 
exemptions  for  agriculture  in  particular  irrigation 
water use (284), this fee is insufficient to cover the 
full costs of water supply. 

charges  a  water 

fee, 

Hungary’s  wastewater  network  is  moving 
closer  to  meeting  EU  standards,  though 
discharges  continue  to  negatively  affect 
water  quality.  In  2022,  94%  of  wastewater 
loads  were  reported  as  compliant  with  the  Urban 

(279) WISE  Freshwater  Information  System  for  Europe,  Country 
Profiles  on  Water  Framework  Directive  -  Hungary  report, 
accessed in 2026, Link. 

contribute 

Waste  Water  Treatment  Directive  (285).  However, 
to 
urban  wastewater  discharges 
substandard  water  quality  of  16.3%  of  river 
bodies,  while  41,7%  of  groundwater  areas  are 
affected  by  wastewater 
from  unconnected 
overflows 
dwellings.  Moreover, 
discharges  contribute  significantly  to  less  than 
good  quality  in  62.6  %  of  rivers  and  43.5  %  of 
lakes;  while  wastewater 
from 
unconnected  dwellings  lead  to  less  than  good 
water quality in 1.7% of rivers and 0.5% of lakes 
(286). 

stormwater 

discharges 

annually, 

EUR 1.3 billion 

Hungary’s  investments  are  insufficient  to 
meet  water  management  needs  and  comply 
with  EU  legislation  (287).  The  water  sector 
including 
requires 
EUR 680 million for wastewater management (288). 
Despite  this,  Hungary  only  invests  EUR 14/capita 
each  year  in  building  new  infrastructure  and 
renewing  ageing  infrastructure,  below  the  yearly 
EU  average  of  EUR 49/capita.  Overall,  Hungary’s 
investment  gap  of  EUR 610 million  per  year 
prevents 
it  from  meeting  EU  water  targets. 
Wastewater  objectives  alone  need  an  additional 
EUR 313 million  per  year  (EUR 32.81  per  capita). 
Drinking  water  measures 
further 
EUR 40 million,  while  other  aspects  of  the  Water 
Framework  Directive  need  EUR 255 million.  Given 
Hungary’s 
taxation  on 
pollution and resources (289) and cap on residential 
public  utility  bills,  there  is  potential  to  better 
integrate  externality  costs,  make  water  users 
accountable,  promote  water  savings  and  enhance 
the ‘polluter pays’ principle, encouraging increased 
contributions  from  users  and  polluters  to  address 
funding gaps. 

limited  environmental 

require  a 

(280) In  2016, 

the  Commission 

infringement 
procedure against Hungary for failing to meet EU parametric 
values for arsenic, boron and fluoride in the drinking water of 
several municipalities in 2016. 

launched  an 

(281) EC,  Environmental  Implementation  Review  (EIR)  –  Hungary 

country report, 2025. Link. 

(282) State Audit Office of Hungary, Report on the implementation 
of  the  National  Water  Strategy  -  control  of  measures  & 
Control  of  drinking  water  management,  sustainable  water 
use, 2025, Link. 

(283) State Audit Office of Hungary, Joint Report on the Results of 
the  Cooperative  audit  in  relation  to  Goal  6  of  the  United 
Nations Sustainable Development Goals, 2024. Link. 

(284) EC,  SWD  on  the  implementation  of  the  third  RBMP,  second 
FHRM  and  second  FRMP,  Member  State:  Hungary,  2025. 
Link. 

(285) EEA, Compliance dashboard (2022 data reported by Hungary 

in 2024), Link. 

(286) EEA, Compliance dashboard (2022 data reported by Hungary 

in 2024), Link. 

(287) EC, EIR – Hungary country report, 2025. Link. 

(288) Calculated  on  the  basis  of  population  figures  on  1 January 

2025 (EC, EIR – Hungary country report, 2025. Link.). 

(289) See  also  the  Annex  on  Industry  decarbonisation,  circularity, 

and climate mitigation. 

93 

 
 
 
Nature restoration 

Sustainable agriculture and land use 

Hungary’s economy is exposed to nature loss, 
44% of its gross value added (GVA) relies directly 
on ecosystems (290), similar to the EU average. This 
vulnerability 
in 
particularly 
agriculture  and  food  production,  construction, 
water  utilities,  healthcare,  transport  and  tourism, 
all of which rely directly on healthy freshwater and 
terrestrial ecosystems. 

pronounced 

is 

Habitat degradation is spreading in Hungary, 
where  22.2%  of  the  land  was  designated  as 
protected area in 2022 (291), below the EU average 
(26.4%). Biodiversity loss is driven by significantly 
deteriorated  habitats, making  Hungary  one  of  the 
Member  States  with  the  lowest  share  of  habitats 
in  good  conservation  status  (292).  Dune  habitats, 
grasslands, wetlands, forests and freshwaters are 
among 
threatened 
ecosystems  (293).  Invasive  alien  species  (IAS)  (294) 
are  exacerbating  nature  degradation  in  Hungary 
(41 IAS of EU concern recorded in 2024) inflicting 
up  to  EUR 83 million  in  damages  in  2020,  mainly 
affecting agriculture and public health (295)(296). 

the  most  degraded  and 

Hungary  faces  a  persistent  biodiversity 
finance gap.  The  country  has  a  notable  shortfall 
of  EUR 1 billion  in  funding  necessary  to  address 
biodiversity and ecosystem conservation priorities, 
showing  an  increasing  difficulty  in  meeting  the 
estimated  investment  needs  of  EUR 1.482 billion 
required for nature restoration efforts (297). 

(290) JRC,  Hirschbuehl  et  al.,  The  EU  economy`s  dependency  on 

nature, 2025. Link. 

(291) Eurostat, Protected Areas Indicator, 2025. Link. 

(292) EEA,  Conservation  status  of  habitats  under  the  EU  Habitats 

Directive, 2021. Link. 

(293) Biodiversity 

Information  System  for  Europe,  Hungary’s 

country profile, accessed in 2026. Link. 

(294) Official  Journal  of  the  European  Union,  Regulation  (EU)  No 
1143/2014  of  the  European  Parliament  and  of  the  Council 
of 22 October 2014 on the prevention and management of 
the  introduction  and  spread  of  invasive  alien  species,  OJ  L 
317, 4.11.2014, pp. 35–55, 2014. Link. 

(295) EC, EIR – Hungary country report, 2025. Link. 

Hungary’s  carbon  removals  fall  somewhat 
short  of  the  level  of  ambition  needed  to 
meet  its  2030  target  for  land  use,  land-use 
change  and  forestry  (LULUCF).  To  meet  its 
2030  LULUCF  target,  additional  carbon  removals 
of 0.9 million tonnes of CO2 equivalent (CO2eq) are 
needed (298).  The  latest  available projections  show 
a  gap  to  target  of  0.3 MtCO2-eq  for  2030 (299). 
Additional  measures  are  therefore  needed  in  the 
land sector to reach the 2030 target. In addition to 
increasing 
further 
net 
investment  in  healthy  forests  and  soils  is  key  to 
building  resilient,  biobased  product  value  chains 
and  enabling  a  growing, 
competitive  EU 
bioeconomy. In particular, continued improvements 
in the monitoring system of net removal data and 
projections  will  play  a  crucial  role  in  supporting 
timely and effective action in the sector. 

removals, 

LULUCF 

carbon 

Land artificialisation is a threat to Hungary’s 
key  ecosystems,  especially  floodplains,  causing 
biodiversity  loss  and  ecosystem  fragmentation 
(300).  The  ongoing  soil  sealing  reduces  ecosystem 
resilience, 
flood 
protection  capabilities.  This  undermines  crucial 
ecosystem services for climate change adaptation 
and  mitigation,  such  as  natural  water  infiltration, 
worsening  floods  and  droughts.  From  2006  to 
2012,  areas  providing  flood  control  ecosystem 
service decreased by 12% due to soil sealing (301). 

sequestration,  and 

in 
Pressures  on  water  and  air  quality 
Hungary  raise  serious  concerns.  13.2%  of 
Hungary’s 
stations 
groundwater  monitoring 
recorded  average  nitrate  concentrations  over 
25 mg/l  (302)  between  2016  and  2019  (303).  This 
trend underscores systemic agricultural  pressures, 

(298) National  LULUCF  targets  of  the  Member  States  in  line  with 

Regulation (EU) 2023/839, Link. 

(299) Climate action progress report 2025, Link. 

(300) EEA,  Land  take  and  land  degradation  in  functional  urban 

areas, 2022, Link. 

(301) EC,  INCA  Platform  (Intergrated  system  for  Natural  Capital 
Accounting), Accounting for ecosystems and their services in 
the European Union, 2021. Link. 

(296) Neobiota,  Economic  cost  of  invasive  alien  species  across 

(302) Including  7.3%  above  50 mg/l,  the  EU  threshold  for  safe 

Europe, 2021. Link. 

drinking water. 

(297) EC, EIR – Hungary country report, 2025. Link. 

(303) EEA, Nitrate in groundwater in Europe, 2025. Link. 

94 

 
 
 
despite  Hungary’s  low  livestock  density  (0.38 
livestock units per hectare in 2023) (304). Although 
Hungary  increased  its  agricultural  area  under 
organic  farming  from  2.45%  in  2013  to  6.07% 
(305) in 2027, it remains below the national target 
of  10%  by  2027  (306),  indicating  potential  for 
further  sustainable  agricultural  practices  with 
reduced environmental impact. 

in  soils,  which  raises  significant  health  and 
environmental concerns (313). 

significantly 

threatens 
Eutrophication 
Hungary’s  biodiversity  and  ecosystems 
integrity. 76.7% of Hungarian areas are affected 
by atmospheric nitrogen deposition, surpassing the 
EU average of 72.9% in 2022 (307), mainly due to 
ammonia  (NH3)  deposition  from  agriculture  (308). 
Hungary  has  not  met  its  NH₃  emission  reduction 
targets  for  2020-2029  and  is  unlikely  to  achieve 
2030  goals,  revealing  weaknesses  in  nutrient 
management  strategies  (309).  NH₃  related  air 
pollution costs Hungary EUR 1.647 billion annually 
(310). 
costs 
EUR 203 million  yearly  (311),  with  78%  attributed 
to  agriculture  due  to  nitrogen  and  phosphorus 
leaching into various water bodies and soils. 

Additionally,  water 

pollution 

thresholds 

Pesticide contamination is a pressing issue in 
Hungary, with 80% of monitored rivers exceeding 
regulatory 
residues 
between 2017 and 2022 (312).  Pesticides threaten 
aquatic  ecosystems  and  pose  long-term  risks  to 
human  health  via  contaminated  drinking  water 
and  food  chains.  Additionally,  Hungary  showed 
higher than EU average levels of pesticide residues 

for  pesticide 

(304) Compared  to  the  EU  average  of  0.75  (Eurostat, Livestock 

density index. Link). 

(305) Eurostat,  Share  of  organic  farming  in  utilised  agricultural 

area, 2026. Link. 

(306) Ministry  of  Agriculture,  National  action  plan  for 

the 
(2022–2027),  2022, 

development  of  organic  farming 
accessed on 26 March 2026, Link. 

(307) EEA,  Eutrophication  caused  by  atmospheric  nitrogen 

deposition in Europe, 2024. Link. 

(308) 92.67%  of  NH3  emissions  of  national  total  emissions  in 

2023. 

(309) EC, EIR – Hungary country report, 2025. Link. 

(310) EC, Directorate-General for Environment, IEEP, Green taxation 
Internalising 
and 
environmental  costs  to  make  the  polluter  pay  (p. 32-33, 
Table 3), 2021. Link. 

instruments 

economic 

other 

– 

(311) EC, Ibid., (p. 35-36, Table 3), 2021. Link. 

(312) Compared  to  the  EU  average  of  29%  of  contaminated 
lakes,  and 

rivers, 

in 

surface  waters.  EEA,  Pesticides 
groundwater in Europe, 2024. Link. 

(313) JRC, Vieira et al., Pesticides residues in European agricultural 
soils - Results from LUCAS 2018 soil module, 2023. Link. 

95 

 
 
 
Table A10.1:Key Adaptation Indicators 

(1)  EFFIS (European Forest Fire Information System). Link. 
(2) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters, based on 
modelling of the risk from floods, wildfires, windstorms, and the insurance penetration rate. Scale: 0 (no protection gap) – 4 (very 
high gap). EIOPA, 2025, Dashboard on insurance protection gap for natural catastrophes. 
(3) Measures total water consumption as a percentage of the renewable freshwater resources available for a given territory and 
period. Values above 20 % are generally considered to be a sign of water scarcity, while values equal or greater than 40 % 
indicate situations of severe water scarcity. 
(4) European Commission, 2024, seventh Implementation Report from the Commission to the Council and the European 
Parliament on the implementation of the Water Framework Directive (2000/60/EC) and the Floods Directive (2007/60/EC) (Third 
River Basin Management Plans and Second Flood Risk Management Plans). 
(6) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2025 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 – Annex IIa. 
Source: Eurostat, EEA, JRC 

96 

Climate adaptation and preparedness:EU-27201920202021202220232024latest dataDrought impact on ecosystems0.770.251.7826.190-2.76[area impacted by drought as % of total]Forest fires burned area (1)528          265          565          7 287       156          1 141       354 510     [burned area in ha. per year]Economic losses from extreme events14            11            36            2 529       31            22            40 452       [EUR million at constant 2022 prices]Insurance protection gap (2)---1              1              1               -[composite score between 0 and 4]Sub-national climate adaptation action43            47            69            76            78            78            34               [% of population covered by the EU Covenant of Mayors for Climate & Energy]Water resilience:EU-27201920202021202220232024latest dataWater Exploitation Index Plus, WEI+ (3)1.37         -          1.36         1.69         1.30         -4.53            [total water consumption as % of renewable freshwater resources]Water productivity28            26            28            28            29            -151[EUR per m3]Water abstractionWater abstraction by source (% from surface water)87.02%86.90%87.60%86.37%85.81%-Water abstraction by sectorAgricultureElectricity coolingManufactu-ringPublic water supplyMining and QuarryingConstru- ction 12.09%67.28%3.27%16.90%0.46%0.00%Status of water bodies (4)[% of water bodies in a good status]Surface water bodies (ecological)-----11%38%Groundwater bodies (quantitative)-----80%93%Nature restoration:EU-27201920202021202220232024latest dataEcosystem dependency---44%--44%[% of direct dependency]Protected area22.222.222.222.222.226.4[% of terrestrial protected areas]Invasive alien species (IAS)-----4129.2[number of IAS of Union concern]Damage cost of IAS----0.831.69[EUR billion]Eutrophication 353353295[AAE of area at risk of euthrophication]Sustainable agriculture and land use:EU-272012-20182018-2021latest dataYearly net land taken by Member State342          901          670            [ppm of total urban surface per Member State]Land conversion in functional urban area [% of total land taken from 2018-2021]Arable land63%Complex and mixed cultivation0%Forests5%Herbaceous vegetation associations1%Open spaces with little or no vegetation0%Pastures28%Permanent crops1%Water1%Wetlands0%201920202021202220232024latest dataLivestock density0.430.380.75(number of livestock units per hectare of utilised agricultural area)Ammonia emissions 94%94%94%93%93%-94%[% of total utilised agricultural area]Pesticide contamination on rivers and lakes water bodiesrivers80%27%[% of monitoring sites with pesticides exceeding thresholds, 2018-2023]lakesn.d.18%Pesticide contamination in soil 79%57%[% of samples with a concentration over 0.5 mg/Kg⁻¹]Net greenhouse gas removals from LULUCF (5)-5363.0-7076.0-7171.2-6773.2-5810.8--198 421 [ktCO₂-eq] 
 
   
 
FAIRNESS 
ANNEX 11: LABOUR MARKET 

Hungary’s 
labour  market  remains  tight 
overall  but  exhibits  significant  inequalities. 
Meeting  Hungary’s  national  employment  target 
depends on the effective integration of vulnerable 
groups into the labour market. The 2025 country-
specific recommendations for Hungary highlighted 
the  need  to  increase  access  to  effective  active 
labour  market  policies,  including  upskilling  and 
reskilling  disadvantaged  groups, 
the 
adequacy  of  unemployment  benefits  and  ensure 
effective  social  dialogue.  Challenges  to  Hungary’s 
competitiveness  persist,  in  particular  regarding 
productivity growth, employment support, regional 
and  societal  disparities  in  the  labour  market, 
labour mobility and social dialogue.  

improve 

The labour market has continued to perform 
well,  but  the  recent  rise  in  unemployment 
rate 
requires  attention.  The  employment 
reached  a  record  high  of  81.1%  in  2024  and 
maintained it in 2025, well above the EU average 
(75.8%)  but  still  below  the  ambitious  national 
employment target of 85% by 2030. However, the 
unemployment rate at 4.4% in 2025 remains well 
above  its  value  of  3.6%  in  2022,  but  remained 
below  the  EU  average  of  6%,  pointing  to  a 
slowdown  in  the  labour  market.  Long-term  and 
very 
rates  showed 
similar  developments,  rising  to  1.5%  and  0.7%  in 
2025 (vs 1.9% and 1% in the EU), with over a third 
of unemployed people being unemployed for more 
than 12 months.  

long-term  unemployment 

young 

people 

Young people face challenges in entering the 
labour  market.  In  2025,  13.9%  of  economically 
active 
aged  15-24  were 
unemployed,  an  improvement  from  2024  and 
below  the  increasing  EU  average  of  15.2%,  but 
still  up  by  3.3  pps  from  2022.  In  contrast,  an 
increasing  share  of  your  people  are  unemployed 
for 12 months or over (up 1.4 pps, 3.8%). Labour 
market  outcomes  are  particularly  weak  for  young 
people  with  low  levels  of  education,  with  an 
unemployment rate of 23.7% (vs 21.2% in the EU). 
Although the early school leaving rate is falling, it 
is  still  slightly  above  the  EU  average  (see  Annex 
13),  and  most  early  school  leavers  are  not  in 
employment.  The  majority  of  those  neither  in 
employment nor in education and training (NEETs, 
10.6%)  are  inactive  (6.5%)  in  2025.  Young  Roma 
people were over three times (36%) more likely to 

regions,  Northern 

become NEET (314) than the average young person 
in  2024.  Regional  differences  are  large:  in  three 
disadvantaged 
Hungary, 
Southern  Transdanubia  and  North  Great  Plain, 
rates  for  early  school  leaving,  NEETs  and  youth 
unemployment  are  well  above 
the  national 
averages,  with  women  particularly  affected.  To 
address these challenges, Hungary has launched a 
renewed  Youth  Guarantee  with  support  from  the 
including 
European  Social  Fund  Plus 
dedicated  youth  counsellors 
local  public 
employment  services  (PES)  offices  and  targeted 
action to attract inactive NEETs. However, inactive 
NEETs are currently under-represented, accounting 
for only 10% of Youth Guarantee participants, and 
overall  coverage  remains  limited,  reaching  only 
about 1% of NEETs.  

(ESF+), 
in 

Graph A11.1: Employment rates 

Source: Eurostat [lfsi_emp_a], [lfsi_educ_a], 
[fst_r_lfe2emprt]. 

People with low level of education, Roma and 
persons  with  disabilities  face  barriers  to 
employment. The employment rate of adults with 
lower  levels  of  education  (59.9%  in  2025)  is  still 
over  20  pps  below  the  national  average,  and  the 
unemployment  rate  for  this  group  remains  above 
the  EU  average  (13.0%  vs  12.1%).  Among  the 
population  aged  15-64,  only  48.8%  of  Roma 

(314) Roma Survey 2024: Rights of Roma and Travellers in 13 
European countries – Perspectives from the Roma Survey 
2024. 

