• Transition to expose legacy business relationships to scrutiny
• EU funds, public contracts, and tax reforms to provide early reform pace signals
• Politically aligned sectors likely to face greater oversight, contract reassessment

“No time to waste.” As Hungary’s new prime minister Péter Magyar takes the oath of office on Saturday, 9 May, his refrain, originally aimed at the urgency of unlocking billions in frozen EU funds, should ring in investors’ ears.

The ceremony, which will be held on the same day as the inauguration of the newly elected parliament, marks the start of a transition that may involve increased scrutiny of legacy relationships, accelerated regulatory change, and greater pressure to identify potential exposures arising from past activities.

Magyar’s victory last month ended Viktor Orbán and his Fidesz party’s 16 years in government and secured a two‑thirds supermajority for the centre‑right Respect and Freedom Party (commonly known as Tisza), with 141 of the 199 parliamentary seats.

Despite the continued holding of elections between 2010 and 2026, under Orbán’s rule, Hungary was frequently described by international observers and analysts as a “hybrid regime” or an “electoral autocracy”. Concerns over the weakening of judicial independence, reduced media pluralism, and the erosion of institutional checks and balances were accompanied by persistent allegations of corruption and cronyism, particularly in relation to state procurement and patronage networks.

These issues contributed to prolonged tensions with EU institutions, including the initiation of rule‑of‑law proceedings and the suspension of EU funding.

Reform priorities and implementation constraints

Magyar’s incoming government has outlined a reform agenda centred on dismantling entrenched power structures, strengthening institutional integrity, and improving Hungary’s international relationships with its traditional allies, including the EU, NATO, and the Visegrád Group (an informal regional alliance comprising Poland, Hungary, the Czech Republic, and Slovakia). Key pledges include:

• Rule of law and institutional restoration: Reforms aimed at restoring democratic governance, re‑establishing the independence of the judiciary, safeguarding media freedom, and eliminating political influence within state institutions and state‑owned companies.

• Joining the European Public Prosecutor’s Office: The incoming government has indicated that Hungary would join the European Public Prosecutor’s Office, which investigates crimes affecting the EU budget, including fraud, corruption, and misuse of EU funds.

• Creation of a National Office for Asset Recovery and Protection: The establishment of a dedicated body tasked with uncovering corruption cases and alleged economic and political abuses from the past two decades, with the stated aim of recovering “billions of forints lost to corruption” and holding responsible those described as having “stolen from the country.”

• Unfreezing EU funds: Seeking to unlock more than EUR 17 billion in EU cohesion and recovery funds currently suspended or withheld due to rule‑of‑law concerns. Magyar has identified as a priority the release of EUR 10.4 billion from the EU’s COVID‑19 recovery fund before its expiry at the end of August 2026, contingent on meeting a series of “super‑milestones” related to anti‑corruption and rule‑of‑law reforms. He has also pledged to unlock a further EUR 6.3 billion in cohesion funds and to pursue access to EUR 16.1 billion in low‑interest EU defence loans, while seeking to end a daily fine imposed on Hungary for breaches of EU immigration rules. Media reports indicated that, despite not yet being sworn in, Magyar has held discussions with European Commission President Ursula von der Leyen on the release of EU funds and is scheduled to visit Brussels on 25 May to sign a political agreement.

The parliamentary supermajority provides the new government with extensive legal leverage to pursue its reform agenda. This includes the ability to amend the constitution, revise or repeal so‑called cardinal laws governing key areas such as the electoral system, the judiciary, media regulation, taxation and local government, as well as to appoint or remove the heads of major state institutions, including senior judges, the prosecutor general and other oversight bodies.

As a former Fidesz insider until 2024, Magyar is likely to have a detailed understanding of how power has been concentrated within these institutions and how existing mechanisms could, at least in theory, be dismantled.

However, practical implementation may be constrained by the legacy of the previous administration.

Individuals associated with the Orbán era remain embedded across state institutions and key segments of the economy. This creates the potential for internal resistance to reforms and administrative inertia, which could slow or complicate reform efforts, particularly in sensitive areas such as investigations, asset recovery, and the review of past procurement decisions.

