Budget adjustment and growth in the European Union - lessons for Hungary

The study examines, in relation to Hungary's difficulties with budgetary consolidation, how far it is possible under outside pressure to carry out lasting correction or catching up. There are good chances of answering this through correction and growth experiences of old EU member-states, whose performances differed, though the outside compulsion was the same. The author finds the successful countries were those where internal commitment based on social consensus behind budget equilibrium emerged irrespective of euro accession. Such countries managed to retain expenditure-side consolidation through several governments, while countries simply aspiring to join the euro zone relied mainly on income-enhancement measures. The difference in adjustment strategies meant that economies in the first group attained lasting consolidation reflected in their growth performance.