97 

45505560657075808520152016201720182019202020212022202320242025%HUtotallow-skilledÉszak-Magyarország (worst performer)Budapest (best-performer) 
 
 
     
 
 
 
people  were  in  employment  in  2023,  compared 
with  75.6%  of  non-Roma,  and  20.4%  of  Roma 
were unemployed, against 3.8% of non-Roma (315). 
The disability employment gap improved (24.3 pps 
vs  24.2  pps  in  the  EU)  (316)  and  is  now  at  EU 
average. 

time  spent 

the  eligibility 

The  duration  of  unemployment  benefits  is 
insufficient  to  help  people  find  quality  jobs. 
The  average 
in  unemployment 
gradually increased from eight months in 2020 to 
12.3  months  in  2025  (317),  with  large  regional 
for 
differences.  Nevertheless, 
unemployment benefits is capped at three months 
(a policy measure in place since 2011), which does 
not  provide  enough  time  to  find  relevant  jobs  or 
take  part  in  upskilling  or  reskilling  to  improve 
employability. This also leads to one of the highest 
at-risk-of-poverty 
rates  among  unemployed 
people in the EU. No policy changes related to the 
country-specific recommendation on improving the 
adequacy of unemployment benefits are currently 
planned. 

People  with  low  educational  attainment  are 
also more likely to face in-work poverty and 
have temporary contracts. In-work poverty has 
increased  twice  in  a  row  since  2020,  to  8.3%  in 
2025  (+2.1  pps),  and  now  at  EU  average  (8.3%). 
The  level  and  growth  of  in-work  poverty  risks  in 
2025  were  the  highest  among  the  low-educated 
(+4.7  pps  to  28%);  households  with  medium  and 
medium to low work intensity (+6.7 pps to 25.1% 
and +6.0 pps to 29.4%), and those with temporary 
contracts  (+1.4 pps  to  26.2%).  More  than  10%  of 
low-wage  employees  remain  trapped  in  low  pay 
for four years or more, pointing to potential wage 
distribution  issues  despite  recent  strong  nominal 
and  real  wage  increases.  While  the  share  of 
employees  working  on  temporary  contracts  was 
low  in  2025  (3.8%  vs  9.9%  in  the  EU),  it  is 
markedly  higher  than  the  EU  average  among  the 
low-educated (19.3% vs 20.2%).  

Active labour market policies do not support 
jobseekers and vulnerable groups effectively. 

(315) National Statistical Office,  

(316) The complementing prevalence-adjusted disability 

employment gap improved, and it is at 3.7% below the EU 
average, also suggesting a favourable turn in the labour 
market situation of persons with disabilities. 

(317) National Statistical Office, 2025, 20.1.1.35. A 

munkanélküliség átlagos időtartama a 15–64 éves 
munkanélküliek körében [hónap] 

people, 

registered 

Over  the  past  decade,  public  spending  on  active 
labour  market  policies  (ALMPs)  has  been  halved. 
Of 
43% 
unemployed 
participated  in  ALMPs:  public  works,  training  and 
hiring  subsidies.  More  than  half  of  these  people 
were  engaged  in  public  works,  which  absorbed 
75% of the total ALMP budget in 2023. The use of 
training  has  increased  but  is  still  the  least-used 
instrument.  Fewer  than  one  third  of  participants 
remain in employment six months after benefiting 
from  an  ALMP,  indicating  low  effectiveness  in 
sustainably  reintegrating  unemployed  people  into 
the  labour  market.  Decreasing  PES  staffing  levels 
add to the challenge by reducing the availability of 
counselling.  The  PES  is  either  loosely  involved  or 
not involved at all in providing services addressing 
social, mental and health issues to people in long-
term  unemployment,  which  services  are managed 
by  the  Social  Opportunity  Directorate  (Társadalmi 
Esélyteremtési  Főigazgatóság)  of  the  Ministry  of 
inclusion. 
the 
Coordination  among  the  different  bodies  involved 
in  ALMPs,  skills  forecasting  and  training  design  is 
underdeveloped both at national and county level, 
which  hampers  economic  development  and 
competitiveness, including at county level.  

Interior,  responsible  for  social 

Recent  active  labour  market  measures  have 
not yet integrated vulnerable groups into the 
labour  market  effectively.  In  response  to  the 
country-specific  recommendation  to  improve  the 
effectiveness  of  ALMPs,  the  review  of  relevant 
legislation  in  2024  reintroduced  the  opportunity 
for the PES to purchase and supervise the content 
and quality of labour market training, which could 
lead  to  positive  results.  Nevertheless,  regular 
impact  assessments  are  yet  to  be  established. 
Since  November  2025,  individuals  have  been 
limited  to  working  maximum  10  years  in  public 
works schemes, with some exceptions based on an 
individual  assessment  or  for  those  within  three 
years  of  retirement.  This  helps  prevent  public 
works  schemes  from  becoming  a  permanent 
solution for those who can work. At the same time, 
other  active  labour  market  tools  and  the  social 
protection  system  need  to  be  strengthened,  as 
those  without  work  face  poverty  and  social 
exclusion  risks  (see  Annex  12).  The  2024  ‘pilot 
work-trial  project’,  which  aimed  to  support  the 
integration of people in long-term unemployment, 
has  not  yielded  the  expected  results  due  to 
from  employers.  Larger 
insufficient 
projects  funded  by  the  ESF+  support  the  labour 
market integration of vulnerable groups (see 2025 
country  report),  but  a  strong  reliance  on  EU 

interest 

98 

 
 
sufficient  national 

funding  often  leads  to  gaps  in  financing  and  loss 
of  expertise  between  programming  periods. 
Ensuring 
resources  are 
allocated  to  improve  ALMPs  could  contribute  to  a 
more  sustainable  and  effective  policy  framework. 
involve  boosting  PES  capacities, 
This  could 
including  their  ALMP  coordination  roles  also  in 
districts 
social 
economy  organisations  to  engage  in  the  labour 
market integration of vulnerable groups.  

(‘járások’),  and 

incentivising 

Labour  market  outcomes  vary  markedly 
across  regions.  The  Budapest  region  had  an 
employment  rate  (20-64)  of  85.3%  in  2025.  By 
contrast,  only  75.8%  were  employed  in  Northern 
Hungary,  with  a  particularly  low  employment  rate 
among  people  with  lower  secondary  education  or 
less,  at  52.4%  (58.2%  in  the  EU).  In  Southern 
Transdanubian, Northern Hungary and North Great 
Plan,  unemployment  rates  are  also  above  the  EU 
average  (6.4%,  7%  and  6.1%).  Weak  labour 
market performance in these regions is related to 
a  higher  share  of  people  with  lower  levels  of 
education,  obstacles  to  transport  options  and 
subdued  economic  activity,  which  results in  fewer 
jobs, especially in rural areas. 

degree 

remained 

Labour  shortages  have  eased  overall  but 
persist  in  some  regions  and  specific  sectors. 
In  2025,  the  job  vacancy  rate  was  2.1%,  at  EU 
average.  The  decrease  was  mainly  due  to  fewer 
vacancies for jobs requiring no qualifications, while 
vacancy  rates  in  occupations  requiring  a  higher 
broadly 
education 
unchanged (318).  Vacancy  rates  are  higher 
in 
western  Hungary,  close  to  the  Austrian  border, 
reflecting  regional  labour  mobility.  These  rates 
also  vary  across  districts  pointing  to  potential 
transport-related  mobility 
constraints  across 
districts  (319).  Vacancy  rates  remain  high  in  the 
public sector, particularly in health and social work 
services 
in  public 
administration,  defence  and  compulsory  social 
security  (3.5%),  and  administrative  and  support 
service  activities  (4.2%  –  including  temporary  job 
agencies, typically with low qualified jobs) in 2025. 
In October 2025, the share of employers expecting 
labour  shortages  to  limit  their  production  was 

(3.7%),  and 

increased 

(318) Lakatos Judit (2025): ‘Magyarországi munkaerőpiac 2024-

2025’. In: Munkaerőpiaci Tükör 2025, pp. 11-26, 
MunkaeropiaciTukor2025.pdf. 

(319) Balázs Reizer (2025): ‘A betöltetlen álláshelyek területi 
különbségei’ In: Munkaerőpiaci Tükör 2025, pp. 82-87, 
MunkaeropiaciTukor2025.pdf. 

99 

higher 
construction and services.  

than 

the  EU  average 

in 

industry, 

to 

neutrality. 

Hungary faces considerable challenges in the 
transition 
The 
climate 
employment  share  of  the  environmental  goods 
and services sector, at 1%, was one of the lowest 
in  the  EU  in  2023  (EU:  2.7%),  and  the  emission-
intensity  of  output  is  significantly  above  the  EU 
average. Energy-intensive industries accounted for 
5.1% of total employment in 2025, well above the 
EU average. .In 2025, occupational shortages were 
reported  for  professions  linked  to  both  the  green 
transition  and  climate  adaptation,  such  as  air 
conditioning  and  refrigeration  mechanics,  building 
construction labourers and refuse sorters. 

tight 

The 
shaped  by 
labour  market, 
demographic  decline  and  outward  labour 
mobility,  has  also  experienced  an  inflow  of 
workers,  mainly  of  third-country  nationals. 
Hungary registered a 28% increase in work-related 
residence  permits  between  2019  and  2024,  with 
over  105 883  permits  issued  in  2024.  In  autumn 
2024,  about  60%  of  the  78  000  third-country 
nationals were employed in low-skilled jobs, while 
EU  workers 
in  high-skilled 
ones (320).  At  the  same  time,  the  government’s 
policy  on  non-EU  labour  migration  has  gradually 
become  stricter:  since  2023,  only  temporary  work 
permits  have  been  awarded,  family  reunification 
has been restricted, the list of eligible countries of 
origin has been limited and only a few temporary 
work  agencies  have  been  authorised  to  hire  non-
EU  workers.  These  restrictions  do  not  apply  to 
seasonal workers and workers in major investment 
projects. 

to  work 

tended 

Wage  growth  has  been  strong  in  recent 
years, but wage levels remain low compared 
with  the  rest  of  the  EU.  Nominal  wage  growth 
was  12.6%  in  2024  and  is  projected  at  9.1%  in 
2025  and  9.4%  in  2026.  This  follows  gains  of 
17%  and  15.1%  in  2022  and  2023,  respectively, 
partly  reflecting  also  high  inflation.  Real  wages 
have  also  grown  rapidly,  reaching  8.5%  in  2024 
and  4.5%  in  2025,  and  are  projected  to  continue 
growing  at  a  strong  pace,  at  6.0%  in  2026.  The 
acceleration  in  real  wage  growth  is  due  to  both 
rapid 
sustained  nominal  wage  growth  and 

(320) Krisztina Bodor, Márton Czifrusz. ‘A külföldi dolgozók a 

magyarországi munkaerőpiacon’ In: Munkaerőpiaci Tükör. 
2025. pp. 64-71, MunkaeropiaciTukor2025.pdf. 

 
 
 
as 

and 

(e.g. 

such 

from 

remains 

healthcare 

responsibilities 

insufficient.  A 

legislative  changes  affecting  the  legal  status  of 
some  public  sector  employers  (most  recently  in 
research  –  see  Annex  4)  and  the  reallocation  of 
governance 
local 
government  to  national  government).  In  addition, 
collective  agreements  are  prohibited  in  some 
sectors, 
public 
administration. Trade union density was only 7.4% 
in  2022.  Since  October  2023, 
the  10% 
the 
representativeness  threshold  required  by 
Labour  Code  to  conclude  collective  agreements 
has  de  facto  hindered  such  agreements.  At  the 
time,  employers’  organisations  density 
same 
reached  53.6%  in  2022.  Weaker  organisation  of 
employees  limits  workers’  influence  over  labour 
conditions.  The  involvement  of  social  partners  in 
legal 
policymaking 
framework  was  adopted  for  the  tripartite  forum 
(VKF)  in  2024,  and  a  three-year  minimum  wage 
increase,  aiming  to  reach  50%  of  the  average 
wage by 2027, was agreed within this forum. The 
2025  minimum  wage  increase  was  implemented, 
but  the  2026  agreement  was  renegotiated  in 
autumn  2025 in  response  to  lower-than-expected 
GDP growth (below 1% instead of the 3% forecast 
in  2024).  This  resulted  in  a  minimum  wage  of 
HUF 322 800  instead  of  HUF 328 600.  In  2025, 
four expert committees were set up in the VKF to 
develop  action  plans  for  sectoral  wage  grids, 
collective bargaining  coverage,  labour  productivity 
and  labour  taxation.  The  government  consults 
social partners via the VKF, but it works mainly as 
an  information-sharing  forum  rather  than  one  of 
meaningful  cooperation.  Authorities  are  currently 
working  on  the  measures  to  be  included  in  their 
future action plan to improve collective bargaining, 
but  have  not  yet  discussed  them  with  social 
partners.  No  impact  assessment  of  the  VKF  legal 
framework  has  been  planned  yet.  Social  partners’ 
capacity-building  is  mainly  supported  through  the 
ESF+,  with  an  allocation  of  0.32%  or  EUR  17 
million between 2021 and 2027. These measures 
are yet insufficient to improve the effectiveness of 
social dialogue.  

The 

disinflation. 
statutory  minimum  wage 
increased  by  61.4%  between  January  2022  and 
July  2026,  a  rise  of  14.0%  in  real  terms.  Despite 
these gains, wage levels in Hungary remain among 
the  lowest  in  the  EU,  reflecting  low  productivity 
and  a  relatively  low  share  of  wages  in  national 
income. In 2024, Hungary also had one of the EU’s 
widest  gender  pay  gaps  (16.9%  vs  EU:  11.1%), 
which 
care 
related 
responsibilities. 

to  unequal 

is  partly 

if 

competitiveness 

The  robust  wage  growth  may  negatively 
productivity, 
affect 
especially  in  terms  of  skills  levels,  does  not 
improve  in  parallel.  Between  2013  and  2024, 
wage  growth  was  above what  would  be  expected 
based  on  standard  macroeconomic  drivers (321), 
and  the  gap  could  increase  further  in  2025. 
Between 2022 and 2025, unit labour costs (ULCs) 
significantly increased due to the high increase in 
wages  combined  with  a  relatively  low  growth  of 
productivity. ULCs grew by 14.2% in 2022, 16.8% 
in 2023, 12.0% in 2024 and 8.9% in 2025. In the 
same period, the real effective exchange rate grew 
by  9%,  with  currency  depreciation  partially 
offsetting  the  stronger 
in 
Hungary compared with its main trading partners. 
Ensuring  sustainable  wage  convergence  with  the 
EU and in parallel  supporting competitiveness will 
require  improving  basic  skills,  increasing  tertiary 
attainment  rates  and  adapting  skills  to  the  green 
and digital transitions. 

in  ULCs 

increase 

Collective  bargaining  coverage  is  weak,  and 
the  effectiveness  of  social  dialogue  remains 
limited. The collective bargaining coverage rate in 
Hungary  was  self-reported  at  16%  in  2022  and 
14.8% in 2023 (322), while the OECD reported it at 
20.4% in 2022 (the latest available data), which is 
a  decrease  compared  with  25.5%,  which  was 
recorded  in  2010 (323).  Both  data  sources  place 
Hungary  with  one  of  the  lowest  rates  in  the  EU. 
is  partly  due  to 
The  more  recent  decrease 

(321) Wage benchmarks are predicted by developments in 

inflation, productivity and the unemployment rate. For more 
details, see: Arpaia, A. and A. Kiss (2015), ‘Benchmarks for 
the assessment of wage developments: Spring 2015’, 
Analytical Web Note 2/2015, European Commission, 
Directorate-General for Employment Social Affairs and 
Inclusion. 

(322) Reported by Hungary in the context of the reporting required 

by the Directive on Adequate Minimum Wages. 2025 

(323) OECD/AIAS ICTWSS v2.0. This is below the threshold of 80% 

under the Directive on Adequate Minimum Wages.  

100 

 
 
 
ANNEX 12: SOCIAL POLICIES 

received 

Hungary  continues  to  face  social  challenges 
related  to  the  effectiveness  of  social 
protection  and  access  to  services.  In  2025, 
Hungary 
country-specific 
recommendations  on  the  adequacy  of  social 
protection  and  unemployment  benefits  as  well  as 
on  access  to  essential  and  social  services  and 
housing.  Uneven  progress  towards  the  2030 
poverty  reduction  target  and  the  limited  capacity 
of  social  transfers  to  reduce  poverty  and  social 
exclusion highlight the scope to further strengthen 
social  protection  coverage,  access,  adequacy  and 
effectiveness.  The  challenges  that  exist  and  the 
lack  of  effective  new  measures  on  access  to 
housing  and  to  essential  and  quality  social 
services and care, with strong regional inequalities, 
related 
suggest  that 
country-specific  recommendation  is  stalling.  In 
long-term  care  services 
addition,  access 
remains 
increasing  poverty 
among  older  people.  Addressing  these  challenges 
will  contribute  to  Hungary’s  inclusive  growth  and 
competitiveness.  

implementation  of  the 

insufficient  amid 

to 

Graph A12.1: Impact of social transfers (excluding 
pensions) on poverty reduction 

inequality, measured as the income quintile share 
ratio (S80/S20), has increased to 4.68, its highest 
level  in  a  decade,  and  it  is  now  over  the  EU 
average  (4.62)  in  2025.  In  2025,  the  effect  of 
taxes  and  social  benefits  (excluding  pensions)  on 
the income quintile ratio (S80/20) was one of the 
lowest  in  the  EU  (23.0% vs  EU  48.8%),  with  both 
components  below  the  EU  average  (11.5%  vs  EU 
34.4% and 9.9% vs EU 16.6%, for social benefits 
and  taxes  respectively).  Weaker  social  transfers 
and growing inequalities also have a visible impact 
on  the  depth  of  poverty:  the  at-risk-of-poverty 
(AROP) gap, which shows the distance between the 
median  income  of  poor  people  and  the  poverty 
threshold,  improved  further  by  2.2  percentage 
points  (pps)  in  2025,  but  remains  above  the  EU 
(24.4% vs 22.5%).  

income  of  a  minimum 

The  adequacy  of  minimum  income  support 
remains very low. The adequacy of the minimum 
income benefit is one of the lowest in the EU, and 
‘employment  substituting  benefit’ 
the 
(ESB, 
támogatás) (324), 
Foglalkoztatást 
helyettesítő 
which is the most common social benefit, has not 
been  adjusted  in  line  with  the  cost  of  living.  The 
disposable 
income 
beneficiary  in  Hungary  is  13.5%  of  the  poverty 
threshold,  against  an  EU  average  of  56.3% (325). 
There  are  no  objective  criteria  for  setting  or 
adjusting  the  amount  of  either  the  ‘employment 
substituting  benefit’  or  the  ‘benefit  for  people 
suffering from health problems or taking care of a 
és 
Egészségkárosodási 
child 
gyermekfelügyeleti 
támogatás).  Their  nominal 
fixed  amount  (EUR 57)  is  not  related  to  family 
size,  composition  or  income  and  has  not  changed 
since  2012.  Currently,  there  are  no  plans  to 
change  this  despite  the  substantial  jump  in  the 
cost  of  living  (77%  price  level  increase  between 
2012 and 2025 (326)) in recent years, especially for 
food  and  housing  prices.  Only  the  benefit  for  job 
seekers  who  are  within  five  years  of  retirement 
(ABP,  Nyugdíj  előtti  álláskeresési  segély)  is  linked 

(BHC, 

(1) Break in series for Hungary in 2019 and 2022. 
Source: Eurostat [tespm050]. 

Social  transfers  and  the  design  of  the  tax 
system are not effective in reducing poverty. 
The impact of social transfers on poverty reduction 
halved  between  2018  and  2025,  from  48.8%  to 
23.1%, and is among the lowest in the EU (33.2% 
in  2025).  In  addition,  the  coverage  of  in-cash 
social  benefits  (other  than  old-age  benefits)  at 
80.3%  is  relatively  low  (EU:  83.1%).  Income 

(324) The  employment  substituting  benefit  (ESB,  Foglalkoztatást 
helyettesítő  támogatás)  is  a  benefit  for  those  who  are 
deemed capable of work, when they are not working in public 
works. Benefit for people suffering from  health problems or 
taking  care  of  a  child 
(BHC,  Egészségkárosodási  és 
gyermekfelügyeleti támogatás) is for those people suffering 
from  health  problems  or  taking care  of  children.  Job  seeker 
benefit  before  pension  (ABP) (Nyugdíj  előtti  álláskeresési 
segély).  

