A decision by Britain to leave the European Union could set a “devastating” precedent for central Europe as some countries, particularly Hungary, could consider following suit, a leading economist there said on Friday.
While “out” campaigners in Britain, a net EU contributor, say the country would be financially better off, nationalism and concerns about immigration could tempt some states, even net beneficiaries of EU funds, to talk about leaving, Gyorgy Jaksity, chairman of investment firm Concorde, said.
Analysts say a “leave” vote in the June 23 British referendum would upset financial markets, cause credit spreads to widen, trigger a rush into safe assets and bolster the dollar.
Jaksity said: “Longer-term, the consequences for the EU can be quite devastating.”
“If there is a major player leaving the EU, and Britain is definitely a major player, it does have a long-term effect on the EU in many different ways,” he said at the Reuters Eastern Europe Investment Summit.
“In Central Europe I would not exclude any country, sometime in the future, being in a position where a politician says we go out,” Jaksity said, adding that Hungary was “number one” on his list of those potentially opting out in such a scenario.
Hungarian Prime Minister Viktor Orban has clashed several times with the European Union over policies affecting the media, the judiciary and the central bank.
His government, which has called for a referendum against an EU scheme to resettle migrants coming to Europe among member states, is running a billboard campaign calling on Hungarians to “send a message” to Brussels.
However, Foreign Minister Peter Szijjarto told the weekly Figyelo in an interview published on Thursday that Hungary’s future was within the European Union. The next election is due in 2018 and Orban’s Fidesz party has a firm lead in the polls.
Under the EU’s current financing cycle, which ends in 2020 Hungary gets some 25 billion euros over seven years. If that largesse diminishes, anti-EU sentiment could increase, said Jaksity, one of Hungary’s most influential economists and a former chairman of the Budapest Stock Exchange.
“As long as you get cheap and almost unlimited EU funding, you do not really see it. But when that disappears you have a growth problem, which is what Hungary faces in the years after 2020, which is an issue that no one has an answer to.”