Hungary’s newly elected government, which took office in April 2026, has set its sights on adopting the euro by around 2030. The move, supported by about 80% of Hungarians, aims to eliminate exchange rate risks, reduce transaction costs, and enhance price transparency. However, meeting the Maastricht criteria, such as keeping the budget deficit below 3% of GDP, does not guarantee long-term economic success. The country currently faces significant challenges, including a budget deficit near 7.3% of GDP, high debt-service costs, and weak productivity growth.
The Bruegel report proposes five domestic readiness tests to assess Hungary’s preparedness for euro adoption. These tests evaluate the country’s institutions, policies, productive capacity, shock absorbers, and the proposed forint-euro exchange rate. The report emphasizes that institutional repair and fiscal consolidation should come first, redirecting resources from poorly targeted subsidies to critical areas like health, education, and infrastructure. Price and credit distortions must also be addressed to restore monetary transmission and align wage growth with productivity.
Entry into the Exchange Rate Mechanism (ERM II) should only occur once fiscal and inflation paths are credible. The central exchange rate must be consistent with long-term competitiveness and robust against major shocks. Premature entry into the euro area could risk weak growth, renewed inflation, and painful adjustments. The report warns that while euro adoption could strengthen credibility and investment, it must be accompanied by credible domestic reforms to ensure sustained economic stability.
The adjustment process will take several years, and the report advises Hungary to seek an early technical roadmap from European institutions. This should cover legal alignment, preparation for ERM II, and close cooperation with ECB banking supervision. The report concludes that European support can facilitate accession but cannot substitute for credible domestic reform. Hungary must meet both the Maastricht criteria and the proposed domestic readiness tests to ensure a successful transition to the euro.