(325) Joint Employment Report 2026, Figure 2.4.9.  

(326) HICP, Eurostat. 

101 

2025303540455020152016201720182019202020212022202320242025%HUHungaryEU27 
 
   
 
 
 
to  the  minimum  wage  (40%  of  the  minimum 
wage), which is set to increase annually until 2027 
according  to  the  three-year  minimum  wage 
agreement  with  social  partners  (see  Annex  11). 
The  percentage  of  people  at  risk  of  poverty 
receiving  minimum  income  benefits  remains  low 
at  11% (327) 
(estimate)  due  to  an  eligibility 
requirement  that  excludes  people  in  employment 
(except for some simplified forms of employment). 
The delays in processing minimum income benefit 
applications  are  high,  around  60  days.  Improving 
adequacy,  regularly  adjusting  benefits  to  the  cost 
of living, and ensuring active inclusion, in line with 
the Council recommendation on minimum income, 
would  help  support  the  more  vulnerable  groups 
and  contribute  to  addressing  the  challenges 
country-specific 
the 
covered 
recommendations addressed to Hungary. 

2025 

in 

Despite  some  progress  in  reducing  poverty 
and  social  exclusion,  significant  challenges 
remain, including high deprivation rates. Since 
2019,  the  number  of  people  at  risk  of  poverty  or 
social  exclusion 
(AROPE)  has  decreased  by 
183 000, compared to Hungary’s national  poverty 
(328). 
reduction  target  of  292 000  by  2030 
Between  2024  and  2025, 
rate 
the  AROPE 
increased slightly  (by  0.2 pps, to 19.5% vs 20.9% 
in the EU). The increase seems to have been driven 
by  increasing  in  work-poverty,  which  increased by 
1.3 pps to 8.3%, and was around the EU average 
(8.3%)  in  2025.  In  contrast,  the  percentage  of 
people  who  cannot  afford  certain  common  items 
(severe  material  and  social  deprivation)  further 
improved  by  0.8 pp.  but  remains  one  of  the 
highest  in  the  EU  (8.5%  vs  6.3%).  Monetary 
poverty  (measured  using  the  AROP  rate,  which  is 
the  share  of  people  having  less  than  60%  of  the 
median  disposable  income  after  social  benefits), 
also  slightly  decreased,  from  14.3%  in  2024  to 
14%  in  2025,  but  increased  among  children.  A 

comprehensive approach, as set out in the EU anti-
poverty  strategy,  could  help  address  the  multiple 
dimensions  of  poverty  and  achieve  the  national 
anti-poverty target. 

groups 

vulnerable 

experience 
Some 
significantly  higher  poverty  or 
social 
exclusion  risks.  Adults  with  lower  secondary 
education or less are significantly more likely to be 
at  risk  of  poverty  or  social  exclusion  than  their 
European  peers  (46.1%  vs  34.2%).  Adults  with  a 
low level of education tend to experience a higher 
rate  of  severe  material  and  social  deprivation  in 
Hungary  than  in  the  EU,  including  in  the  working-
age  population  (18-64 years  olds:  28%  vs  15.2% 
in the EU), with almost one in five of them facing 
persistent  poverty (329).  In-work  poverty  among 
those with a low level of education in Hungary has 
increased significantly (up 4.7 pps to 28%) and is 
now  one  of  the  highest  in  the  EU  (18.8%).  The 
AROPE rate among people not in employment has 
improved, but still above its value in 2019 (24.2%, 
vs  28.8%  in  2025).  28.3%  of  all  persons  with 
disabilities  were  at  risk  of  poverty  or  social 
exclusion in 2025 (28.8% in the EU). Roma people 
were also much more likely to be at risk of poverty 
or  social  exclusion  (61.5%  in  2023)  than  non-
Roma  (18.2%)  and  preliminary  national  data 
suggest  that  this  figure  increased  further  to 
64.8% (330) 
low 
educational attainment and weaker labour market 
integration (331). 
accelerated 
implementation  of  Hungary’s  national  social 
inclusion  strategy  and 
its  action  plan  could 
contribute to addressing these challenges.  

in  2024.  This 

is  related  to 

and 

The 

full 

Children at risk of poverty or social exclusion 
are facing a particularly vulnerable situation. 
In  2025,  the  child  AROPE  rate  was  23%  (EU: 
24.3%).  Among  Roma  children  this  situation  is 
more  acute:  according  to  the  FRA  Roma  Survey 

(327) European Commission: Directorate-General for Employment, 
Social Affairs and Inclusion, The 2025 minimum income 
report – An overview of the implementation of the 2023 
Council recommendation on adequate minimum income 
ensuring active inclusion across EU Member States – Joint 
report prepared by the Social Protection Committee and the 
European Commission, Directorate-General for Employment, 
Social Affairs and Inclusion. Part 2, Country analyses, 
Publications Office of the European Union, 
2025, https://data.europa.eu/doi/10.2767/3005188. 

(328) The material and social deprivation of families with children 
has decreased from 21.0% in 2019 to 15.5% in 2025, 
compared to Hungary’s national target of reducing it to 13% 
by 2030. 

(329) Persistent at-risk-of-poverty rate refers to people who were 
at  risk  of  poverty  for  at  least  two  of  the  three  preceding 
years. 

(330) Data from the Hungarian National Statistical Office. The 

national data collection on poverty or social exclusion (in line 
with SILC) also includes data collection on Roma. The 
national data are based on 2023 and 2024 income data, 
respectively. SICL data at Eurostat are published with a one-
year delay compared to the data collection. Therefore, the 
HNSO data for 2023 would correspond to the 2024 
reference year at Eurostat. Helyzetkép | 2024. 

(331) Rights of Roma and Travellers in 13 European countries – 

Perspectives from the Roma Survey 2024. 

102 

 
 
 
social  services,  with  the  lowest  levels  in  rural 
areas (see Annex 19). 

Gaps  in  the  social  protection  system  for 
some  workers  persist.  Non-standard  workers, 
for  example  those  employed  under  ‘simplified 
employment’  (Egyszerűsített  foglalkoztatás)  have 
no access to sickness and maternity benefits. They 
have  only  voluntary  coverage  for  healthcare,  but 
very  few  opt  in.  Similar  gaps  exist  for  seasonal 
workers, mainly working in agriculture and tourism.  

still 

Access  to  housing  is  a  social  challenge.  The 
percentage  of  the  population  spending  over  40% 
of  household  income  on  housing  dropped  by  3.7 
pps  to  5.3%  and  is  below  the  EU  average  (EU 
7.7%)  (334).  The  housing  cost  overburden  in  cities 
(6.7%) 
limits  study  and  employment 
opportunities  for  low-income  households.  People 
at  risk  of  poverty  or  social  exclusion  (21.2%), 
single-parent  households  (17.1%)  and  Roma  face 
a  higher  housing  cost  overburden.  Overcrowding 
among  the  population  at  risk  of  poverty  or  social 
exclusion  was  also  higher  than  the  EU  average  in 
2025  (37.4%  vs  34.5%).  In  2024,  40%  of  Roma 
experienced housing deprivation and 93% were in 
overcrowded households (see Annex 16). While the 
housing cost for owners with a mortgage is lower, 
housing  costs  still  largely  affect  tenants,  whether 
renting  on  market  or  reduced  prices  (38..4%  and 
13.3% in 2025, respectively), Targeted reform and 
investment  measures  supporting  the  renovation 
and  construction  of  accessible  social  housing  in 
non-segregated  areas  with  good  access 
to 
education  and  employment,  including  the  related 
social  and care services and home rental support, 
could  help  improve  the  living  conditions  of  socio-
economically  disadvantaged  people  and  persons 
with disabilities. 

2024, 58% of Roma children are at risk of poverty. 
Child  poverty  is  particularly  high  among  children 
whose parents have a low level of education (78% 
in  2025,  vs  62.5%  in  the  EU).  Children  at  risk  of 
poverty  or  social  exclusion  also  often  live  in 
that  struggle  with  housing  cost 
households 
overburden  (21.2%  vs  22.2%  in  the  EU)  and 
overcrowding  (51.4%  vs  44.4%  in  the  EU)  (332). 
Children  under  3  at  risk  of  poverty  or  social 
exclusion  tend  to  participate  significantly  less  in 
early childhood education and care (see Annex 13), 
which  has  a  significant  long-term impact  on  their 
development.  The  number  of  children  under 
professional  child  protection  provision  has  been 
increasing  in  recent  years,  partly  because  of 
families’ social and financial difficulties. A growing 
share  of  these  children  are  being  placed  in 
institutional  care  due  to  the  declining  availability 
of  foster  families,  which  can  negatively  affect 
their educational,  employment, and mental-health 
outcomes (333).  Hungary 
a 
complementary  national  target  for  child  poverty 
reduction.  Compliance  with  the  European  Child 
Guarantee  is  high  as  regards  healthy  nutrition, 
free  school  meals  at  pre-primary  and  primary 
education,  and  vaccination.  However,  there  is 
scope  for  reforms  and  investments  in  areas  such 
as  children’s  mental  health,  alternative  care, 
adequate  housing  and  non-financial  barriers  to 
accessing  early  childhood  education  and  care  for 
children  under  3.  Targeted  support  for  children  in 
need, such as children with disabilities, Roma and 
children  of  parents  with  a  low  level  of  education, 
could  further  stimulate  social  and  territorial 
inclusion. 

has 

not 

set 

Living  conditions  vary  widely  across  regions 
and  territories.  Almost  one  in  four  people  living 
in  rural  areas  is  at  risk  of  poverty  or  social 
exclusion,  compared  to  13%  in  cities,  with  the 
highest rates recorded in North Great Plain (28%) 
and  Northern  Hungary  (28.8%).  These  disparities 
are  often  related  to  regional  differences 
in 
economic  activities,  as  well  as  the  unequal 
distribution of people with a low level of education 
or  unemployed  people  across  the  country.  This  is 
coupled  with  unequal  access  to  essential  and 

(332) The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

(333) Bardits – Kertesi, Family foster care or residential care: the 

impact of home environment on children raised in state care 
KRTK-KTI 2024/3 KRTKKTIWP202403.pdf. 

(334) This indicator should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

103 

 
 
 
Graph A12.2: Regional differences in poverty and 
social exclusion risks, low educational attainment 
and unemployment, 2025 

Source: Eurostat 

Energy  poverty  is  comparatively  low  and 
mainly  affects  low-income  households.  In 
2025, 5.8% of the population was unable to keep 
their  homes  adequately  warm  (EU:  8.8%),  while 
households  at  risk  of  poverty  were  much  more 
(EU:  19.6%).  Heating 
affected  at  16.8% 
expenditure is projected  to  rise more  than  the  EU 
average,  consistent  with  above-average  exposure 
to  ETS2-covered  fuels  in  household  energy  use, 
with natural gas standing out (335). The EU’s Social 
Climate  Fund,  with  EUR 2.5  billion  allocated  to 
Hungary,  could  help  mitigate  these 
impacts 
through energy-efficiency investments targeted at 
the most vulnerable households.  

Transport  poverty  is  a  growing  challenge.  In 
Hungary,  10.4%  of  the  population  was  unable  to 
afford  a  car  in  2025,  well  above  the  EU  average 
(5.5%),  with  particularly  high 
rates  among 
households  at  risk  of  poverty  (26.8%  vs  EU 
16.5%) (336).  Regions  outside  Budapest  and  Pest 
county, where approximately 16% of people are at 
risk of poverty or social  exclusion, are particularly 
poorly  served  by  public  transport.  Transport  fuel 
expenditure  is  projected  to  increase  slightly  more 
than  the  EU  average,  driven  by  ETS2,  raising  the 
affordability  risks  in  car-dependent  rural  regions 
and  suburbs.  Strengthening  the  affordability  and 
availability  of  public  transport  will  be  essential, 

(335) European Commission calculations based on Green 

EUROMOD” 

(336) Eurostat (including a 2024 EU-SILC survey on access to 

services, also covering transport, published this month) and 
the data from the Transport Poverty Hub. 

while in areas with limited public transport access, 
could  be 
further 
considered.  

transport  options 

social 

inequalities  are 

Poverty  and 
increasing 
among  older  people.  The  AROPE  rate  for  older 
people  increased  significantly  between  2019  and 
2023,  and  started  gradually  decreasing  to  19.8% 
in  2025,  but  was  above  the  EU  average  in  2025 
(EU 18.8%). AROPE rates for older women continue 
to  be  higher  than  for  men,  at  24%  compared  to 
13.3% in 2025. This is despite a relatively low but 
increased  gender  pension  gap,  at  16.7%  in  2025 
(compared to 9.6% in 2024 and 23.9% in the EU). 
The  relatively  high  AROPE  rate  can  mainly  be 
attributed to consistently high severe material and 
social  deprivation  (around  9%  between  2019  and 
2025),  while  the  increasing  trend  of  monetary 
poverty (up by 7 pps since 2019 to reach 16.1% in 
2024)  seems  to  have  stopped  in  2025  (13.8%). 
Income  inequality,  as  measured  by  the  income 
quintile  (S80/S20)  ratio,  increased  significantly 
among older people from 2.70 in 2019 to 4.32 in 
2025,  and  it  is  now  above  EU  average  of  4.12. 
Income  inequality  in  this  age  group  in  Hungary  is 
more  prominent  among  men  (4.51)  Inequalities 
among  older  people  mainly  appear  to  be  a  side 
effect  of  increasing  wages  in  recent  years  (see 
Annex 11), which have resulted in higher pensions 
for recent pensioners (pay-as-you-go system with 
no  capping),  as  well  as  wage  inequalities  largely 
related to educational attainment and gender pay 
gaps. At the same time, the minimum pension has 
not  increased  since  2012  (HUF 28 500).  Self-
employed  farmers  and  primary  producers  are 
particularly  vulnerable,  as  most  of  them  are  only 
entitled  to  the  minimum  pension.  The  inadequacy 
of  old-age  pensions  forces  farmers  to  continue 
working 
delaying 
generational  renewal  and the setting up of  young 
farmers.  Demographic  changes  also  put  pressure 
on  the  long-term  financial  sustainability  of  the 
pension  system 
report). 
Hungary  has  not  taken  any  measures  to  address 
income inequalities and preserve the adequacy of 
pensions.  The  Hungarian  recovery  and  resilience 
plan  includes  a  reform  of  the  pension  system  by 
2026,  but  no  progress  has  been  reported  in  this 
area.  Following  the  reintroduction  of  the  13th 
month pension in 2021, the government launched 
the  14th  month  pension  in  2026  in  order  to 
compensate  pensioners  for  the  inflationary  shock 
of  recent  years.  However,  these  measures  have 
not  yet  led  to  a  significant  improvement  in  the 
living conditions of low-pension recipients.  

(see  2025  country 

retirement 

beyond 

age, 

104 

051015202530EU averageHungaryBudapestPestKözép-DunántúlNyugat-DunántúlDél-DunántúlÉszak-MagyarországÉszak-AlföldDél-AlföldUnemployment rate (15-74)Share of low-skilled population (25-64)At-risk-of poverty or social exclusion rate 
   
 
There  are  significant  social  and  territorial 
inequalities  in  accessing  quality  healthcare 
and long-term care. The care sector in Hungary 
is  characterised  by  low  public  spending  and  high 
out-of-pocket  expenditure,  as  well  as  staff 
shortages in healthcare (see Annex 15) and formal 
long-term care (LTC): in 2024, there were only 0.9 
long-term  care  workers  per  100  individuals  over 
the  age  of  65  (EU  average  of  3.3.  workers),  with 
significant  regional  disparities.  The  data  show 
staff  shortages,  resulting  in  long  waiting  times. 
The number of years left in good health at age 65 
is  relatively  low  (7.5  vs  9.4  in  the  EU).  In  2025, 
21%  of  older  people  living  in  rural  areas  rated 
their  health  as  good  or  very  good  compared  to 
31.3%  in  urban  areas.  Long-term  and  specialised 
care provision are also concentrated in developed, 
urban  areas  in  central  Hungary  and  western 
regions.  Public  LTC  expenditure,  at  0.5%  in  2022, 
is  one  of  the  lowest  in  the  EU  (vs  EU  average  of 
1.7%) and is strongly oriented towards residential 
care  (66.5%  vs  46.2%  in  the  EU  in  2022),  with 
relatively  less  emphasis  on  home  care  (14.9%  vs 
28.8% in the EU in 2022). There is no legislation to 
recognise  informal  carers.  While  informal  carers 
can 
(in-cash 
benefits  only),  they  do  not  receive  training,  and 
their  use  of  formal  care  services  remains  low, 
which  may  affect  the  quality  of  long-term  care. 
Hungary  allocates  EUR 156  million  to  improving 
local social and healthcare infrastructures through 
the European Regional Development Fund and the 
European Social Fund Plus between 2021-2027. A 
substantial 
approach 
more 
investment  in  professional  staffing  could  help 
address  regional  disparities  and  improve  access 
for  low-income  populations.  In  addition,  there  is 
economy 
for 
scope 
establishing 
organisations 
(such  as  care  cooperatives)  to 
deliver  high-quality  care  services  that  meet  the 
needs of the population, including where they live. 

financial  compensation 

systemic 

receive 

social 

and 

105 

 
 
ANNEX 13: EDUCATION AND SKILLS 

the 

remains 

In  2025, 

significant, 

Low  levels  of  basic  skills,  low  participation 
of  vulnerable  groups  of  adults  in  learning 
and  low  tertiary  attainment  rates  present 
major  challenges  to  Hungary’s  economic 
competitiveness  and  the  digital  and  green 
transitions. 
country-specific 
recommendations addressed to Hungary called for 
increasing  the  participation  of  disadvantaged 
groups  in  quality  mainstream  education.  Ethnic, 
in 
socio-economic  and  academic  segregation 
education 
leaving 
disadvantaged students less likely to acquire basic 
skills  and  more  likely  to  leave  school  early.  The 
measures  Hungary  has  introduced  to  address 
Roma  segregation  are  not  sufficiently  targeted. 
Hungary  has  implemented  a  large-scale  salary 
reform  for  teachers,  which  helps  make  the 
profession more attractive. However, the ageing of 
the teacher population and high teacher workload 
continue  to  pose  serious  challenges.  Participation 
in  vocational  education  and  training  (VET)  is 
increasing,  though  there  are  persistent  challenges 
to  progression  to  higher  levels  of  studies  and 
permeability, and participation of vulnerable adults 
in 
low.  Tertiary  education 
attainment is still one of the lowest in the EU, and 
enrolment  in  science,  technology,  engineering  and 
mathematics  (STEM)  fields  is  insufficient  to  meet 
the high demand for specialists.  

learning 

remains 

Hungary  shows  some  progress  in  offering 
formal  childcare  for  children  under  three. 
97.9% of children aged three and over participated 
in  early  childhood  education  and  care  (ECEC)  in 
2024 (EU average: 95.6%), exceeding the EU-level 
target  of  96%.  Participation  of  children  under 
three in formal  childcare increased (by 4.6 pps to 
21.1%, EU average: 40.6%) in 2025, but it was not 
the case for children that are at risk of poverty or 
social  exclusion  (9.7%)  (see  Annex  12).  Hungary 
expanded  childcare  capacities  from  46 000  in 
2017 to 68 800 in 2025, but there are still some 
districts  where  demand  exceeds  supply (337).  In 
2023, 16.3% of children under three had no place 
in  their  place  of  residence  (338).  In  2026,  the 
government plans to carry out a nationwide needs 

(337) Hungarian Central Statistical Office, 2026. Table 25.1.2.2.   

