Hungary is entering a new political and economic phase following the parliamentary elections of 12 April, which ended 16 years of uninterrupted rule by Viktor Orbán. The decisive victory of Péter Magyar’s Tisza party, securing a two thirds constitutional majority, marks a turning point for domestic governance, relations with the European Union and investor sentiment, while leaving significant execution risks ahead.
Tisza won 136 of the 199 parliamentary seats, supported by voter turnout close to 80%, one of the highest levels in Hungary’s recent history. The result reflects strong demand for political renewal, institutional reform and a move away from the polarizing governance style that has strained Hungary’s relationship with Brussels over the past decade.
A potential large‑scale release of EU funds
Subject to Hungary implementing reforms that meet EU rule‑of‑law and anti‑corruption requirements, up to €18 billion in suspended funds under the Cohesion Policy and the Recovery and Resilience Facility (RRF) could be unlocked, equivalent to around 9.5% of GDP. This would provide substantial fiscal and investment support to an economy that has recently faced high inflation, weak growth and constrained public finances. Together with low cost defense loans, under the EU’ SAFE rearmament programme, Hungary may benefit from a financial envelope of around €35 billion in the short to medium term.
“The election result fundamentally changes Hungary’s negotiating position with the European Union,” said Mateusz Dadej, Regional Economist at Coface. “Political authority and economic necessity are now aligned. Access to EU funds has become a cornerstone for stabilizing public finances and restoring confidence.”
A diplomatic shift, under constraints
The defeat of Viktor Orbán also signals a broader geopolitical recalibration. It represents a first step towards normalizing relations between Hungary and the European Union and reshapes the transatlantic political balance by depriving US President Donald Trump of a key ideological ally in Europe.
However, Hungary’s foreign‑policy repositioning remains constrained by structural factors, most notably its strong dependence on Russian energy. Around 85% of natural gas imports and 86% of crude oil supplies still originate from Russia, limiting the scope for a rapid realignment and pushing the new government towards a cautious and pragmatic approach towards both Moscow and Kyiv.
Markets already showing greater confidence
Financial markets have reacted positively to the political shift. Hungarian financial assets have seen increased demand both before and after the election, reflecting expectations of improved governance, reduced political risk and an end to economic policies widely perceived as inefficient.
Sustained reform momentum could also support upward revisions of Hungary’s sovereign credit rating, helping to ease borrowing costs, currently among the highest in Central and Eastern Europe. Nevertheless, Coface notes that rebuilding long‑term investor confidence, particularly foreign direct investment, will require consistent policy delivery over time.
“Market pricing reflects expectations of change rather than confirmed results,” Mateusz Dadej added. “Restoring Hungary’s investment appeal will depend on whether reforms translate into lasting institutional and economic improvements.”
