The possibility and effects of introducing the euro
GKI Economic Research Co., Ltd. has examined the feasibility, conditions, and expected economic impacts of introducing the euro in Hungary. In preparing this analysis, we took into account both the current status of compliance with the Maastricht criteria and public expectations. Below, we present the most important factors in detail.
Based on the platform and communications of the election-winning Tisza Party, the objective has been set to meet the necessary conditions for the adoption of the euro by 2030. An analysis of this objective requires a focused examination of the criteria for entry, the resulting economic impacts, and the factors determining a successful transition. According to the 2025 Eurobarometer survey, 75% of the Hungarian population fully supports the introduction of the euro; however, 72% of respondents believe the country is not yet prepared for the transition. This public assessment is realistic: based on the Maastricht criteria for joining the eurozone, Hungary has diverged from the possibility of accession in recent years.
Adherence to five primary criteria is required for accession:
- Price Stability: The inflation rate may not exceed by more than 1.5 percentage points the average of the three best-performing member states.
- Fiscal Deficit: The budget deficit must not exceed 3% of GDP.
- Debt-to-GDP Ratio: As a general rule, it must approach 60% of GDP (if it currently exceeds it).
- Long-term Interest Rates: Interest rates on long-term loans may be no more than 2 percentage points higher than the average of the three member states with the lowest inflation. The ECB approximates this indicator using the annual yield of long-term (10-year or similar) government bonds.
- Exchange Rate Stability: A minimum of two years must be spent in the ERM II system, which pegs the forint-euro exchange rate to a central parity, allowing a fluctuation margin of only +/- 15%.
Regarding price stability, the Hungarian Consumer Price Index (CPI) stood at 4.4% in 2025. The average of the three EU member states with the lowest figures—Cyprus (0.8%), France (0.9%), and Italy (1.6%)—was 1.1%. Consequently, domestic inflation significantly exceeded the 2.6% reference value for the price stability criterion, despite government interventions (e.g., utility price caps and regulated prices).
In terms of long-term interest rates, Hungary continues to exhibit exceptionally high values within the European Union. According to ECB data, the average interest rate on long-term loans in Hungary was 6.9% in 2025. Given that the 2025 reference value according to the ECB database would be 4.8%, Hungary failed to meet the requirements in this area as well. Although yields dropped significantly following the elections, the 10-year yield currently stands at 6.1%.
Preliminary data indicates that the fiscal deficit as a percentage of GDP was 4.7% in 2025. The Hungarian budget has been unable to compress the deficit below the 3% threshold since 2020, and this is not expected to change in 2026. According to GKI forecasts, the general government deficit will hover around 6% this year.
The gross public debt-to-GDP ratio was approximately 74.6% in 2025, based on preliminary financial account data from the MNB (Central Bank of Hungary). This represents an increase compared to the 73.5% level in 2024, signaling a further divergence from the 60% threshold.
Indicators of Maastricht Criteria in Hungary (2010–2025)
Eurobarometer data suggests that 68% of the population expects positive economic impulses from the introduction of the single currency. It is crucial to emphasize that the benefits of accession begin to manifest as soon as the formal declaration of intent is made and the preparation process commences. Strict adherence to the Maastricht criteria inherently increases economic stability, reduces risk premiums, and improves market expectations. Thus, the favorable effects would not appear abruptly on the day of entry, but gradually during the fulfillment of the admission requirements.
The advantages of accession are most visible in the evolution of interest rates. The domestic interest rate level is nearly double that of the eurozone, causing the population and businesses (as well as the state budget itself) to face significant interest expenses. Adopting the euro would greatly reduce interest burdens, freeing up resources for households, corporations, and—in the long run—the general government. For example, while the average mortgage rate in the eurozone is 3.4%, domestic subsidized “Otthon Start” (Home Start) loans carry a similar rate; however, in the eurozone, no state subsidy is required to achieve such levels. Additionally, the elimination of transaction (currency exchange) costs and the further strengthening of foreign trade relations are other possible benefits.
At the same time, the risks of accession must be weighed. Transitioning to the euro may involve short-term inflationary effects, which could raise inflation expectations; however, recent examples of Bulgarian and Croatian accession do not support the occurrence of such a short-term spike. In the long term, a risk exists that the common monetary policy has only a limited capacity to offset the inflationary surplus stemming from real convergence and the stimulation of consumption due to a lower interest rate environment. This process could lead to the overheating of the economy, as well as the development of real economic and financial imbalances. These risks can be mitigated by increasing competitiveness, placing the fiscal deficit on a sustainable path, and the lower inflation expectations anticipated with the introduction.
In summary, while the majority of Hungarian society supports the adoption of the euro and trusts in its positive impacts, real economic and fiscal trends in recent years have trended toward divergence. Euro adoption would be specifically beneficial for debtors and would reduce transaction costs. The narrowing interest expenses of the general government would create opportunities to expand social programs without increasing the budget deficit or deteriorating the debt-to-GDP ratio. Nevertheless, caution is warranted, as surrendering an independent monetary policy could lead to higher inflation and structural imbalances—risks that can only be managed through consistent economic policy.