(338) Hungarian Central Statistical Office, 2024. Helyzetkép 2023. 
Azoknak a 3 éven aluli gyermekeknek a száma és aránya, 
akik a lakóhelyükön napközbeni ellátáshoz nem férnek 
hozzá, Latest publicly available data. 

assessment  to  prepare  further  investments  in 
creche places (339). 

Student  performance  gaps  in  basic  skills 
linked  to  socio-economic  background  are 
among  the  largest  in  the  EU.  Only  12.2%  of 
disadvantaged  15-year-olds  performed  well  in  at 
least  one  Programme  for  International  Student 
Assessment (PISA)  domain (reading, mathematics, 
science)  in  2022,  compared  to  60%  of  their 
advantaged  peers (340).  This  is  one  of  the  largest 
gaps  in  the  EU.  The  2023  Trends  in  International 
(TIMSS) (341) 
Mathematics  and  Science  Study 
reveals deterioration in mathematics performance 
among  eighth  graders  compared  to  the  previous 
assessment cycles (342). The gap between students 
from advantaged and disadvantaged backgrounds 
in the fourth grade is one of the largest among the 
participating  countries  (131  vs  85  score  points). 
Hungary carries out extensive standardised testing 
across various subjects from grade 4 to grade 11. 
The  results  confirm  the  strong 
influence  of 
students’  family  background  and  the  socio-
economic  status  of  their  place  of  residence  on 
their  academic  outcomes (343).  Underperforming 
schools are required to develop an action plan and 
receive  additional  support.  The  centralisation  of 
education governance and funding in 2013, which 
was accompanied by a loss of school and teacher 
autonomy,  has  not  succeeded 
reducing 
inequalities between schools (344). 

in 

segregation 

persistent. 
Educational 
Two thirds  (62%)  of  Roma  children  aged  6  to  15 
attend schools where most of their peers are also 
Roma (345).  Academic  segregation  is  exacerbated 

is 

(339) Government of Hungary, 2025. Action Plan 2025-2026 for 

the Gender Equality Strategy 2021-2030.  

(340) OECD, PISA 2022, DG EAC calculations. 

(341) Von Davier, M., Kennedy, A., Reynolds, K., Fishbein, B., 

Khorramdel, L., Aldrich, C., Bookbinder, A., Bezirhan, U., & Yin, 
L., 2024. TIMSS 2023 International Results in Mathematics 
and Science. Boston College, TIMSS & PIRLS International 
Study Center. 

(342) Oktatási Hivatal, 2024. Tájékoztató a TIMSS 2023 

eredményeiről. 

(343) Government of Hungary. Az Európai Unió számára készített 

köznevelési stratégia 2021-2030. 

(344) Hermann, Z. & Semjén, A, 2021. The effects of centralisation 

of school governance and funding on inequalities in 
education.  

(345) European Union Agency for Fundamental Rights, 2025. 

Rights of Roma and Travellers in 13 European countries - 
Perspectives from the Roma Survey 2024. 

106 

 
 
 
 
 
 
 
      
In  a  2025  opinion, 

by  the  proliferation  of  church-affiliated  and 
in  disadvantaged 
private  schools,  especially 
regions, which attract and concentrate advantaged 
students. 
the  Deputy 
Commissioner for the Protection of Minority Rights 
highlighted  the  issue  of  persistent  segregation, 
accompanied  by  an  outflow  of  qualified  teachers 
from public schools (346). Hungary has introduced a 
law (347)  sanctioning  schools  whose  student 
population is significantly different from the socio-
economic 
surrounding 
catchment area. However, it only applies to a small 
fraction of primary schools (fewer than 0.1%). The 
implementation of measures to tackle segregation 
in municipalities with only one school, or between 
different  sites  operated  by  the  same  school,  is 
lagging. 

distribution 

the 

of 

territorial  concentration  of 

Early  school  leaving  has  decreased.  In  2025, 
the share of young people (aged 18 to 24) leaving 
education and training without obtaining an upper 
secondary  certificate  stood  at  9.3%  (EU  average: 
9.3%),  down  from  11.6%  in  2023,  but  above  the 
EU  level  target  of  9%.  Regional  disparities  are 
significant:  young  people  in  rural  areas  are  over 
four  times  more  likely  to  leave  education  and 
training prematurely than those in cities (15.1% vs 
3.4%).  The 
low 
educational  attainment  has  increased  in  certain 
districts  in  disadvantaged  regions  (348)  among 
younger  cohorts.  The  decreasing  trend  in  early 
school  leaving  could  be  related  to  participation  in 
second  chance  programmes (349),  more  young 
people returning to formal education (e.g. evening 
VET programmes) and the introduction of an early 
warning  and  monitoring  system  in  compulsory 
education  with  targeted  pedagogical  support.  At 
the  same  time,  only  94.4%  of  16-year-olds  were 
still  enrolled  in  compulsory  education  in  2024, 
among  the  lowest  rates  in  the  EU  (EU  average: 
98.1%). The lowering of compulsory school age to 
16 
improved 
employment  outcomes  for  school  dropouts (350). 
Since  the  reform,  the  probability  to  leave  school 

in  2011  has  not  resulted 

in 

early has increased markedly among young Roma 
people and those with low parental education. 

to 

and 

teachers 

twice  as  many 

Teachers  in  Hungary  report  low  societal 
appreciation 
increasing  workload. 
Hungary’s teaching population is one of the oldest 
in  the  EU  (50.0%  over  50  years  old;  EU  average: 
39.9%),  which  is  expected  to  exacerbate  already 
existing  shortages.  Between  2020  and  2023,  the 
share  of  retirement  age  (65+)  VET  teachers 
increased from 1.1% to 6.3% (EU average: 1.3% to 
3%).  According  to  the  OECD’s  Teaching  and 
Learning  International  Survey  (TALIS)  2024,  only 
8.4% of lower secondary teachers in Hungary think 
that  the  profession  is  valued  in  society  (EU 
average: 15.4%). While more new teachers receive 
induction  than  before  (graph  A12.1),  one  out  of 
five  teachers  under  30  reported  their  intention  to 
leave  the  profession  in  the  next  five  years  (EU 
average:  15.2%).  The  weekly  workload  has 
increased from 39.3 to 43.2 hours since 2018 and 
close 
(28.5%) 
experience  a  lot  of  stress  in  their  work  compared 
to  teachers  in  other  EU  countries  (EU  average: 
face  several  barriers, 
16%).  Teachers  also 
conflicts 
costs  and 
including 
to 
schedule 
participate 
professional 
in 
development. As a result of the large-scale salary 
reform  with  support  from  the  European  Social 
Fund  Plus  (ESF+),  the  average  gross  earnings  of 
teachers  compared  to  other  tertiary  graduates 
increased  from  around  60%  in  2023  to  around 
80%% in 2025 (351). Teachers who work in schools 
with  a  high  proportion  of  disadvantaged  students 
receive  additional  compensation.  In  the  same 
increased  VET  trainers’ 
period,  Hungary  also 
salaries  using  national  funds.  Recently,  a  positive 
effect  can  be  observed in  the  growing  number  of 
teacher  education (352). 
applications 
However,  more  efforts  are  needed  to  attract  and 
retain  young  teachers  with  higher  competences, 
especially  in  socio-economically  disadvantaged 
areas, which tend to be more affected by teacher 
shortages (353). 

continuous 

initial 

to 

(346) AJBH,  2025.  Opinion  No.  6/2025  on  the  admission  and 
operational  practices  of  parallel  church-run  educational 
institutions and the school segregation of Roma children. 

(347) Act XCII of 2023. 

(348) Hermann, Z. & Czaller, L. 2025. Munkaerőpiaci Tükör 2025. 

(349) E.g. the ‘Launchpad’ (Dobbantó) programme for 15–16-year-
olds who have not completed primary education, ‘Workshop 
schools’ (Műhelyiskola). 

(351) Hungarian Central Statistical Office, 2026. 

23.1.1.32. Average gross earnings of teachers working in 
initial education and of professionals in the national 
economy and their share. 

(352) European Commission, 2025. Education and Training Monitor 

- Hungary, 2025. 

(350) Adamecz, A., 2024. A tankötelezettség változásának hatásai.  

(353) Varga J. (ed.), 2024, A közoktatás indikátorrendszere 2023. 

107 

 
 
 
Graph A13.1: Provision of induction to teachers 
upon joining school 

Source: OECD TALIS 2018, TALIS 2024 

Hungary  has  one  of  the  highest  shares 
of early school leavers and young people not 
in  employment,  education  or  training  (NEET) 
among persons  with  disabilities in  the  EU.  In 
2024, 41.2%  of  persons  with  some  or  severe 
disabilities were early school leavers (EU average: 
in  contrast  to  10.1%  of  the  total 
24.6%), 
In  addition,  young  persons  with 
population. 
disabilities  are  much  more  likely  to  be  NEET in 
Hungary  (59.0%)  than  in  the  EU  on  average 
(31.4%). As  for  adults,  the  share  of  persons  with 
disabilities  who  have  low  educational  attainment 
was  above  the  EU  average  (33.7%  vs  32.9%)  in 
2024,  and  the  share  of  persons  with  disabilities 
who  have  tertiary  attainment  was  well  below  the 
EU average (11.1% vs 21.4%). 

for 

students  with 

special 
Support 
educational  needs 
is  uneven  across  the 
country.  The  number  of  pupils  with  special 
educational  needs  (SEN)  has  been  growing  in 
recent years, especially the number of pupils with 
behavioural  and  learning  disorders (354).  While  the 
majority  of  children  with  SEN  are  educated  in 
mainstream  settings,  they  do  not  all  have  access 
to adequate levels of support, which impedes their 
social  and  economic  integration.  The  number  of 
special  education  professionals  almost  doubled 

between 2015 and 2025 (355).  Nonetheless, in the 
children  are 
northeast  of  Hungary, 
diagnosed with SEN compared to the southwest, in 
part  also  due  to  limited  access  to  diagnostic 
services (356).  

fewer 

is 

VET  participation 
increasing,  although 
some  students  and  regions  still  face  limited 
opportunities.  Medium-level  VET  participation  is 
above EU average (58.9% vs 52.9% in 2025), with 
all  post-secondary  non-tertiary  and  53.1%  of 
upper  secondary  students  enrolled 
in  VET 
programmes. The increased interest in VET can be 
attributed to two main factors. Firstly, more young 
people  are  opting  for  five-year  VET  courses 
(technikum),  which  lead  to  an  upper  secondary 
school  leaving  certificate  giving  access  to  higher 
education.  Secondly,  the  possibility  to  obtain  two 
VET  qualifications  free  of  charge  has  attracted 
more adults to VET, with over a quarter of all VET 
students being adult learners in the academic year 
2023/2024. Nevertheless, in 2024, over one in five 
secondary  VET  students  (10.8%  of  all  full-time 
upper  secondary  students)  were  still  enrolled  in 
three-year VET programmes that do not give direct 
access to further formal full-time studies.  In more 
disadvantaged  counties,  a  higher  share  of 
students  tends  to  participate  in  three-year  VET 
programmes.  For  instance,  in  Somogy  county, 
20.1%  of  upper  secondary  students  participate  in 
these  programmes,  while  in  Budapest,  this  share 
stood at 3.8% in 2024/2025 (357). In 2025, a pilot 
project,  co-funded  from  ESF+)  was  launched  to 
facilitate progression of 3-year VET students to 5-
year  VET  (’technikum’),  its  results  are  still  to  be 
seen. 

VET  students’  average  performance  in  basic 
skills  tends to  be  weaker,  having  a  negative 
impact  on  long-term  employability. According 
to PISA 2022, Hungarian students have one of the 
largest gaps in average mathematics performance 
between  general  and  vocational  programmes, 
in  the  socio-
largely  related  to  differences 

(355) Public Education Information System, Statistical data 
collection: Number of employees directly assisting in 
educational and training work in primary public education, 
opening data (KIR-STAT 2015-2025, a02t57). 

(356) Hegedűs, R., 2023. Sajátos nevelési igényű gyermekek, 

tanulók számának területi és statisztikai elemzése, Educatio 
32 (2), pp. 228–246 (2023). 

(354) Between  2021/2022  and  2024/2025,  the  number  of 
students  diagnosed  with  SEN  rose  by  12.5%  (Hungarian 
Central Statistical Office, 2025, Table 23.1.1.6). 

(357) Hungarian Central Statistical Office, 2026. A középfokú 

nappali oktatásban tanulók megoszlása iskolatípusok szerint 
vármegyénként, 2024/2025. 

108 

23.432.652.566010203040506070HUEUHUEU20182024% 
  
 
 
economic  composition  of  the  two  educational 
paths.  Three-year  VET  programmes  are  more 
affected by low achievement, have a higher share 
of  pupils  from  disadvantaged  socio-economic 
background and have higher dropout rates. Despite 
low educational outcomes, the employment rate of 
people  aged  20-34  who  had  recently  completed 
VET was above the EU average (84.2% vs 80.0%) 
in 2024, related to a tight labour market. In 2025, 
the government relaunched a major project funded 
by  the  ESF+  to  improve  VET  pupils’  educational 
performance  and  prevent  dropout, 
including 
through  small-group  mentoring  for  low-achievers. 
Further structural measures such as increasing the 
taught  time  dedicated  to  basic  skills  for  all  VET 
students  and  providing  additional  pedagogical 
support  for  low  achievers  could  help  tackle  low 
VET achievement.  

Participation of VET students in dual learning 
and  access  to  university  could  be  improved, 
especially  among  vulnerable  groups. In  2025, 
43.1% of people who had recently graduated from 
VET  had  been  exposed  to  work-based  learning 
during  their  studies.  This  represents  an  increase 
but remains significantly below the EU average of 
66%.  Between  2020  and  2025,  cohesion  policy 
funds  supported  setting  up  29  sectoral  training 
centres  and  five  sectoral  knowledge  centres  to 
improve  VET  students’  access  to  dual  learning. 
These  centres  will  build  on  cooperation  between 
VET  centres  and  businesses,  and  the  knowledge 
centres also involve universities. 

adults 

seriously 

low  basic  skills  and  persistent 
Adults’ 
hamper 
inequalities 
competitiveness. Hungarian 
perform 
relatively poorly in literacy, numeracy and problem 
solving according to the 2023 Programme for the 
International  Assessment  of  Adult  Competencies 
(PIAAC) survey. People in the 16-24 age group who 
are  still  enrolled  in  initial  education  or  have 
recently  completed  it  score  significantly  worse, 
signalling  potential  issues  with  the  quality  of 
education. Almost  1 in 4 adults are low-achievers 
in both numeracy and literacy (24.1%; EU average: 
21.8%),  and  the  impact  of  a  person’s  parents’ 
educational  background  remains  significant  into 
adulthood.  Educational  attainment  significantly 
influences  labour  market  outcomes  and  earnings. 
Adults’ low basic skills currently do not feature in 
the  government’s  policy  agenda.  An  ESF+  call  for 
proposals  aims  to  improve  the  basic  skills  of 
people  with 
low  educational  attainment  and 
unemployed people. Nevertheless, the employment 

prospects  of  low-skilled  adults  could  be  improved 
with  a  permanent  structure,  linked  to  the  public 
employment  service  (see  Annex  11),  supporting 
adults’ basic skills development. 

in 

the 

performance 

Science,  technology  and  digital  skills  supply 
could  be  significantly 
improved.  While 
medium-level  vocational  education  enrolment  in 
STEM-related pathways was slightly above the EU 
average  in  2024  (38.77%  vs  36.63%),  female 
participation  was  below  the  EU  average  (12%  vs 
15.9%).  The  share  of  students  enrolled  in  STEM 
fields at the tertiary level was 23.8% in 2023 (vs 
an EU average of 26.9% and a proposed EU target 
of  32%),  and  women  are  particularly  under-
represented  at  only  25.4%  (EU  average:  32.2%). 
37% of eighth graders lack basic digital skills (EU 
target:  below  15%)  –  despite  Hungary’s  above-
average 
International 
Computer  and  Information  Literacy  Study  (ICILS). 
The share of adults with at least basic digital skills 
decreased  slightly  from  58.9%  in  2023  to  57.3% 
in 2025, which is below the EU average of 60.4%. 
Adults  with  low  educational  background  (35.5%), 
(44.8%)  and 
people 
unemployed  people  (47.1%)  were  also  less  likely 
to  have  at  least  basic  digital  skills  than  their  EU 
peers. The share of ICT specialists in employment 
increased  slightly  in  2025  but  remains  below  the 
EU  average,  and  the  share  of  female 
ICT 
specialists  remains  one  of  the  lowest  in  the  EU 
(see  Annexes  4  and  11).  At  the  same  time,  IT 
specialists are in relatively high demand, especially 
in  Budapest.  To  tackle  the  shortages  of  digital 
skills  and  specialists,  Hungary  is  investing  over 
EUR 230 million  of  ESF+  funds  in  digital  skills 
development  at  different  levels,  aiming  to  reach 
above  500 000  participants,  including  180 000 
disadvantaged adults.  

rural  areas 

living 

in 

is 

essential 

Maintaining  the  strong  performance  in  adult 
learning 
for  Hungary’s 
competitiveness,  but  vulnerable  groups  still 
lack  targeted  support. With  62.2%  of  adults 
participating  in  learning  over  the  previous  12 
months,  Hungary  performed  well  above  the  EU 
average  (39.5%) 
its 
national  target  of  60%  by  2030.  However,  adults 
with  a 
level  of  educational  attainment, 
unemployed people and people outside the labour 
market  participate  significantly  less  in  learning 
(42.1%,  20.7%  and  18.6%,  respectively).  The 
participation  of  workers  employed  in  energy-
intensive  sectors  decreased  to  7.5%  in  2025  and 
is among the lowest in the EU. The adult learning 

in  2022  and  exceeded 

low 

109 

 
education 

administrative  data  shows  only  a  slight  increase 
(around 1 pp) since then in the number of students 
enrolled  in  secondary  education  giving  access  to 
(361). 
higher 
study 
programmes  is  another  factor  for  successfully 
widening  access:  while  applications  to  higher 
education  have  increased  by  42%  between  2020 
and  2025,  government-funded  placements  were 
only increased by 33% (362). 

Expanding 

European 

legal  framework  sets  out  the  main  features  of  a 
new  adult  learning  fund  but  does  not  yet  specify 
its  source  of  funding.  The  planned  piloting  of 
individual  learning  accounts  with  ESF+  support 
could improve access to adult learning across the 
board, including for vulnerable groups, especially if 
coupled with better career guidance. Similarly, the 
implementation of micro-credentials introduced in 
2024  would  benefit  from  a  single  transparent 
approach  across  educational  sectors.  As  part  of 
the 
Framework 
Recommendation’s  implementation,  Hungary  has 
yet to connect the national qualifications database 
to  Europass.  Increasing  synergies  between  the 
existing  skills  forecasting  tools  (Munkaeropiaci 
Elorejelzo  Rendszer),  graduate  tracking  systems 
(Diplomas  Palyakoveto  Rendszer,  Szakkepzesi 
Palyakovetesi  Rendszer)  and  skills  councils,  and 
using  them  systematically  in  policymaking,  and 
leveraging  related  research  could  also  bring  good 
results  in  governing  initial  and  adult  learning 
policy. 

Qualifications 

Tertiary  education  attainment  remains  low, 
despite  excellent  employment  prospects 
after graduation. In 2025, only 32.6% of people 
aged 25-34 held a tertiary degree, well below the 
EU  average  of  44.8%  and  the  EU-level  target  of 
45%.  93.2%  of  recent  tertiary  graduates  are 
employed  (EU  average:  87%),  indicating  high 
demand.  Between  2002  and  2022,  the  wage 
premium  for  individuals  with  a  master’s  degree 
continuously  exceeded  200%  of  the  earnings  of 
those  with  below  lower  secondary  educational 
attainment (358). Yet, social mobility in and through 
higher  education  is  persistently  low,  including  in 
STEM  fields (359).  In  recent  years,  Hungary  has 
taken  steps  towards  opening  up  higher  education 
for  under-represented  groups,  for  example  by 
setting  an  objective  to  increase  the  proportion  of 
students  from  socio-economically  disadvantaged 
backgrounds  or  by  launching  VET  programmes  in 
cooperation with universities. In 2023, 40% of VET 
students  were  enrolled  in  programmes  not  giving 
and 
access 

education 

tertiary 

(360), 

to 

(358) Varga, J., 2025. Az iskolai végzettség kereseti hozama 

Magyarországon, 2002–2022. In Z. Hermann & J. Varga 
(Eds.), Munkaerőpiaci tükör 2023–2024: Befektetés az 
emberi tőkébe Magyarországon. 

