Ungarn is planning export restrictions for building materials and thus risks another dispute with the EU Commission. According to Prime Minister Viktor Orbán, the measures should take effect from October. But the head of government needs the green light from Brussels. The restrictions are intended to dampen the sharp price increases for wood and steel in Hungary. These have recently been increasingly carried out in view of global scarcity. This also made the materials on the home market more expensive and drove up inflation.
According to Orbán, the price trend is jeopardizing the success of a government subsidy program that allows families to receive government grants for home renovations. The Prime Minister, who has been in power since 2010, is facing parliamentary elections next year. The sharp rise in construction costs and the sharp rise in inflation as a whole are likely to deliver campaign ammunition to his opponents. Annual inflation in Hungary was recently stable at over 5 percent.
The cost explosion, especially for wood, affects not only Hungary, but also Germany and many other countries in the world. The construction boom and the rapid industrial recovery also fueled demand during the Corona crisis. The German trade is complaining about delivery bottlenecks and massive price increases – also for insulation materials. However, the Federal Ministry of Economics had rejected export restrictions on construction timber. Instead, Economics Minister Peter Altmaier (CDU) proposed at the end of June that more healthy spruce be felled in Germany. The currently applicable restriction on the felling of spruce should be reversed “as soon as possible”.
Germany’s timber industry itself is divided on the question of whether an export ban is needed. The German Forestry Council recently rejected such a proposal. The German timber industry council, which represents the wood processing industry, announced that it would generally reject regulatory interventions because the shortage was largely due to the pandemic. At the same time, however, one must observe the protectionist advances of other countries and their effects on the German market – for example with a view to Russia for wood.
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