Family fortunes
Viktor Orban’s plans to boost Hungary’s birth rate are unlikely to work
Instead, huge handouts for mothers could overheat the economy
“IMMIGRATION MEANS surrender,” thundered Viktor Orban, Hungary’s prime minister, at a state-of-the-nation address in Budapest on February 10th. The strongman expounded his pet conspiracy theories, pouring vitriol on George Soros, a billionaire whom he blames for many of Hungary’s problems, and the EU. Both, he railed, were conspiring to flood Hungary with migrants, many of them criminals or terrorists.
With migration so emphatically ruled out, how then to deal with Hungary’s shrinking, ageing population? The answer, says Mr Orban, himself a father of five, is to have lots of babies. To get Hungarians in the mood for producing them, his speech unveiled a slate of policies for families, which the government estimates will cost 150bn forints ($500m), or 0.3% of GDP, in 2020.
Women with more than four children, he promised, will never have to pay income tax. Also, those below the age of 40 who get married can obtain cheap loans, with increasing amounts of the money written off as they have more babies. A scheme that offers families cheap mortgages to buy new homes will be broadened, and growing families will even get help buying seven-seater cars. Child-care provision will be increased.
As in other central European countries, Hungary’s population is expected to decline rapidly over the century (see chart). In 2016 the fertility rate was just under 1.5 children per woman. Mr Orban wants that to rise to 2.1 by 2030.
His new policies, though, are unlikely to give birth to a baby boom. Hungary is already a relatively big spender on family benefits, according to the OECD. Despite that, the birth rate has barely budged in recent years, says Balazs Romhanyi, of the Fiscal Responsibility Institute. Of all the measures announced, only expanded child care has been found by researchers to have a noticeable effect on fertility, notes Agota Scharle of the Budapest Institute, a think-tank.
Subsidised credit will doubtless have the side-effect of shoring up support for Mr Orban, which may be the point. But it could also swell an economy that is close to overheating, and inflate house prices, warns Mr Romhanyi.
Increasing the number of children does not help much if all they do is emigrate, he says, pointing to outflows in recent years. An obvious solution would be to encourage immigration. On that, Mr Orban will not give in.
This article appeared in the Europe section of the print edition under the headline "Family fortunes"（Feb 14th 2019）
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