(359) European Commission 2025, Education and Training Monitor 

(361)Hungarian  

Central Statistical Office, 2026. Oktatási 

– Hungary, 2025. 

(360) OECD, 2025. Education at a Glance 2025: OECD Indicators, 

adatok, 2025/2026 (előzetes adatok) – Központi Statisztikai 
Hivatal  

OECD Publishing, Paris.  

(362) Felvi.hu, Microsoft Power BI 

110 

 
 
 
 
ANNEX 14: SOCIAL SCOREBOARD 

Table A14.1:Social Scoreboard for Hungary 

Update of 4 May 2026. Members States are categorised based on the Social Scoreboard according to a methodology agreed with 
the EMCO and SPC Committees. Please consult the Annex of the Joint Employment Report 2026 for details on the methodology 
(https://employment-social-affairs.ec.europa.eu/joint-employment-report-2026_en). 
Source: Eurostat 

111 

62.29.357.310.68.14.6881.14.41.5170.819.523.023.124.35.321.11.4Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsSocial protection and inclusionShare of individuals who have basic or above basic overall digital skills(% of the population aged 16-74, 2025)Impact of social transfers (other than pensions) on poverty reduction(% reduction of AROP, 2025)Children aged less than 3 years in formal childcare (% of the under 3-years-old population, 2025)Self-reported unmet need for medical care (% of the population aged 16+, 2025)Disability employment gap (percentage points, population aged 20-64, 2025)Housing cost overburden (% of the total population, 2025)Adult participation in learning (during the last 12 months, excl. guided on the job training, % of the population aged 25-64, 2022)Equal opportunities and access to the labour marketBest performersBetter than averageEarly leavers from education and training(% of  the population aged 18-24, 2025)Young people not in employment, education or training(% of the population aged 15-29, 2025)Gender employment gap(percentage points, population aged 20-64, 2025)Income quintile ratio (S80/S20, 2025)At risk of poverty or social exclusion (AROPE) rate (% of the total population, 2025)Employment rate(% of the population aged 20-64, 2025)Unemployment rate(% of the active population aged 15-74, 2025)Long term unemployment(% of the active population aged 15-74, 2025)Gross disposable household income (GDHI) per capita growth(index, 2008=100, 2024)At risk of poverty or social exclusion (AROPE) rate for children(% of the population aged 0-17, 2025) 
 
 
 
  
 
 
ANNEX 15: HEALTH AND HEALTH SYSTEMS 

Hungary’s  health  system  faces  significant 
challenges  that  negatively  affect  the  health 
its  population,  social  fairness  and 
of 
productivity.  Challenges 
life 
expectancy,  resulting  from  high  treatable  and 
preventable  mortality.  These  issues  are  mainly 
caused  by:  (i) suboptimal  cost-effectiveness  and 
funding  of  the  health  system;  (ii) an  insufficient 
focus  on  disease  prevention  and  outpatient  care; 
and (iii) shortages of healthcare workers. 

include 

low 

Graph A15.1: Treatable mortality 

Age-standardised death rate - mortality that could be avoided 
through optimal quality healthcare. 
Source: Eurostat (indicator: hlth_cd_apr) 

the  highest 

Life expectancy at birth in Hungary was still 
among  the  lowest  in  the  EU  in  2024,  and 
2022  avoidable  mortality  –  preventable  or 
treatable  –  was  among  the  highest.  The 
gender  gap  is  also  among  the  widest  in  the  EU. 
Women  can  expect  to  live  longer  than  men 
(6.3 years longer in 2024). Treatable mortality was 
the  EU,  suggesting 
in 
among 
shortcomings  in  the  effectiveness  of  the  health 
system.  Moreover,  Hungary  is  one  of  the  few  EU 
countries  where  mortality  from  treatable  causes 
has  improved  only  slightly  over  the  last  10 years 
(see  Graph A15.1).  Diseases  of  the  circulatory 
system  –  cardiovascular  diseases  (CVDs)  –  and 
cancer  remain  the  leading  causes  of  death,  with 
the  former  accounting  for  more  than  48%  of  all 
deaths  in  Hungary  in  2023,  the  latter  24%. 
Standardised death rates from cancer were one of 
the  highest 
in  the  EU.  Suicide  rates  have 
decreased  over  time  in  Hungary  but  are  still 
among  the  highest  in  the  EU.  Unmet  needs  for 

mental  healthcare  have  continued  to  increase  in 
Hungary since the pandemic (363). 

Preventable  mortality  was  close  to  double 
the EU average in 2023. Hungary has increased 
investment  in  disease  prevention  over  the  last 
10 years, from a 2.7% share of spending in 2014 
to  3.4%  in  2023,  but  it  remains  below  the  EU 
average  of  3.7%.  A  national  public  healthcare 
programme  has  been  developed  but  finances  are 
lacking for implementation. Hungary participates in 
several  joint  actions  funded  by  EU4Health  aimed 
at  reducing  the  burden  of  cancer,  cardiovascular 
diseases, diabetes and respiratory diseases. These 
actions  include  JACARDI,  JA-SAFE,  EUnetCCC  JA, 
JANE-2,  SOLACE  and  EUCanScreen  (364).  Hungary 
also benefits from EU4Health direct grants for the 
prevention of non-communicable diseases (NCDs), 
the  establishment  of  networks 
for  cancer 
infrastructure  and  expertise,  and  implementation 
and innovative approaches to cancer screening.  

Preventable  mortality  in  Hungary  is  closely 
linked  to  behavioural  risk  factors  (365). 
Hungary continues to have the highest prevalence 
of preventable deaths from lung cancer in the EU. 
Both  adults  and  adolescents  report  one  of  the 
highest smoking rates in the EU (25% of adults in 
2022 vs 18% in the EU on average). The smoking 
rate  has  declined  more  slowly  than  in  other  EU 
countries  over  the  last  two  decades.  In  addition, 
reported  smoking 
among  adolescents,  33% 
e-cigarettes  in  the  past  month  –  one  of  the 
highest rates in the EU, where the average rate is 
21%.  Hungarian  adults  also  have  one  of  the 
fruit  and 
lowest 
vegetables in  the  EU  and have  among  the lowest 
levels  of  physical  activity  outside  working  time  in 
the  EU.  Poor  dietary  habits  translate  into  high 
rates  of  obesity:  21.8%  of  the  population  was 
obese  in  2022.  Overweight  and  obesity  rates 
among  adolescents  have  also  increased  in  the 

rates  of  consumption  of 

(363) OECD/European Observatory on Health Systems and Policies 
(2025), Country Health Profile 2025: Hungary. State of 
Health in the EU. 

(364) JACARDI - Joint Action on CARdiovascular diseases and 

DIabetes, JA-SAFE - Joint Action on Health Promotion and 
Disease Prevention including Smoke and Aerosol Free 
Environments, EUnetCCC JA - The European Comprehensive 
Cancer Centre Network, JANE-2 - Joint Action on Networks of 
Expertise on Cancer, SOLACE - Strengthening the screening 
of Lung Cancer in Europe, EUCanScreen - Implementation of 
cancer screening programmes. 

(365) Country Health Profile 2025: Hungary - see earlier footnote. 

112 

182.7173.2179.6188.9178.4172.394.889.291.793.389.786.8201420192020202120222023per 100 000 populationHungaryEU 
 
     
 
 
 
Table A15.1:Key health indicators 

*The EU average is weighted for all indicators except for doctors and nurses per 1 000 population, for which the EU simple 
average is used based on 2023 data (or latest available). Doctors’ density data refer to practising doctors in all countries except 
Greece, Portugal (licensed to practise) and Slovakia (professionally active). Density of nurses: data refer to practising nurses (EU 
recognised qualification) in most countries except Portugal (licensed to practice) and Slovakia (professionally active). Latest data 
update on nurses for Belgium and Sweden: 2022; for France: 2021; for Luxembourg: 2017. 
** latest available 10-year trend: ratio 2023/2014 or 2024/2013; a factor of 2.00 means that it has doubled in 10 years. 
***’Available hospital beds’ covers somatic care, not psychiatric care. 
Source: Eurostat 

past  decade,  rising  from  15%  in  2010  to  25%  in 
2022  –  one  of  the  highest  in  the  EU.  Both  adults 
and adolescents also report a high level of alcohol 
consumption.  To  support  physical  activity,  the 
activity  prescription  programme  was  launched  in 
2024  (366).  The  programme  is  being  piloted  by 
30 municipalities  and  allows  general  practitioners 
(GPs) to prescribe physical activity to help prevent 
and  treat  lifestyle-related  diseases  and  promote 
active  living.  Municipalities  will  raise  awareness 
among  GPs  and  the  public,  working  with  local 
sports facilities to offer free exercise sessions for 
patients with a prescription.  

Poor  health  outcomes  negatively  affect 
and 
Hungary’s  workforce, 
productivity 
competitiveness. 
In  Hungary,  mortality  at 
working  age  as  a  proportion  of  total  mortality  is 
among  the  highest  in  the  EU,  exacerbating  the 
effects of population ageing on a shrinking labour 
force.  Gains 
in  health  status  from  further 
prevention  investment  could  alleviate  this  impact. 
As regards NCDs, it is estimated that up to 80% of 
CVDs and type 2 diabetes in the world, up to half 
of  cancer  cases,  and  most  chronic  lung  diseases 
can be prevented (367). For example, preventing all 
deaths  from  NCDs  in  Hungary  –  in  particular 
in 
cancer  –  would  result 
working-life  years  from  2022  to  2040  (vs  0.9% 
for  the  EU,  see  Graph A15.2).  Cancer  in  particular 

in  a  1.8%  gain 

(366) Country Health Profile 2025: Hungary - see earlier footnote. 

has a large impact on workforce participation and 
productivity  (7).  The  gain  in  working-life  years  is 
one  of  the  highest  potential  increases  across 
Member  States  and  would  save  about  1 676 600 
in  Hungary  over  2022-2040.  This 
life  years 
increase  would  mitigate  an  otherwise  expected 
6.4% 
to 
demographic  ageing  of  the  2022  population  (7% 
for the EU) (368). 

the  workforce  due 

reduction  of 

Graph A15.2: Potential gains in working-life years 
from prevention, between 2022 and 2040 

Source: EC/OECD, State of Health in the EU: 2025 Synthesis 
Report 

health 

system 

strongly 
Hungary’s 
hospital-centred. Health spending per inhabitant 
increased  in  Hungary  over  the  preceding  decade 
but remained one of the lowest in the EU in 2023. 

is 

(367) NCD Alliance, 2025: Noncommunicable Diseases (NCDs) 

(368) OECD/EC (2025), EU Country Cancer Profiles Synthesis Report 

overview | NCD Alliance. 

2025. 

113 

0.8%0.5%0.8%0.3%0.2%0.1%0.0%0.5%1.0%1.5%2.0%HungaryEUCancerCVDDiabetes and chronic lower respiratory disease2020202120222023202410-year change**EU average* (latest year) Cancer mortality per 100 000 population320.9309.9312.2315.9n.a.0.91233.1 (2023)Mortality due to circulatory diseases per 100 000 population 731.4 722.8 732.1 710.2n.a.0.93313.0 (2023)Current expenditure on health, purchasing power standards, per capita1 7011 8921 8921 9252 0501.473834.9 (2023)Public share of health expenditure, % of current health expenditure 70.8 72.5 73.0 73.7 73.21.0780.6 (2023)Spending on prevention, % of current health expenditure 3.77.62.93.4n.a.1.263.7 (2023)Available hospital beds per 100 000 population*** 606 606 592 579n.a.0.93440 (2023)Doctors per 1 000 population*3.23.33.53.6n.a.1.074.3 (2023)*Nurses per 1 000 population* 4.3 4.3 4.4 4.5n.a.0.907.6 (2023)*Mortality at working age (20-64 years), % of total mortality19.921.019.118.618.20.7814.3 (2023)Consumption of antibiotics in the community and hospital sectors,      defined daily doses per 1 000 inhabitants 11.2 11.9 14.4 14.2 13.70.8720.3 (2024) 
 
     
 
 
     
 
(22%).  Hungary 

The  largest  share  of  Hungary’s  health  spending 
goes  on  hospital  services  (more  than  a  third  of 
total  health  expenditure),  while  less  than  a  third 
goes  on  outpatient  care.  Medical  goods  (retail 
pharmaceuticals  and 
therapeutic  appliances) 
accounted  for  a  quarter  of  health  spending.  23% 
of total health spending comes from out-of-pocket 
(OOP)  payments  –  well  above  the  EU  average  of 
16%.  The  largest  share  of  OOP  payments  is 
accounted  for  by  pharmaceuticals  (51%)  and 
outpatient  medical  care 
is 
implementing  measures  to  increase  access  to 
outpatient  care.  Under  the  Hungarian  national 
eHealth  infrastructure  (EESZT),  new  rules  were 
introduced 
the  digital 
to 
appointment  booking  system  (369).  Hungary  can 
benefit from implementing the results of the 2024 
Technical  Support  Instrument  project,  which  aims 
to  achieve  a  comprehensive  revision  of  the 
governance,  costs,  financing  parameters  and 
classification  system  in  hospital  care  in  Hungary. 
These  initiatives  are  still  ongoing  and  have  been 
extended to 2026. At the same time, reorganising 
primary  care  from  single  to  group  practices  aims 
to strengthen and enhance capacity for outpatient 
care (370).  

in  2025 

improve 

Hungary’s  pharmaceutical  sector 
is  of 
moderate  economic  significance.  Employment 
in pharmaceutical manufacturing in Hungary ranks 
among  the  highest  in  the  EU  (see  Annex 4).  In 
2024, Hungary reported a number (18.7) of clinical 
trials  per  million  population  close  to  the  EU 
average.  The  industry  also  maintains  a  modest 
share of extra-EU exports (7% in 2025 vs 14% for 
the EU average), ranking close to the median of EU 
countries. 

Relative  to 
its  population,  Hungary  had 
among  the  highest  number  of  hospital  beds 
in  the  EU  in  2023.  This  is  despite  an  average 
length  of  stay  and  especially  occupancy  rate  that 
are  among  the  lowest  in  the  EU  (371).  Meanwhile, 
the  trend  of  low  investment  in  the  health  sector 
continued. Hungary had one of the lowest levels of 
health infrastructure investment per capita among 
EU countries in 2024 and on average since 2015. 
This  is  reflected  in  the  low  availability  of  key 
diagnostic  technology:  Hungary  has  one  of  the 

(369) Country Health Profile 2025: Hungary - see earlier footnote. 

(370) Country Health Profile 2025: Hungary - see earlier footnote. 

(371) Country Health Profile 2025: Hungary - see earlier footnote. 

lowest rates of medical imaging devices per capita 
in  the  EU.  The  EU  cohesion  policy  (2021-2027) 
currently 
(EU 
co-financed  share)  in  Hungary  to  healthcare  for 
health infrastructure.  

EUR 156 million 

dedicates 

Hungary’s  estimated  domestic  spending  per 
capita  on  prevention,  preparedness  and 
response is  among  the lowest  in  the  EU  (372). 
Another  significant  challenge  for  hospitals  in 
particular  is  antimicrobial  resistance  and  related 
multi-resistant  infections.  The  consumption  of 
antibiotics  in  Hungary  decreased  slightly  between 
2023 and 2024, but continued efforts are needed 
to  meet 
recommended  national 
target (373). 

the  2030 

in 

Persistent  shortages  of  health  professionals 
limit the provision of healthcare. In 2023, the 
number of practising nurses per 1 000 population 
was  among  the  lowest  in  the  EU  and  has 
decreased over the last decade. Moreover, 24% of 
nurses were 55 years of age or over, while around 
16% were 34 years or under in 2023, among the 
the  EU.  Hungary  also  had  a 
lowest 
comparatively low number of nursing graduates in 
relation to its population. Moreover, fewer than 1% 
of 15-year-olds aspire to become nurses (374). For 
several  years,  the  density  of  doctors  in  Hungary 
has been below the EU average of 4.3 per 1 000. 
Moreover, the number of GPs per inhabitant is one 
of the lowest in the EU, and their share is very low 
compared  with 
uneven 
geographical 
healthcare 
professionals  is  also  an  issue  (375)  (see  Annex 18 
and  Annex 12).  Healthcare  workers  in  Hungary 
report among the highest rates of depression, with 
39%  of  respondents  meeting  the  threshold  for 
probable  major  depressive  disorder,  compared 
with 8% for the general population (376). Also, close 
to  half  of  healthcare  workers  reported 
low 
emotional  well-being.  All  these  characteristics 

distribution 

specialists. 

The 

of 

(372) OECD Health Statistics 2025. 

(373) National target set by the Council Recommendation on 

stepping up EU actions to combat antimicrobial resistance in 
a One Health approach, 2023/C 220/01. 

(374) Country Health Profile 2025: Hungary - see earlier footnote. 

(375) Pál, V., et al. (2022): Az Egészségügyi Dolgozók Területi 

Eloszlása Magyarországon: Mintázatok, Okok És Különböző 
Narratívák’. Tér-Gazdaság-Ember 10(2):9–31. 

(376) WHO Regional Office for Europe (2025), Mental Health of 
Nurses and Doctors survey in the European Union, Iceland 
and Norway.  

114 

 
 
 
pose  a  significant  challenge  to  the  long-term 
accessibility of health services and, more broadly, 
the  care  system  (see  Annex 11).  Government 
actions  to 
improve  the  retention  of  health 
professionals  include  phased  salary  increases  for 
doctors,  dentists,  pharmacists  and  nurses  (since 
2021)  and  rewards  of  up  to  40%  for  good 
performance  (since  2022).  Since  1 March  2024, 
the  base  salaries  of  health  professionals  have 
increased  by  an  average  of  20%  (377).  The 
government  also  provides 
to 
strengthen the supply of healthcare professionals. 
In  January  2026  it  launched  a  home  support 
programme  for  healthcare  workers  in  the  public 
healthcare  system.  Two  new  reforms  have  also 
been  implemented  in  Hungary  to  strengthen  the 
competences of health professionals and GPs (378). 
Hungary  participates  in  several  EU4health-funded 
projects providing training for the health workforce 
(379). 

scholarships 

Hungary’s  health  system  is  among  the  more 
digitally  mature 
the  EU,  despite 
in 
socio-economic  disparities  in  the  use  of 
digital health tools. In 2023, health spending on 
information  and  communication  technology  (ICT) 
was  EUR 0.6 million  per  100 000  population, 
below  the  EU  average  of  EUR 2.3 million  per 
100 000 (380). Hungary has made limited progress 
in  digital  health  investments  relative  to  other 
countries.  Nevertheless,  the  shares  of  Hungarians 
accessing  their  personal  health  records  online  or 
using  online  health  services  (excluding  phone) 
instead  of 
increased 
in-person  consultations 
steeply  between  2020  and  2024  and  are  above 
the  EU  average.  However,  there  are  significant 
socio-economic  disparities  in  the  use  of  digital 
health  tools.  The  percentage  of  people  with  a 
lower 
level  of  education  who  seek  health 
information,  book  a  medical  appointment  or 
access  electronic  health  records  online  is  much 
lower  than  that  of  people  with  a  high  level  of 
education. This education gap in Hungary is one of 
the widest in the EU. Hungary is piloting AI-based 
decision support in pathology to improve colorectal 
cancer  screening.  An  AI  committee  oversees 

(377) Country Health Profile 2025: Hungary - see earlier footnote. 

