The MT Diary

First, a quiz question to tease your friends and relations over the holidays. Which EU country, not a member of the euro area, has a huge budget deficit, an economy still in recession, and a deeply unpopular Socialist government under a prime minister called Gordon who is almost certain to lose the general election scheduled for next spring?

Too easy, I guess. You shouted 'Hungary' in unison. The capital letter on 'Socialist' gave it away. New Labour doesn't like to think of itself that way. Gordon Bajnai, a modest and courteous economist, is not ashamed of the label.

There is one big difference between Budapest and London (apart from the goose and red cabbage). The IMF is in charge of its fiscal policy. The Hungarians may not think so, but that could turn out to be an advantage. They are getting on now with the painful adjustments they need, while we await our election before the bill is presented. So there is a good chance that they'll emerge from the slough of economic despond more quickly.