EUR/HUF may spike to 375, Hungary could leave the EU - Saxo Bank's black swans have landed

Saxo Bank has included Hungary in its 10 Outrageous Predictions for 2020, forecasting a collapse of the forint to EURHUF 375 as Hungary’s leadership and the EU fight over the country’s place in the Union.

Continuing almost two decades of tradition, Saxo Bank's experts have made 10 Outrageous Predictions for the year ahead. Their consensus-smashing forecasts would send shockwaves through the markets, if they come to pass. So will they prove pure fantasy or visions of reality?

Here's the black swan occurences for Hungary as forecasted by Saxo Bank's Chief Economist and CIO Steen Jakobsen. (Such occurances may be estimated to have a less than 1% chance of taking place, when they do happen they are often the most disruptive to the status quo.)

Hungary has been an impressive economic success since it joined the EU in 2004. But the 15-year marriage now seems in trouble after the EU initiated an Article 7 procedure against the country, citing Hungary’s – or really PM Orbán’s — ever-tighter restrictions on free media, judges, academics, minorities and rights groups, which in the opinion of the EU does not conform with the rule of law, weakens democracy and does not conform with EU values.

A divorce is increasingly likely and we could see Hungary take steps to follow the UK out of the EU by end of 2020.

There is endless irony here, says Jakobsen: a major portion of Hungary’s economic success since 2004 comes from EU capital transfers. One estimate from KPMG estimates that EU membership’s net effect on Hungarian growth was at some +3.0% of GDP per year, but despite this high correlation the government in Budapest is seeking confrontation with Brussels whenever possible. 

The pushback from Hungary’s leadership is that the country is only protecting itself: mainly protecting its culture from mass immigration. Plus, they maintain that it has a right to decide for itself.

But an open economy with insular governance, immigration and press rules?

It’s an unsustainable status quo, and the two sides will find it tough to reconcile in 2020 as the Article 7 procedure moves slowly through the EU system.  

PM Orbán is even openly talking about how Hungary is a ‘blood brother’ with the renegade Turkey as opposed to a part of the rest of Europe, a big shift in rhetoric that has not gone unnoticed in Hungary — as well as among bureaucrats and politicians in Brussels. 

That this change of tone coincides with EU transfers all but disappearing over the next two years is hardly surprising.

But it will leave Hungary’s currency, the forint (HUF) on the back foot and take it to a new, much weaker level of 375 in EURHUF terms as the markets fear the disengagement or reversal of capital flows as EU companies reconsidertheir investment in Hungary.

The section on Hungary is merely one page, but Saxo Bank tried to give it more emphasis with a kind of a shocking cartoon:

Would Hungary really leave the EU? We would not bet on it

Lists like this do actually contain shocking events and may achieve the desired effect and media attention. At the same time, they call the attention of market players to the fact that although these events have a very low probability of happening, they do have huge impact if and when they do occur. This could lead to some investors re-evaluating market risks.

Meanwhile, it is also important to remember that there have been doubts concerning Hungary's European Union membership in recent years, but Prime Minister Viktor Orbán repeatedly said (e.g. in his speech after the 2018 general elections) that Hungary's place was in the EU and it would remain a member. Since then, according to press reports citing diplomatic leaks, Orbán has privately spoken of a desire to achieve a more independent status for Hungary. This could be closer to the current status of Austria, which is neutral from a military point of view and is not a NATO member, but it is a member of the EU. This has neither been confirmed nor refuted by top government levels.

It is also worth noting that the government's oft-repeated objective of making Hungary a top five EU state in competitiveness by 2030 would be moot by definition and would also be in jeopardy in actual economic content if Hungary seriously contemplated leaving the EU. A study by the French central bank last year showed that in economic terms, Hungary would lose by far the most by exiting the EU.

Cover photo by Portfolio, Ákos Stiller 

This article is part of the work programme titled "The impacts of EU cohesion policy in Hungary - Present and Future" which is carried out by Net Média Zrt., the publisher of, between 1st April 2019 and 31st March 2020 with European Union financing. The views in this article solely reflect the opinions of the author. The European Commission as the funding entity does not take any responsibility for the use of information presented in this article.

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