(378) 51/2025 (XII.22.) Decree of the Ministry of Interior - National 
Collection of Legislation 13/2025 (IV.17.), Decree of the 
Ministry of Interior - National Collection of Legislation. 

(379) EU Funding & Tenders Portal. 

(380) Country Health Profile 2025: Hungary - see earlier footnote. 

progress  and  plans  system-wide  integration  of  AI 
technologies  (381).  Hungary  is  also  developing  a 
regulatory  framework  for  telemedicine.  Hungary 
receives  EU  funding  through  the  DQ4HDAB  and 
XDSI_NS  projects  funded  by  EU4Health  (382).  The 
first aims to improve the quality of health data in 
Hungary to promote secondary use of health data, 
while 
service 
infrastructure.  

expands 

digital 

latter 

the 

(381) Country Health Profile 2025: Hungary - see earlier footnote. 

(382) DQ4HDAB - Enhancing Data Quality for Use by the Health 
Data Access Body, XDSI_NS - Expansion of MyHealth@EU 
Digital Service Infrastructure (eHDSI) with new services. 

115 

 
 
 
ANNEX 16: HOUSING 

the 

Limited  progress  has  been  made 
in 
country-specific 
2025 
addressing 
recommendations.  In  2025,  Hungary  received 
country-specific  recommendations  on  targeting 
support  measures  in  the  housing  sector  at  low-
income  households  and  increasing  the  housing 
supply,  also  for  social  housing.  Some  measures 
have  been  put  in  place  but  their  potential  to 
successfully  target  low-income  households  and 
social  housing  is  questionable  given  that  the 
proportion  of  social  housing  stock  is  low  and 
declining. 

As  housing  policy  in  Hungary  has  been 
oriented towards homeownership, there is no 
national 
rental  housing  policy. 
inadvertently 
Ownership-oriented  policies  have 
boosted  demand  and  prices  without  expanding 
supply. 

social 

House  prices  have  increased  faster  than  in 
any  other  EU  country  and  rents  have  also 
risen  sharply,  outpacing  wage  growth  over 
the  last  decade.  Many  households  –  including 
middle-income families  – spend a high proportion 
of their income on housing, pushing large numbers 
into housing cost burdens or housing poverty. 

Hungary  lags  significantly  behind  in  building 
new  homes.  The  shortage  is  especially  acute  in 
urban  centres  and  industry  hotspots,  where  the 
limited supply drives demand and pushes prices up 
further. 

affordability 

Housing 
challenges 
disproportionately  affect  vulnerable  groups. 
The  house-price-to-income  levels  are  among  the 
highest  in  the  EU.  The  proportion  of  people  who 
spend  over  40%  of  their  disposable  income  on 
housing costs has also increased and now exceeds 
the  EU  average  of  8.2%.  Arrears  are  driven  by 
utility bills. 

Housing  quality  has  improved  overall,  but 
severe  housing  deprivation  is  still  relatively 
high  and  the  energy  efficiency  of  dwellings 
of low-income families is poor. Energy poverty 
is relatively low, yet people with an income under 
the poverty threshold  were four times more likely 
to  be  unable  to  keep  their  homes  adequately 
warm than those with a higher income. 

Housing market developments 

Over the past decade, house prices increased 
In  2013-2024,  nominal  house 
significantly. 
prices  grew  by  265%,  the  largest  increase  in  the 
EU  (Graph  A16.1).  In  2025,  the  nominal  house 
price  growth  attained  18.3%  year  on  year. 
Regional  differences  in  house  and  rental  price 
levels  remain pronounced.  The  growing  difference 
between housing prices and rents (29.7% in 2023, 
37.4%  in  2025)  indicates  an  overheated  housing 
market. 

Subsidised  mortgage  schemes  supported 
affordability  but  fuelled  overvaluation  in 
recent years. The price-to-income ratio increased 
by  16.7%  in  2015-2024  (EU  average:  5.6%).  The 
proportion  of  household  income  spent  on  interest 
payments stood at 1.7% in 2024, below the 2000-
2024  average  of  2.7%.  This  can  be  attributed  to 
preferential 
the 
overvaluation gap at country level reached 22% in 
standard  European 
the 
(based  on 
2025 
Commission methodology). 

mortgages. 

However, 

Graph A16.1: House prices, rents and price-to-
income evolution in HU and EU27 since 2005 

Source: Eurostat 

in 

The construction of new homes rose strongly 
until  2023,  but  productivity 
the 
construction  sector  remains  low.  Productivity 
in  construction,  measured  by  gross  value  added 
per  worker,  has  been  consistently  low,  averaging 
~30%  below  the  economy-wide  average  over  the 
past  decade.  Productivity  in  construction  is  also 
well below the EU average, in spite of a moderate 
convergence in real terms, improving from 28% of 
the EU average in Q4-2016 to 43% in Q3-2025. 

116 

501001502002503003504004500507091113151719212325Index (2005 = 100)Nominal prices HUNominal prices EU27Rental prices HURental prices EU27Price-to-income ratio HUPrice-to-income ratio EU27 
 
  
 
 
Graph A16.2: House supply indicators in HU since 
2005 

Graph A16.3: Bank loans to households for house 
purchase 

Source: Eurostat 

Source: MNB 

Strong housing demand together with limited 
supply  has  recently  led  to  further  increases 
in  house  prices.  By  2024,  with  more 
accommodative  financial  conditions  and 
the 
introduction  of 
the  Family  Housing  Subsidy 
(CSOK+)  facility,  there  was  a  rebound  in  housing 
demand,  which  was  further  boosted  in  2025  by 
the  Home  Start  programme  (383)  (Graph  A16.3). 
Demographic trends  and a  large  housing  stock  of 
4.6  million  dwellings  mean  that  the  housing 
construction gap is rather low, at 38 684 dwelling 
units needed by 2035 (384). However, most demand 
is  concentrated  in  the  capital  and  metropolitan 
region, which lack sufficient supply. 

Structural policies 

to 

are 

helping 

A  new  set  of  national  building  and  planning 
streamline 
rules 
administrative procedures. Hungary has applied 
new administrative rules to speed up the approval 
of  large  residential  developments  linked  to  its 
affordable  housing  loan  schemes  (e.g.  the  Home 
Start  programme).  In  addition,  a  new  set  of 
national  building  and  planning 
requirements 
(Településrendezési  és  Építési  Követelmények 
Alapszabályzata)  has  been  implemented  in  an 
attempt  to  reduce  uncertainty  for  builders  and 
investors  by  modernising 
regulation  of 
construction in Hungary. 

the 

different 

housing-related 

While 
tax 
incentives  exist,  only  a  handful  of  them 
tax 
affect  housing  costs.  Housing-related 
incentives  are  a  mix  of  targeted  VAT  reductions, 
limited  transfer  tax  reliefs,  employer  benefit 
provisions  and  associated  family/housing  subsidy 
structures.  The  tax  system  currently  includes  a 
handful  of  tax‑related  incentives  and  preferential 
treatments that affect housing costs, though many 
family  support  or 
are 
into  broader 
specifically 
employment  benefits,  and  not 
structured as an affordable housing tax policy. 

tied 

(383) MNB November 2025 Housing Market Report. 

(384) Balouktsi et al. (2026) Housing investment needs in the EU, 

JRC Technical Report 144703. 

There is  no  nationwide rent control  law that 
caps rents or regulates increases on a broad 
basis. For rent contracts in general, landlords 
and  tenants  rely  mainly  on  private  contracts, 
market conditions and general civil law. For short-

117 

01234560501001502002503003504000507091113151719212325% of GDPIndex (2005 = 100)Residential building permits in m2, indexResidential buildings producer prices, indexInvestment in dwellings (right-hand side axis)01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0000500001000001500002000002500003000002223242526millions EURPure new loansRenegotiationTotalStock (rhs) 
  
 
  
term  rentals,  Budapest  and  some  municipalities 
rules  by  applying 
tighten 
have  begun 
moratoriums,  bans  or  limitations  on  new  short-
term rental registrations. 

to 

Measures  that  lower  borrowing  costs  and 
entry  barriers  aim  to  make  mortgages  more 
accessible,  especially  for  middle-income  and 
young  buyers  with  own  resources.  Legislative 
changes that would allow mortgage on new builds 
to be registered earlier in the process are expected 
to boost real-estate development and help buyers 
access  subsidised  loans.  However,  support  for 
home  ownership 
tax 
incentives  tends  to  inflate  property  prices  by 
increasing  buyer  demand  without  expanding 
supply at the same pace. 

through  subsidies  and 

Local governments have discretion over how 
to  address  affordable  housing 
locally. 
Budapest  stands  out  as  the  most  active  with 
measures  to  improve  housing  affordability.  These 
measures  include  proposals  for  programmes  (e.g. 
municipal  housing  agencies)  using  public  and 
existing  private  housing  assets  to  increase  the 
number of affordable dwellings  for residents. The 
capital also has district level  housing policies that 
indirectly affect local housing supply and cost. 

Structural 
issues,  affordability  pressures, 
regulatory  and  policy  gaps  and  demand-
supply  mismatch  make  the  development  of 
social  and  affordable  housing  a  challenge. 
Social/municipal  housing  made  up  only  0.8%  of 
the  housing  stock  in  2024.  30-35%  of  the 
population experiences housing poverty by at least 
(385)  and  a 
one  of  the  standard 
‘generation  rent’  (young  people  ending  up  renting 
as they cannot afford to buy) is emerging (386). 

indicators 

There  is  a  significant  proportion  of  vacant 
houses  that  often  need  major  quality 
improvements  before  they  can  be  put  back 
on  the  market.  These  570 000  vacant  homes 
represent 12-13% of the total housing stock (387). 
Many  of  these  dwellings  are  in  poor  condition  or 
are  in  areas  where  demand  is  low,  which  makes 

(385) Habitat for Humanity 2025, Éves lakhatási jelentés. 

(386) Csizmady, Kőszeghy (2022) ‘Generation Rent’ in a Super 
Homeownership Environment: The Case of Budapest. 

the  existing  stock  hard  to  use  for  affordable 
housing  without  investment.  Municipalities  often 
lack  funding  or  legal  tools  to  expand  or  renovate 
social  housing.  Regulatory  hurdles  may  make  it 
difficult 
into 
affordable  units,  strategic  coordination  between 
national and local housing programmes is rare. 

repurpose  empty  buildings 

to 

No  central  housing  strategy  has  been 
adopted. While  it appears that a formal  strategy 
was drafted in 2024, it has not yet been published. 

Current  central  housing  policy  prioritises 
expanding  homeownership  through  ad  hoc 
measures  such  as  subsidised  loans  and 
financial 
incentives.  The  Housing  Capital 
programme,  launched  in  March  2025,  is  expected 
to  boost  supply  by  5 000  new  apartments,  rental 
apartments and dormitory units a year. The Home 
Start  programme  (388),  launched  in  September 
2025,  boosts  demand  by  first-time  buyers  under 
the  age  of  40.  Any  project  with  at  least  250 
apartments,  of  which  at  least  70%  meet  the 
criteria of the Home Start programme, can become 
investment.  The 
a  priority  national  economic 
eligibility  criteria  are  much  less  stringent  than 
those 
incentive 
programmes. 

government 

previous 

of 

(RRF) 

cohesion 

(ESF+)  and 

Support  under  the  Recovery  and  Resilience 
Facility 
policy 
and 
programmes has not been fully delivered. The 
RRF  and  the  cohesion  policy  programmes  (the 
European  Social  Fund  Plus 
the 
European  Regional  Development  Fund  (ERDF)) 
provide  support  of  around  EUR 430  million,  an 
amount  that  is  expected  to  be  reduced.  The  ‘300 
settlements’  programme  includes  improving  living 
conditions,  however  the  initially  planned  2 000 
non-segregated  dwellings  do  not  seem  to  have 
been  achieved  and  some  houses  were  built  in 
segregated  areas.  In  addition,  the  ESF+  and  ERDF 
can  help  to  improve  housing  conditions  and  help 
people  to  move  to  integrated  areas.  In  2025,  a 
new  measure  to  support  affordable  and  social 
housing  targeting  people  with  disadvantages  was 
planned  under  the  Territorial  and  Settlement 
Development Operational Programme. 

(387) Habitat for Humanity 2025, Social housing and empty 

(388) About Hungary - Government publishes draft decree on 

spaces landscapes in Hungary. 

Home Start Programme  

118 

 
 
 
Vulnerable groups 

Access to affordable housing remains out of 
reach for those most in need. The housing cost 
overburden rate decreased from a higher than EU 
average level (9% in 2024) to 5.3% in 2025 vs the 
EU average of 7.7% (389). Nevertheless, it remains 
among  the  highest  in  the  EU  for  tenants  paying 
the  market  price  (8.4%)  as  well  those  renting  at 
reduced  prices  (13.3%).  People  at  risk  of  poverty, 
single-parent  households,  people  with  disabilities 
and Roma are disproportionately overburdened by 
housing costs. There has been no targeted support 
in  recent  years  to  help  low-income  groups  and 
young  people  to  access  housing.  In  2024,  half  of 
the  housing  loans  went  to  households  in  the 
highest income  quintile,  suggesting  that  the  loan-
based  measures  are  not  effectively  supporting 
Housing 
lower-income 
programmes  announced  in  2025  did  not  improve 
the situation. 

households 

(390). 

Rising  housing  prices  negatively  affect  the 
most  vulnerable.  The  number  of  dwellings 
owned  by  municipalities  has  been  decreasing, 
falling below 100 000 in 2024 for the first time (-
76  percentage  points  since  2000).  The  proportion 
of  municipality-owned  dwellings  available  for 
social  rent  is  also  decreasing  (1.3%  in  2016  vs 
0.8%  in  2024).  At  the  same  time,  the  number  of 
children in temporary accommodation for families 
has  been  increasing  (6 422  in  2019  vs  7 005  in 
2024 (391)) indicating that an increasing number of 
families is facing housing difficulties. 

Homelessness  is  gradually  increasing  and 
targeted  measures  to  eradicate  long-term 
homelessness  are  lacking.  In  2024,  9 448 
people  were  accommodated 
long-term  or 
temporary homes for homeless people (392). People 
often become homeless owing to arrears in utility 

in 

(389) The overburden rate should be read together with the tenure 
structure (homeowner, tenants), that may differ across 
country and regions. 

(390) penzugyi-stabilitasi-jelentes-2025-majus.pdf. 

(391) KSH 25.1.2.3. Gyermekek és családok átmeneti otthonaiban 
az év folyamán ellátott gyermekek vármegye és régió 
szerint. 

(392) KSH 25.1.1.31. A tartós bentlakásos és átmeneti elhelyezést 

bills and informal rental. It has been reported that 
a quarter of the homeless might be 60+, and that 
half of the homeless under 30 were in institutional 
foster care earlier (393). In 2024, an estimated 30-
40 000 people were homeless (394). Hungary lacks 
a statutory mechanism requiring a national  street 
count  or  homelessness  registry.  Homelessness 
remains  a  problem  owing  to  a  lack  of  social 
housing 
homelessness 
prevention measures and housing-led policies. 

dedicated 

supply, 

is 

to 

average 

housing 

suitable 

live 
EU 

Access 
remains 
significantly  more  difficult  for  Roma  people. 
in  dwellings  with  poor 
47%  of  Roma 
conditions 
~18%). 
(the 
Overcrowding (83%) is extremely high (395). A large 
proportion of Roma live in segregated settlements 
and  neighbourhoods  with  poor  infrastructure  and 
insecure  tenancy  conditions,  limiting  their  access 
to 
Inadequate 
integration  services  and  social  housing  further 
exacerbate  their  segregation,  and  geographical 
mobility is limited. In 2025, local decrees that put 
administrative  restrictions  on  the  settlement  of 
disadvantaged  people  (‘local  identity  protection’) 
made this situation worse. 

jobs,  education  and  services. 

People with disabilities and older people with 
income  face  significant  structural, 
low 
financial  and  accessibility  barriers 
to 
accessing  suitable  and  independent  housing, 
in  particular,  in  the  private  housing  market. 
The  quality  of  housing  and  access  to  a  home 
depend to a large extent on the person’s financial 
situation,  i.e.  whether  they  are  able  to  finance 
accessibility measures or whether their family can 
provide  financial  support.  In  addition,  access  to 
appropriate housing support is very limited and the 
de-institutionalization approach is missing. 

(393) Utcáról Lakásba Egyesület. 2025, A 30 év alatti hajléktalan 
emberek között minden második állami gondozott volt. 

(394) OECD, 2024 Hungary (EN). 

nyújtó szociális intézményekben ellátottak ellátási 
típusonként. 

(395) FRA Rights of Roma and Travellers in 13 European countries 

- Perspectives from the Roma Survey 2024. 

119 

 
 
 
Graph A16.4: Housing affordability selected indicators 

Source: Eurostat and European Commission calculations.  The overburden rate should be read together with the tenure structure 
(homeowner, tenants), that may differ across country and regions. 

120 

 
 
HORIZONTAL 
ANNEX 17: SUSTAINABLE DEVELOPMENT GOALS 

social 

fairness 

This  annex  assesses  Hungary’s  progress  on 
the  sustainable  development  goals  (SDGs) 
along  the  dimensions  of  competitiveness, 
and 
sustainability, 
macroeconomic stability. The 17 SDGs and their 
related  indicators  provide  a  policy  framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
inequalities  and  tackle  climate 
poverty,  fight 
change  and 
the  environmental  crisis,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
The graph below is based on the EU SDG indicator 
set developed to monitor progress on the SDGs in 
the EU. 

In  relation  to  SDGs  on  competitiveness, 
Hungary is improving on all of them (SDGs 4, 
8  and  9).  It  needs  to  catch  up  with  the  EU 
average on SDGs 4 and 9, but is above the EU 
Graph A17.1: Progress towards the SDGs in Hungary 

average on SDG 8. It is achieving poor results on 
industry, innovation and infrastructure (SDG 9) but 
improving  on  some  R&D  indicators,  for  example, 
tertiary  education  attainment  (32%  of  population 
aged  25  to  34  in  2024;  EU  average:  44%)  and 
R&D personnel (1.24% of labour force in 2024; EU 
average  1.59). 
Its  investment  share  of  GDP 
(SDG 8;  23.2%  in  2024)  is  still  above  the  EU 
average  (21.7%)  but  a  negative  trend  can  be 
observed.  With  the  exception  of  the  gender  gap, 
Hungary  outperforms  the  EU  average  on  all 
employment  indicators  (SDG 8),  but  there  is  a 
slight  increase  in the share  of  the  labour  force  in 
long-term  unemployment  (1.5% 
in  2025;  EU 
average  1.9%).  The  recovery  and  resilience  plan 
(RRP) 
the 
research  and  development 
development  of 
cooperation  and  boosting  digitalisation 
in 
education,  public  administration,  and  the  health, 
transport and energy sectors. 

includes  measures 

supporting 

While Hungary is improving (SDGs 2, 7, 9, 12 

For a detailed progress assessment towards the various SDGs, see the annual Eurostat report ‘Sustainable development in the 
European Union’; for extensive data on the short-term SDG progress of EU countries, see Key findings – Sustainable development 
indicators; for an interactive visualization of SDG progress of EU countries, see SDG country overview. A high status does not 
mean that a country is close to reaching a specific SDG, but signals that it is doing better than the EU on average. The progress 
score is an absolute measure based on the indicator trends over the past five or six years. The calculation does not take into 
account any target values, as most EU policy targets are only valid for the aggregate EU level. Depending on data availability for 
each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of 29 April 2026. Data refer mainly to the period 2019-2024 or 2019-2025. Data on SDGs may 
vary across the report and its annexes due to different cut-off dates. 

