The fall of Hungary’s Orbán shows how populism can be beaten

For a country of fewer than 10 million people, Hungary has an impressive habit of making history.

When Nikita Krushchev sent his tanks into Budapest in 1956, it laid bare the terrifying reality of Soviet dominance across Eastern Europe. Three decades later, the reburial of Imre Nagy and the subsequent opening of Hungary’s border with Austria was a key moment in the chain reaction that led to the fall of the Berlin Wall, and, soon after, the USSR itself.

This week, the election in Hungary did not quite remake the world, but it came close.

Former Orbán ally-turned-nemesis Péter Magyar, leader of the opposition Tisza (Respect and Freedom) party, campaigned on a promise of “regime change”, which sounded equivalent to those heady days of 1989.

After an overwhelming victory, he may be able to deliver on it. His party won the critical supermajority required to amend the constitution and dismantle Viktor Orbán’s vice-like grip on the judiciary, state institutions and the media.

A narrow result might have sown more chaos with Orbán using his own supermajority to create even more institutional obstacles. But this is indisputable. “The Dictator”, as ex-EU Commission President Jean Claude Juncker famously dubbed him, conceded early in a phone call to his rival. Magyar exulted, telling jubilant crowds across the Danube from the Hungarian parliament that the scale of the result “makes possible a transition that is efficient, just and peaceful… Hungary is back in Europe”.

Orbánomics: A cautionary tale

The effects of Orbán’s defeat will reverberate far beyond the Danube. For liberals, it offers a moment of cheer amid mounting fear of the drift towards anti-democratic, nationalist populism. But this was not only an ideological contest. At its heart, it was a damning verdict on the economic implications of populism.

Hungarians have been living for 16 years under what has been termed Orbánomics, or a self-styled “illiberal” economic model which concentrates power, erodes independent institutions and preserves the spoils of public spending for a favoured oligarchic elite in a gluttonous buffet of corruption.

The results have been dire. Competition has withered under the oligarchy of a politically connected elite. Productivity has been stagnant, while GDP per capita has remained flat since 2020, a miserable performance compared with regional economic success stories such as those of Poland and Romania. Investment in education and healthcare – apart from an unsuccessful drive to increase the birthrate – has slumped well below EU averages.

Even more damaging has been rampant inflation, with the central bank of Hungary playing along with Orbán’s whims. Prices in Hungary have risen by 57% since 2020, the highest of any EU member state, and nearly double the bloc’s average. Voters, it turns out, really hate inflation.

Orbán’s great friend in the White House should take note of the economic – and eventual political – consequences of entrenching corruption and bullying the central bank.

How to beat the populists

Magyar is a charismatic, erudite and talented politician. He knows the conservative leanings of his electorate well enough to stress his anti-immigration stance and refusal to arm Ukraine. But he also knows that Hungary is better off as a liberal democracy within Europe than as a Russian client state, enriching a narrow class of oligarchs at everyone’s expense.

He has pledged to restore co-operation with the EU, not least to secure €18-billion in EU funds that Brussels had frozen over rule of law concerns, and allowing the EU to proceed with a long-awaited €90-billion loan to Ukraine.

Ukraine, and the EU in general, are the biggest winners internationally from this election. Moscow and Washington are the biggest losers. Orbán was the Kremlin’s most useful asset inside the EU; a reliable source of delay, division and paralysis on everything from sanctions to defence.

Trump, too, has lost a devoted ideological ally. The Hungarian prime minister was a template for Christian nationalism, a darling of Maga rallies, and a figure of such symbolic importance that US Vice President JD Vance made a two-day visit to Budapest last week to speak glowingly of Orbán at a rally and call Trump live from the stage. After publicly pledging to smash the European “liberal consensus” and defend the continent from “civilizational erasure”, this loss must hurt in the White House. It has lost its firmest ally in Europe.

A continent in flux

Orbán’s demise fits a broader, if potentially premature, pattern across Europe. While far-right populists remain extremely popular and have been the most influential political force globally since the financial crisis, there are increasing signs that the tide is turning. Maga’s European buddies have had a bad month.

Italian prime minister and Maga darling Giorgia Meloni suffered a bruising defeat in a referendum on judicial reform last month, triggering resignations and a vote of confidence. Marine Le Pen’s far-right National Rally failed to make a hoped-for breakthrough by winning a major city in municipal elections. Slovenia’s nationalist Janez Jansa was beaten by liberal Robert Golob in national elections. Germany’s AFD failed to unseat the ruling CDU in elections in the western state of Rhineland-Palatinate, despite hoping to clinch it.

It is always dangerous to draw sweeping conclusions across electoral systems. But a trend is clear: association with Trump is increasingly a liability. As the devastating war in the Middle East grinds on, sending energy prices across the world skyrocketing, citizens all over the world grow more alarmed by American unreliability. Trump sympathisers are being punished at the ballot box.

One of Meloni’s predecessors, Mario Monti, issued a prescient warning about how such attacks might affect the result of the Italian referendum: “If our prime minister continues to show herself as the European leader most devoted to Trump… I would think that she too, deep down, has an authoritarian vocation.” In the safety of the voting booth, perhaps recalling Trump’s attacks on the rule of law, citizens’ hands are wavering.

This will not be without significance for South Africa’s politics. The timing of the election of a new leader of the DA is striking, arriving at a moment when the global mood may be shifting.

ANALYSIS

Has the DA drifted to the right?

January 29, 2026

Allegations are often made that the party has drifted to the right on policy issues over the past few years. Helen Zille even stated as much in a recent interview that she “saved the DA from woke, left, ethno-populism”.

That may or may not be right. But Hungary shows the results of ideological positioning paired with economic stagnation, the erosion of institutions and rampant corruption. The lesson for the DA – and indeed the ANC, EFF and PA – is that credibility on governance, institutions and economic delivery matter far more than alignment with any global culture war.

Hungary has once again shown that the tides of geopolitics could be turning. Even in South Africa, politicians would be wise not to try to swim against it. DM

Natale Labia writes on the economy and finance. Partner and chief economist of a global investment firm, he writes in his personal capacity. MBA from Università Bocconi. Supports Juventus.