121 

 
 
 
 
 
 
generation 

in  waste 

and  13)  or  performing  well  (SDGs 7  and  11) 
on  some  SDGs  related  to  sustainability,  it  is 
moving  away  from  others  (SDGs 11  and  15) 
and  needs  to  catch  up  with  the  EU  average 
(SDGs 2,  9,  12,  13  and  15).  There  is  room  for 
improvement 
and 
management, where the circular material use rate 
is low (7.3% of material input for domestic use vs 
EU  average  of  12.2%;  see  also  Annex 9)  waste 
generation  has  increased  (from  1 892 kg  per 
capita  in  2018  to  2 850 kg  per  capita  in  2022). 
However,  the  environmental  goods  and  services 
sector  are  larger  than  EU  average  (value  added: 
3.4%  of  GDP  against  EU  average  of  2.9%  in 
2023). Passenger car emissions from new cars are 
decreasing more slowly than the EU average, and 
energy  productivity  is  low  (EUR 5.7  per  kg  of 
emissions in 2024 against EU average of EUR 10). 
On a positive note, Hungary’s net greenhouse gas 
emissions  (SDG 13)  of  5.0 tonnes  per  capita  in 
2024 remained below the EU average (6.5 tonnes 
per  capita).  Moreover,  the  net  greenhouse  gas 
emissions  from 
land  use  and  forestry  have 
decreased and remain below well the EU average. 
The  RRP  includes  measures  to  facilitate  the 
development of renewable energy and improve the 
sustainability of transport, water management and 
the circular economy. 

vocational  education  and  modernise  the  health 
sector. 

is 
On  macroeconomic  stability,  Hungary 
performing  well  and 
improving  only  on 
SDG 8, but is moving away from and needs to 
catch  up  with  the  EU  average  on  SDGs 16 
and  17.  To  catch  up  with  the  rest  of  the  EU  on 
SDG 16  (Peace,  justice  and  strong  institutions), 
Hungary  has  room  for  considerable  improvement 
on (i) general government total expenditure on law 
courts  and  (ii)  both  the  worsening  perceived 
independence of the justice system and Corruption 
Perceptions  Index  score.  On  SDG 17  (Partnerships 
for the goals), Hungary continues to be below the 
EU  average  for  global  partnership  indicators.  The 
RRP  includes  reforms  to  improve  public  finances, 
measures  in  areas  related  to  the  rule  of  law  and 
the  anti-corruption  framework,  and  reforms  to 
strengthen judicial independence. 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other annexes. 

related 

indicators 

On  social  fairness,  Hungary  is  improving  on 
all SDGs (SDGs 1, 3, 4, 5, 7 and 8) apart from 
SDG  10  where  Hungary  is  moving  away. 
While Hungary is performing well on SDGs 1, 
7 and 8, but needs to catch up on SDGs 3, 4 
and  5  on  fairness.  While  Hungary  has  made 
to 
progress  on  multiple 
multidimensional  poverty  (SDG 1),  its  rate  of 
severe  material,  social  and  housing  deprivation 
rate is still below the EU average, as is its relative 
median  at-risk-of-poverty  gap.  Related  to  SDG 3 
(Good  health  and  well-being),  Hungary  has 
experienced  a  positive  trend  but  needs  to  reduce 
its  obesity  rate  (20.5  in  Hungary  in  2025;  EU 
average  16.3) 
the 
unadjusted gender pay gap (SDG 5) decreased, on 
average, to 11.1% of men’s average gross hourly 
earnings in the EU as a whole, it narrowed only by 
1.3 percentage  points  to  16.9%  in  Hungary  from 
2019  to  2024.  The  negative  progress  on  SDG 10 
(Reduced  Inequalities)  is  mainly  driven  by  the 
inequalities  within  the  country,  as 
worsened 
evidenced  by  the  increase  in  the  urban-rural  gap 
for  risk  of  poverty  or  social  exclusion.  The  RRP 
supports  social  development  in  disadvantaged 
settlements  and  aims  to  improve  higher  and 

(see  Annex 15).  While 

122 

 
ANNEX 18: COMPETITIVE REGIONS 

Regional development trends 

Despite  the  overall  steady  convergence 
towards  the  EU  average  and  high  regional 
GDP  per  head  growth,  Hungary  has  some  of 
the  highest  internal  regional  disparities  in 
the EU (396). The pace of convergence has varied 
across  regions,  and  regional  disparities  have 
widened considerably over time. In 2024, GDP per 
head (in purchasing power standard, PPS) was less 
than  70%  of  the  EU  average  in  all  Hungarian 
regions,  apart  from  the  capital  region,  with  four 
regions  –  Dél-Alföld,  Dél-Dunántúl,  Észak-
Magyarország, Észak-Alföld – featuring among the 
EU’s  20  poorest  regions.  Rural  and  peripheral 
areas,  as  well  as  territories  affected  by  industrial 
transformation, 
social  and 
economic challenges. 

face  persistent 

Disparities  in  GDP  per  head  are  associated 
with  significant  labour  productivity  gaps 
across  regions  (A18.2).  All  but  one  region 
(Nyugat-Dunántúl)  had  productivity  growth  rates 
above 1.7% between 2013 and 2023 (EU average 
0.7%).  However, 
just 
slightly  above  75%  of  the  EU  average  in  Pest 
county  and  at  79% in the  capital,  while  the  other 
(Dél-Alföld,  Dél-Dunántúl,  Észak-
six 
Magyarország, 
Közép-Dunántúl, 
Észak-Alföld, 
Nyugat-Dunántúl) performed below 70% of the EU 
average.  

labour  productivity  was 

regions 

The structure of regional economies is a key 
determinant  of  economic  performance.  The 
centre of the country – Budapest and Pest County 
–  exhibits  dynamic  growth  driven  by  knowledge-
based  activities.  Counties  with  strong  industrial 
and reindustrialised bases, including those heavily 
reliant 
foreign-direct-investment 
manufacturing, 
show  moderate  growth  or 
stagnation  (e.g.  Győr-Moson-Sopron,  Komárom-
Esztergom,  Fejér,  Heves).  The  same  is  true  for 
peripheral  counties  with  large  university  centres 
(e.g. Baranya, Csongrád-Csanád). Meanwhile, other 
peripheral  counties  exhibit  slow  convergence (397). 

on 

(396) Lengyel, I. and Kotosz B. (2018). ‘Felzárkózás és/vagy 

távolságtartó követés? A visegrádi országok térségeinek 
fejlődéséről’. Tér és Társadalom 32(1):5–26. 

In  manufacturing-intensive  counties  (e.g.  Győr-
Moson-Sopron,  Komárom-Esztergom,  Vas,  Heves, 
Jász-Nagykun-Szolnok),  industry  driven by  foreign 
direct investment accounts for the largest share of 
gross  value  added  (GVA).  This  points  to  a  higher 
vulnerability  to  external  shocks.  In  other  regions, 
the  main 
non-tradable 
sectors (398). 

contributors 

are 

Map A18.1:  GDP per head compared with the EU 
average. 

2021-2023 average GDP per head in purchasing power 
standard compared with the EU average. 
Source: Commission calculations based on Eurostat 16 July 
2025 data 

Diverging  regional  economic  performance  is 
aggravated by a shrinking workforce. Between 
2015  and  2024,  the  average  annual  percentage 
decrease in the population aged 20-64 was 0.7%. 
It  decreased  by  1.4%  to  1.2%  in  Dél-Dunántúl, 
Észak-Magyarország and Dél-Alföld, and only Pest 
showed  an  increase  (of  0.5%).  Employment  rates 
also  vary  widely  across  regions.  Three  regions 
Észak-
Észak-Alföld, 
(Dél-Dunántúl, 
Magyarország),  especially 
rural  areas, 
exhibited higher unemployment rates (around 7%), 
and  struggle  with  particularly  high  youth 
unemployment (17-22.8%, EU: 14.9%). (see Annex 
11).  

their 

and 

(397) Lengyel, I., Vas, Zs., (2024). ‘Az Újraiparosítás Hatása a Hazai 

Térségek Felzárkózási Pályáira’. Közgazdasági Szemle 
71(11):1176–98. 

(398) Egyed I., Zsibók Zs., (2024). ‘Területi különbségek a 
foundational economy szemszögéből a 2016 utáni 
Magyarországon’. Területi Statisztika 64(3):273–307. 

123 

 
 
 
 
 
 
 
 
 
Map A18.2:  Labour productivity (2023), Hungary 
(NUTS 2 regions) 

Productivity, GDP per hour worked (in PPS), EU = 100%. 
Source: Commission calculations based on Joint Research 
Centre (JRC) data 

Table A18.1:Main development trends, challenges and the concentration of resources 

Source:  European Commission based on Eurostat data; categories of regions based on Map A18.1 

124 

Main development trendsLess developed regions (population 7.9 million)According to 2021-2023 data, all but one Hungarian region(the capital) recorded a GDP per head below 75% of the EU average, with labour productivity significantly below the EU average in all regions. Nyugat- and Közép-Dunántúl, however, attracted significant foreign-direct investment, attained deeper integration in international value chains and had a greater adoption of advanced technologies. Four regions continue to be among the EU’s 20 poorest regions, with significant internal disparities. Overall, some areas in less developed regions have achieved successful reindustrialisation, attracted foreign-direct investment and higher value-added services. However, their peripheral districts struggle with population loss, poor access to public services and a lower share of qualified workers.More developed region (population 1.7 million)Budapest is the only more developed region in Hungary, with a significantly higher R&I intensity than the other regions and a service-oriented economy. It is the centre of the largest functional urban area of Hungary (around 3 million inhabitants). The region faces specific challenges, such as insufficient coordination of public services and a lack of affordable housing.Specific territoriesUrban areas in mid-sized cities and in the capital face specific challenges, including: (i) implementing coordinated, integrated urban investments and smart solutions; (ii) improving low energy efficiency in residential housing; (iii) tackling deteriorating housing affordability; and (iv) strengthening climate resilience.Areas with more advanced manufacturing and services are more exposed to industrial automation and generative AI, respectively. Other areas centred around heavy industry and mining face more risks from the green transition, while other territories historically reliant on declining industries struggle with shrinking economic activity.Rural areas, especially in the north and south, lag behind with: (i) lower levels of investment; (ii) weaker productivity; (iii) outdated industries; (iv) limited integration into national supply chains; (v) higher shares of disadvantaged populations; (vi) poor access to public services; (vii) weak transport infrastructure; and (viii) less capacity to cope with the impact of climate change.The transition away from lignite mining and energy use as well as industrial decarbonisation have created localised socio-economic challenges and investment needs. Hungary’s territorial just transition plan identifies the most affected territories.National cohesion aspectsAlthough Hungary has a modern motorway network, it is heavily centred around Budapest. Rail connectivity is weak in the country and faces severe infrastructural difficulties that increase car usage. Several regions face environmental challenges with: (i) the health of natural ecosystems; (ii) regular droughts and water scarcity; (iii) the poor quality of drinking water; (iv) inadequate wastewater and waste management; and (v) poor air quality.  
 
 
 
 
 
  
 
Key challenges for regional 
competitiveness 

are 

disparities 

significant 

There 
in 
competitiveness  across  Hungary’s  regions. 
Only the capital region of Budapest scores above 
the  EU  average  in  the  Regional  Competitiveness 
Index 2022, while regions in southern and eastern 
Hungary  are  around  30%  below 
it.  These 
disparities  are  driven  by  differences  in  economic 
structure,  investment  in  research,  development 
and innovation and access to public services. 

the 

boost 

regions’ 

long-term 

competitive 
Harnessing 
advantages  through  regional  specialisation 
can 
competitiveness. 
Industry  already  makes  a  significant  contribution 
to  regional  GVA  in  the  counties  of  Komárom-
Esztergom,  Fejér,  Győr-Sopron-Moson,  Heves  and 
Borsod-Abaúj-Zemplén counties. Building on these 
strengths  opens great  opportunities,  for  example: 
(ii) 
(i)  electromobility 
pharmaceutical industry and agriculture in Hajdú-
Bihar);  (iii)  health  and  biotechnology  industry  in 
Csongrád;  (iv)  ICT  in  Veszprém;  and  (v)  green 
in  Dél-Alföld,  Dél-Dunántúl  and 
technologies 
Észak-Magyarország for geothermal energy. 

in  Győr-Moson-Sopron; 

fully 
Regional  potential  can  only  be 
untapped  if  these  regions  move  towards 
economic  activities  with  higher  value  added 
and  advanced  technologies  and  promote 
business  R&D  and  innovation.  There  is  also 
untapped  potential 
in  high  value  added 
services (399),  especially  in  counties  with  large 
university  centres  (e.g.  Debrecen,  Győr,  Miskolc, 
Pécs, Szeged) as the share of business services in 
GVA  is  low  across  Hungarian  counties  (ranging 
from  5-8%),  except  in  Budapest.  Cooperation 
among 
local 
government is essential for creating a favourable 
environment  for  attracting  successful  service 
industries,  as  already  demonstrated  in  Debrecen 
and  Szeged.  However,  these  regions  struggle  in 
putting in place strategic frameworks for boosting 
regional competitiveness effectively, which should 
be  based  on  a  thorough  understanding  of  the 

universities 

companies, 

and 

the 

specific  needs  and 

region’s 
regional 
comparative  advantages.  Smart  specialisation 
strategies  have  been  a  good  starting  point  for 
these frameworks; however, they are currently not 
always  developed  with 
right  mix  of 
stakeholders around the table. 

the 

(e.g. 

Marked  discrepancies  in  R&D  expenditure, 
weak  regional  innovation  ecosystems  and  a 
slow  adoption  of  advanced  technologies 
constrain  the  competitiveness  of  lagging 
regions.  Although  Budapest  spends  2.2%  of  its 
GDP  on  R&D,  Pest  (0.4%),  Dél-Dunántúl  (0.6%), 
and Észak-Magyarország (0.7%)  were among the 
bottom 20% of EU regions in 2023. Most counties 
(in particular Békés, Jász-Nagykun-Szolnok, Tolna, 
Somogy,  Szabolcs-Szatmár-Bereg  and  Zala)  face 
low  R&D  intensity,  coupled  with  the  absence  of 
endogenous  drivers,  limited  human  capital  and  a 
fragmented  SME  sector (400)  with  weak  links  to 
global  value  chains.  Apart  from  a  few  positive 
innovation 
examples 
local 
in  Győr), 
ecosystems  are  weak  and  there 
limited 
is 
cooperation  between  academia, 
industry  and 
municipalities.  Stronger  collaboration  could  help 
retain  young  graduates,  stimulate  higher  value 
added  activities  and  innovation  and  facilitate the 
adoption of advanced technologies (see Annex 4). 
Southern  counties  and  many  eastern  ones  lag 
behind  in  the  adoption  of  advanced  Industry  4.0 
technologies (401),  exacerbating  the  divide  in  the 
uptake  of  digital  technologies  in  the  country.  In 
line  with  these  findings,  analyses  suggest  that 
centralised,  sectoral  programmes  have  had 
limited success in reducing regional imbalances in 
economic  development.  By  contrast,  cross-
sectoral  collaboration  and  coordination  at  the 
appropriate functional territorial level could better 
unlock  potential,  boost  innovation  spillovers  and 
strengthen competitiveness.  

(400) Kovács, Sz., Lux, G., Páger. B., (2017.) ‘A középvállalatok 
szerepe a feldolgozóiparban: egy magyarországi kutatás 
első eredményei’. Területi Statisztika 57(01):52–75. 

(399) Juhász K.. (2020). ‘Az SSC szektor és területi kérdései 
Magyarországon SSC sector and its regional issues in 
Hungary’. Tér-Gazdaság-Ember 8(1):77–87 

(401) Kiss, É., Páger., B., (2024). ‘Spatial Patterns of Manufacturing 
Sectors and Digitalisation in Hungary in the Age of Industry 
4.0’. European Planning Studies 32(3):668–93. 

125 

 
 
 
Table A18.2:Key regional indicators (at NUTS 2 level) for Hungary 

Dark green – the indicator is at least 120% o of the EU average. 
Light green – the indicator is at least 100% but less than 120% of the EU average. 
Yellow – the indicator is at least 90% but less than 100% of the EU average. 
Light red – the indicator is at least 75% but less than 90% of the EU average.   
Dark red – the indicator is less than 75% of the EU average. 
This colour scale applies to ‘positive’ indicators where higher values are favourable. 
For ‘negative’ indicators (where higher values are unfavourable), the colours are reversed. 
Source: Eurostat and JRC 

level  of  human 

capital  varies 
The 
considerably  across  the  Hungarian  regions, 
which  is  a  major  obstacle  to  achieving 
growth,  particularly  in  higher  added-value 
activities. The combined share of employment in 
knowledge-intensive  and  high-technology  sectors 
in 2024 was just below the EU  average (44% vs 
47%).  The  EU  average  was  only  surpassed  in 
Budapest  and  Pest  (66%  and  48%),  and  this 
indicator remained below 40% in all other regions. 
In  2024,  in  the  capital  region,  the  share  of  the 
population  aged  25-64  with  tertiary  education 
was  59%,  considerably  above  the  EU  average  of 
36%.  By  contrast,  all  other  Hungarian  regions 
lagged  behind,  with  Dél-Dunántúl  (22%),  Észak-
Magyarország  (21%)  and  Észak-Alföld  (22%) 
recording  the  lowest  shares.  This  gap  has  been 
caused by a decline in the number of students in 
higher  education  since  2006,  which  has  been 
most pronounced in smaller, rural institutions and 
less  developed  counties.  Seven  counties  (Békés,  
Jász-Nagykun-Szolnok, 
Komárom-Esztergom, 
Nógrád,  Tolna,  Vas,  Zala,)  no  longer  have  higher 
education 
it 
much harder for local businesses and institutions 
to access a qualified labour supply.  

institution  headquarters,  making 

The  educational  performance  of  students 
also  reflects  territorial  disparities.  The 
educational  performance  gap  among  students  in 
Hungary’s  most  and  least  developed  districts 
(járás)  increases  in  higher  school  grades.  In 
addition,  there  is  a  marked  difference  between 
urban  and  rural  areas  in  the  performance  of 
students  across  different  subjects  (PISA,  2022). 
This 
reflects  underlying  problems,  such  as 
stagnating  public  spending  on  education,  socio-
economic  and  ethnic  segregation,  and  an  ageing 
teaching workforce (402), which is especially acute 
in  rural  areas  and  peripheral  regions  (see  Annex 
13).  As  a  result,  students  in  peripheral  areas  are 
less  likely  to  receive  the  preparation  required  to 
enter  higher  education:  in  2024,  the  ratio  of 
students  enrolled  in  university-preparatory  upper 
secondary  schools  was  significantly  lower  than 
the  national  average  in  several  counties  in  less 
developed  regions  (in  particular  in  Csongrád-
Csanád,  Jász-Nagykun-Szolnok,  Nógrád,  Somogy, 

(402) Hajdu, T. et al, (2024):  A Közoktatás Indikátorrendszere 
2023. Budapest: HUN-REN Közgazdaság- és Regionális 
Tudományi Kutatóközpont. 

126 

GDP per head (PPS, index)Net migrationReal GDP growthPopulation aged 25-34 with high educational attainmentHuman resources in science and technology (core)Employment rate 20-64Unemployment rateAt-risk-of-poverty or social exclusion rate (AROPE)Energy povertyEU27=100Average annual change per 1000 residentsAverage annual % change% of population aged 25-34% of total employment% of population aged 20-64% of labour force% of population% of total population20242015-20242014-2024202520252025202520252025EU1003.51.644.849.976.16.021.09.2Hungary762.42.732.643.881.14.419.55.7Budapest1680.63.262.071.084.33.210.74.1Pest6411.14.233.047.983.63.016.02.5Közép-Dunántúl663.72.523.235.383.13.110.81.4Nyugat-Dunántúl664.60.921.036.582.23.112.03.0Dél-Dunántúl50-0.62.122.034.177.36.425.46.7Észak-Magyarország47-3.12.120.932.775.87.030.512.7Észak-Alföld50-2.52.626.034.778.26.128.49.4Dél-Alföld52-0.52.123.336.681.34.825.16.8  
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tolna) (403). 
failed 
school  management  has 
territorial and social inequalities (404). 

In  addition,  the  centralisation  of 
reduce 

to 

The  declining  population  (Map  A18.3)  and 
two  most  pressing 
the 
ageing  are 
demographic 
challenges,  which  exhibit 
strong  regional  variations,  threatening  the 
competitiveness  of  local  economies.  Except 
for  Pest,  the  population  declined  in  all  Hungarian 
regions  between  2015  and  2024,  resulting  in  an 
overall national decrease, in contrast to growth in 
the  EU  average.  Észak-Magyarország  and  Dél-
Dunántúl  experienced  particularly  steep  declines, 
with  the  most  severe  population  losses  observed 
in peripheral and rural areas.  

Access  to  high-quality  local  public  services 
is  critical  to  retaining  population  and 
sustaining 
local  competitiveness,  while 
smart  solutions  have  a  clear  potential  to 
improve their quality and efficiency. Although 
Nyugat-Dunántúl has a relatively favourable level 
of services, the eastern and southern regions face 
weaker 
infrastructural  conditions  and  poorer 
access  to  key  public  services,  such  as  childcare, 
education,  health  and  social  services  (see  Annex 
12).  These  regions  are  among  the  most  heavily 
affected  by  demographic  decline  and  are  among 
the least competitive in the country. This is in line 
with  research  demonstrating  the  central  role  of 
retaining  population  and 
public  services 
boosting economic performance (405). On access to 
healthcare  (see  Annex  15),  rural  areas  in  Pest, 
Dél-Dunántúl,  Észak-Magyarország,  Észak-Alföld, 
and Dél-Alföld feature among the bottom 20% of 
EU  regions.  The  situation  is  considerably  worse 
than that of similar areas in the EU, especially the 
access 
the  supply  of  healthcare 
professionals  (406).  Data-driven  smart  solutions 
can  improve  the  quality  and  responsiveness  of 

to  and 

in 

(403) Participants in public education and vocational education, 

(Central Statistical Office, www.ksh.hu). 

(404) Velkey  G.,  (2020).  ‘Az  oktatási  rendszer  változásainak 
hatása  az  elmaradott  vidéki  térségekben  élő  fiatalok 
és 
iskoláztatási 
Társadalom 34(4):122–42. 

foglalkoztatási 

esélyeire’. 

Tér 

és 

(405) Horeczki  R.,  Póla  P.,  (2023).  ‘Fejlesztési  lehetőségek  a 
periférián  egy  Baranya  megyei  felmérés  tükrében’.  Tér  és 
Társadalom 37(3):77–97. 

(406) Pál,  V.,  et  al.  (2022):  Az  Egészségügyi  Dolgozók  Területi 
Eloszlása  Magyarországon:  Mintázatok,  Okok  És  Különböző 
Narratívák’. Tér-Gazdaság-Ember 10(2):9–31. 

127 

local  public  services  and  administration  and 
enable more effective management of resources. 
However,  their  adoption  is  currently  hindered  by 
limited 
local  data,  technical  know-how  and 
leadership  commitment.  Smart  city  goals  are 
rarely  reflected  in  urban  development  strategies, 
and  most 
basic 
infrastructure improvements (407). 

settlements 

focus 

on 

to  EU  markets, 

Despite  good  territorial  coverage  of  public 
transport,  major  infrastructural  bottlenecks 
persist,  hindering  access  to  local  public 
services  in  areas  outside  large  cities.  The 
centralisation  of  Hungary’s  transport  networks 
around  Budapest  exacerbates  existing  disparities. 
While  investments  in  the  highway  network  have 
they 
improved  connectivity 
primarily  benefit  developed  urban  centres  and 
suburban  areas  nearby (408).  Rail  connectivity,  as 
measured by the  population  that  can  be  reached 
within  90  minutes  by  rail,  is  low  in  Hungary 
(12.1%)  compared  with  the  EU  average  (16%), 
particularly  in  Dél-Dunántúl  (2.9%)  and  Észak-
Magyarország  (3.3%).  In  particular,  the  railway 
system faces severe difficulties, including the lack 
of  double-track  capacity  on  primary  lines,  and 
recent rail closures, which have resulted in higher 
travel  costs  and  a  further  isolation  of  peripheral 
areas.  Rail  closures  have  had  clear  negative 
effects in several regions; a recent example is the 
closure  of  line  106,  connecting  Debrecen  to  the 
Romanian border.  

regions (409), 

Restructuring  of  transport  networks  has 
often failed to take account of the needs of 
deepening 
disadvantaged 
peripherality  and  leading  to  a  development 
trap.  Poor  service  frequency,  uncoordinated 
traffic  management  systems  and  inefficient  bus 
route  networks  aggravate  regional  infrastructural 
problems.  Hungary's  underdeveloped  secondary 
and  tertiary  road  network  also  limits  access  to 

(407) Varró,  K.,  Szalai,  Á.,  2022.  ‘Discourses  and  Practices  of  the 
Insights  from 
in  Central  Eastern  Europe: 
“Big”  Cities’.  Urban  Research  &  Practice 

Smart  City 
Hungary’s 
15(5):699–723. 

(408) Egri  Z.,  Kőszegi  I.,  (2020).  ‘A  közúti  elérhetőség  szerepe  a 
kelet-magyarországi 
és 
gazdasági 
gazdaságfejlesztésben’. Területi Statisztika 60(6):653–87. 

teljesítményben 

(409) Lieszkovszky,  J.  P.,  Hardi,  T.,  &  Ács,  B.  (2021).  A  vidéki 
térségek  közforgalmú  közlekedési  hálózatának  fejlődése 
Magyarországon a kezdetektől a XXI. század elejéig. Tér és 
Társadalom, 35(2), 89–109.  

 
 
 
public  services (410)  and  has  contributed  to  the 
emergence  of  peripheral  areas.  In  addition,  the 
share of car use increased from 35.3% in 2011 to 
46.4% in 2022, while public transport and bicycle 
transport 
in 
peripheral areas. While the number of passengers 
in  local  public  transport  increased  following  its 
significant drop during the COVID-19 pandemic, it 
remains below pre-pandemic levels. 

decreased (411), 

particular 

in 

in 

the 

Local  governments  face  extremely  tight 
financial  constraints  and  shrinking  fiscal 
autonomy (412),  especially 
least 
developed  regions.  Since  2015,  their  own 
operating  revenues  have  fallen  sharply  and, 
although  partly  offset  by  operating  state 
subsidies,  71%  ran  an  operating  deficit  at  least 
one  year  between  2020  and  2023.  Given  that 
local  business  tax  is  the  primary  source  of 
revenue  for municipalities  in  Hungary,  those  with 
a  significant  economic  base  fare  better,  while 
others  rely  on  unpredictable  state  transfers, 
especially  those  in  the  least  developed  regions 
and areas where poverty and social segregation is 
concentrated.  This  uneven  financing  architecture 
shapes the quality of public services at local level 
and  incentivises  short-term  investments.  This  is 
aggravated 
cross-sectoral 
across  municipal 
territorial 
boundaries, despite its potential to enable a more 
efficient use of resources. 

fragmented 

cooperation 

by 

(410) OECD  (2019),  OECD  Economic  Surveys:  Hungary  2019, 

OECD Publishing, Paris. 

(411) Központi Statisztikai Hivatal (Central Statistical Office) 

2022.  

(412) Bogdán G. et al, 2025: ‘Az önkormányzatok működési 

költségvetési mozgástere és forrásszerkezeti mobilitása a 
feladatfinanszírozás rendszerében’. Comitatus: 
Önkormányzati Szemle 35(253):17–36. 

128 

Map A18.3:  Average annual population change at 
NUTS 3 level (2015-2024) 

Source: Eurostat and JRC 

as 

foreign 

Housing  prices  have  significantly  increased 
over  the  past  10  years,  especially  in  cities 
and  urban  agglomeration  areas,  while 
eastern  regions  suffer  from  substandard 
housing.  Between  2015  and  2025,  the  price 
index for new and used apartments has grown by 
267%. The overall price increase has been driven 
by  government  incentives  stimulating  demand, 
interregional migration patterns, limited supply of 
housing,  constraints 
in  public  transport  and 
resource  constraints  in  the  construction  industry, 
rising 
which  have  also  driven  up  already 
construction  costs,  with  additional  local  factors—
rising 
such 
demand—further 
in  specific  areas.”.  As  a  result, 
contributing 
(Map  A18.4), 
affordability  has  deteriorated 
especially  in  more  economically  affluent  urban 
and agglomeration areas (Budapest, Pest, Nyugat-
Dunántúl). This is reflected in the increasing price-
to-income  ratio,  with  Budapest  scoring  14.5, 
broadly  in  line  with  other  regional  capitals, while 
most  eastern  regions  are  just  below  7  (2024). 
Affordable  housing 
is  of  poor  quality  and 
overcrowded, especially in rural areas. The highest 
proportion  of  substandard  housing  can  be  found 
in 
Észak-Alföld, 
contributing 
further  spatial  and  social 
polarisation  in  housing.  Energy  poverty  in  these 
regions  exacerbates  the  problem  of  affordable 
housing:  10-21%  of  Hungarian  households 
(roughly  380 000  to  800 000  households)  are 

Észak-Magyarország 
to 

and 

 
 
 
 
 
energy poor and concentrated in peripheral areas. 
Solid  fuels  are  the  primary  heating  sources  in 
many  of  these  households,  contributing  to  PM2.5 
concentrations  above  the  EU  average,  harming 
life quality and health expectancy (see Annex 8).  

Map A18.4:  House purchase capacity relative to 
income (2024) 

Source: ESPON-H4ALL 

inequalities 

Climate vulnerability is highly uneven across 
regions  in  Hungary.  Spatial 
in 
climate  vulnerability  reinforce  existing  socio-
economic  disparities  as  peripheral  settlements 
face  greater  risks  in  their  capacity  to  adapt  to 
climate  change (413).  The  Great  Plain  is  highly 
exposed,  with  high  sensitivity  and  low  adaptive 
capacity. Northern Hungary also suffers from high 
sensitivity  (an  ageing  population,  poor  soils)  and 
weak adaptive capacity, while the least vulnerable 
areas  are  found  in  Nyugat-Dunántúl.  Increasingly 
frequent  heat  stress  in  urban  areas,  aggravated 
by  dense  built-up  areas  and 
lack  of 
vegetation, also pose a growing public health risk 
in 
the 
economic  impact  of  climate  risk  (Map  A18.5) 
varies across Hungarian regions. Model estimates 
indicate that by 2050, 16% of the population will 
live  in  more  vulnerable  territories,  facing  GDP 
losses  of  2-5%,  with  a  further  48%  living  in 
regions with losses ranging from 1-2%. Csongrád-

regions.  Consequently, 

the  southern 

the 

(413) Lennert J. et al., (2024). ‘A magyarországi 

klímasérülékenység területi különbségei’. Tér és Társadalom 
38(2):103–29. 

129 

Csanád,  Jász-Nagykun-Szolnok  and  Győr-Moson-
Sopron  are  expected  to  be  the  hardest  hit,  with 
losses of over 2.5% of GDP. By contrast, counties 
in  north-eastern  Hungary  are  expected  to  face 
lower  losses,  with  the  main  impacts  stemming 
from spillover effects on labour productivity.  

in  many 

As the impacts of climate change are mainly 
regions,  water 
water-related 
management has become crucial for climate 
resilience. The Great Plain is particularly exposed 
to  future  droughts,  with  estimated  annual 
damages  of  EUR 110  million (414).  This  area  is 
experiencing  decreasing  groundwater 
levels 
resulting  from  low  levels  of  water  retention  and 
significant  illegal  water  extraction,  especially  in 
in 
Homokhátság  and  Nyírség.  This 
increasing  aridity  and  deteriorating  natural 
and 
resources 
by 
habitats, 
land  ownership.  However,  water 
fragmented 
integrated, 
territorially 
management 
cross-sectoral  approach  as  responsibilities  are 
spread  across  various  sectoral  and  territorial 
frameworks.  Hungarian  territorial  development 
policy  continues  to  align  water  management 
targets with separate administrative areas rather 
than  functional  territorial  hydrological  regions 
(415). 

exacerbated 

lacks  a 

results 

Several regions have untapped potential for 
renewable  energy  production,  and  green 
technology has the potential to drive growth 
in 
is 
these  areas.  Although  Hungary 
outperforming  the  EU  average  in  solar  energy 
production (see Annex 9), it still falls far short of 
the  country's  total  technical  potential,  especially 
in  rural  areas.  Municipalities  in  Észak-Alföld,  Dél-
Alföld  and  Dél-Dunántúl  have  high  untapped 
potential  for  solar  energy  production,  but  this  is 
constrained by grid capacity limits and insufficient 
digitalisation.  Other  regions  have  potential  for 
onshore  wind  energy,  particularly  Nyugat-
Dunántúl.  

Several  Hungarian  regions  are  rich 
in 
geothermal  resources  that  are  not  used  to 

(414) OECD (2023), ‘Promoting nature-based solutions in 

municipalities in Hungary’, OECD Environment Policy Papers, 
No. 39, OECD Publishing, Paris. 

(415) Szabó, P. & Jozsa, V., Gordos, T., (2021). Cohesion policy 
challenges and discovery in 2021-2027. The case of 
Hungary. DETUROPE - The Central European Journal of 
Tourism and Regional Development. 13. 66-100. 

 
 
 
 
 
 
to  high 

their  full  potential  due 
initial 
investment  costs  and  the  lack  of  corresponding 
investment resources as well as to  long-standing 
legal  constraints.  With  the  exception  of  Közép-
Dunántúl,  all  regions  contain  areas  with  distinct 
potential  for  geothermal  energy  production  and 
related activities, which is a strategic opportunity. 

Map A18.5:  Economic impact of climate change 
(2024) 

Source: European Commission and JRC 

130 

 
 
 
 
                                                                                                                                                                         
 
 
ANNEX 19: TRANSPORT 

This  Transport  Annex  presents  the  state  of  play 
and  the  challenges  Hungary  faces  with  the 
implementation  of  the  trans-European  transport 
network  (TEN-T),  the  European  Railway  Traffic 
Management System (ERTMS), and road safety. 

Five  European  transport  corridors  cross 
Hungary (Baltic Sea – Adriatic Sea, Baltic Sea 
–  Black  Sea  –  Aegean  Sea,  Mediterranean, 
Rhine  –  Danube,  and  Western  Balkans  – 
Eastern  Mediterranean).  The  Hungarian  TEN-T 
rail network is 3 669 km long (1 652 of which are 
on  the  core  network).  The  road  network 
is 
long  (1 102 of  which  on  the  core 
2 706 km 
inland 
network).  Hungary  has  405 km  of 
waterways,  three  airports  (including  one  core 
airport),  eight  ports (including two core ports) and 
nine urban nodes on TEN-T (416).  

Rail  infrastructure  in  Hungary  has  improved 
over  the  last  two  decades  but  the  country 
lags  behind  in  terms  of  rail  network  quality. 
Significant  investments  are  needed  on  the  core 
and  extended  core  network  to  ensure  compliance 
with TEN-T requirements. 

for 

On this issue, the Budapest node is currently 
a  significant  bottleneck 
rail.  The 
Hegyeshalom-Csorna-Porpác-Szombathely-
line  does  not  meet  TEN-T 
Zalaszentiván 
requirements.  This  project,  together  with  the 
modernisation  of  the  Zalaszentiván-Nagykanizsa 
line  for  electrification  and  increased  speed,  will 
improve  a  vital  north-south  freight  connection  in 
western  Hungary.  The  connection  to  the  Adriatic 
ports on the east-west axis will be improved via a 
project  encompassing  modernisation  of 
the 
Székesfehérvár-Lepsény line, including increases in 
load  and  speed.  Moreover,  harmonising 
axle 
technical  and  operational 
the 
minimisation  of  national  rules  in  line  with  the  EU 
interoperability  and  safety 
directives  on  rail 
remains critical to ensuring seamless cross-border 
rail transport. 

rules  with 

networks  by  providing  a  unified  signalling  system 
that  significantly  reduces  the  risk  of  accidents.  It 
also provides interoperability between national rail 
systems, improving cross-border train movements. 
Finally, the ERTMS enhances network capacity and 
operational 
the 
competitiveness of the rail sector. 

efficiency, 

increasing 

By  end  of  2024 (417)  the  ERTMS  was  in 
operation  on  16%  of  Hungary’s  TEN-T  rail 
network.  To  meet  its  national  plan’s  ERTMS  roll-
out  target by 2035, Hungary aims to deploy  it  on 
an additional length of 528 km. 

of 

preparation 

in  Hungary  have 
Infrastructure  projects 
experienced  delays  due  to  the  longer-than-
expected 
procurement 
documentation  as  well  as  complaints  and 
appeals  submitted  by  the  unsuccessful 
bidders.  In  some  cases,  public  procurements  had 
to  be  cancelled  and  repeated,  since  no  bids  were 
submitted  or  they  exceeded  the  available  budget. 
Issues related to public procurement and  contract 
management  have  been  detected.  There  have 
been  cost  overruns  due  to  bids  substantially 
exceeding cost estimates, which is in turn linked to 
a  scarcity  of  construction material  and  workforce. 
One  of  the  main  rail  infrastructure  investments 
has  been  subject  to  appeals  and  successive 
cancellations  of  the  environmental  permits issued 
for this project. 

The Hungarian National Safety Authority has 
to  deal  with  difficult  operating  conditions.  It 
still  faces  challenges  related  to  organisation  and 
leadership, the development of skills management, 
the  regularity  and  effectiveness  of  supervision, 
vehicle 
and 
authorisation. 

functioning 

proper 

the 

of 

Implementing the ERTMS is essential to work 
to  digitalise  the  railways  and  to  modernise 
and  harmonise  railway  operations  across 
Europe.  The  ERTMS  ensures  the  safety  of  rail 

(416) TENtec Information System, according to Reg. 2024/1679. 

coordinator Matthias Ruete. 

(417) Based on ERTMS – Third work plan of the European 

131 

 
 
 
 
 
Table A19.1:ERTMS deployment in Hungary. 

Map A19.1:  TEN-T Cross-Border & National Priority Sections in Hungary. 

Road  crashes  impose  an  enormous  social, 
economic  and  health  burden  on  the  EU 
economy.  The  external  socio-economic  costs  of 
fatal,  serious  and  minor  injuries  have  remained 
persistently  high  despite  the  progress  made  in 
reducing  crash  frequency  and  severity.  These 
resources 
innovation, 
education,  healthcare  and  other  crucial  public 
investments (418). 

could  otherwise 

fuel 

(418) Report on the implementation of the EU Road Safety Policy 

framework at the Mid-Point, COM(2026) 77 final. 

In  2024,  Hungary,  with  52  fatalities  per 
million population was above the EU average 
of  45  per  million.  Compared  with  the  EU 
average,  the  distribution  of  fatalities  in  Hungary 
shows a high proportion of fatalities aged between 
25 and 49 and of cyclists within urban areas. The 
proportion  of  fatalities  on  roads  outside  urban 
areas and on motorways was  also relatively high. 
The  highest  proportion  of  serious  injuries  was 
recorded  within  urban  areas,  with  the  figures  for 
seriously  injured  powered-two-wheeler  riders  and 
cyclists being relatively high.    

Based  on  the  latest  available  data,  Hungary 
has  made  reasonable  progress  but  needs  to 

132 

 
 
 
 
 
 
 
 
 
 
 
 
 
do more to be on track towards meeting the 
2030  target  of  halving  the  numbers  of  road 
fatalities.  Additional  efforts  are  needed  to 
improve  progress  on  serious  injuries,  which  could 
be  addressed  either  by  prioritising  the  relevant 
policies  or  by  exploring  other  relevant  activities 
with  an  emphasis  on  crashes  within  urban  areas, 
vulnerable road users and post-crash care (419).  

Graph A19.1: Hungary's road fatalities per million, 
2024 

Source: Report at the Mid-Point – Hungary, SWD(2026) 45 
final. 

(419) More details in Report on the implementation of the EU Road 

Safety Policy framework at the Mid-Point – Hungary, 
SWD(2026) 45 final. 

133