Furthermore, Magyar’s prior senior involvement with Fidesz, combined with the scale of authority conferred by a supermajority, suggests that investors may wish to monitor whether reform efforts result in substantive institutional change or merely a redistribution of control within existing power structures.

Implications for businesses and investors

For investors with exposure to Hungary, the transition creates both opportunity and risk.

In the first 12 to 36 months, companies closely tied to Fidesz‑era patronage networks may face heightened risk. Firms dependent on public contracts, EU financing, regulated concessions or politically protected financing may be exposed to audits, legal reviews, investigations and contract re‑tendering.

These processes could delay payments, disrupt project pipelines and increase refinancing risk, particularly in sectors where state spending or licensing has been decisive. Businesses associated with Orbán‑aligned interests could also face asset freezes or other enforcement actions as past arrangements are scrutinised.

Early signals will be critical in assessing whether the reform agenda is translating into a more stable operating environment. Key indicators to monitor include progress on unlocking EU funds, the review and re‑tendering of public contracts, and the phasing out of sector‑specific taxes.

Orbán’s tenure was characterised by abrupt policy shifts, short‑notice legislation, sector‑specific taxes and discretionary regulation, all of which elevated regulatory risk.  A move toward more predictable economic policymaking, transparent regulation and stronger institutional governance could improve confidence and support higher levels of domestic and foreign investment.

At the same time, reputational and regulatory risk is likely to increase during the transition, particularly as investigations, audits and enforcement actions gain momentum.

As a result, the scope and focus of due diligence reviews may need to change and expand. In some cases, standard due diligence that focuses primarily on current ownership and management structures may not be sufficient.

Reportedly, individuals linked to the Orbán era may have already begun moving assets and restructuring ownership.[1] Similar patterns were observed around previous election periods.

Reviewing changes in ownership, governance and management shortly before and after the election may therefore be critical in identifying residual political links or attempts to distance assets from past networks.

Given that many of Orbán’s allies are reported to operate through opaque corporate structures, combining open‑source due diligence with discreet source intelligence will often be necessary to identify informal influence, dependencies, and legacy relationships.

A recent due diligence assignment conducted by Blackpeak on an integrated energy company with historical links to Hungary illustrates these challenges.

Public records showed the business to be currently majority owned by its chairman, with no formal ownership or direct control by political actors. However, in‑country sources consistently described the company’s early growth as closely aligned with individuals connected to Hungary’s political and economic elite, and at times with figures linked to Russian state-owned companies. Sources also suggested that, despite the lack of official political ownership today, the chairman remains linked to influential political and business actors associated with Orbán’s circle.

The case highlights a broader risk for investors: companies may appear “clean” on paper while retaining embedded political dependencies that could draw scrutiny under a new government reviewing legacy networks. Understanding these informal ties will be essential in assessing both near‑term enforcement risk and longer‑term resilience.

Transition impact to vary across sectors

Sectors that benefited from political alignment, state intervention, or opaque procurement practices under the previous administration may face the greatest adjustment following the change in government.

• Construction and infrastructure: Firms reliant on politically driven public procurement and EU‑funded projects may face audits, contract reviews, re‑tendering and payment delays. Increased competition is likely to compress margins and reduce market share for incumbents previously favoured under relationship‑based tendering.

• Media and advertising: Highly politicised media groups that expanded through state advertising, regulatory advantages and ownership concentration may be adversely affected as public advertising is redirected.

• Energy and utilities: Incumbents exposed to politically managed pricing, regulatory intervention and protective arrangements may face pressure as the sector shifts towards a more EU‑aligned, market‑based framework, particularly where profitability depended on non-market pricing.

• Telecoms and regulated industries: Businesses that relied on political influence to manage fees, prices or regulatory outcomes may lose advantage under more predictable, rules‑based regulation, requiring adjustments to existing business models.

• Defence and security: Companies linked to opaque procurement, politically connected intermediaries or defence privatisations under the previous government could be exposed to project reviews, supplier reprioritisation, and stricter EU and NATO compliance standards.

• Banking and financial services: While the sector may benefit from reduced policy intervention, banks heavily exposed to politically connected borrowers, municipal entities or oligarchic groups could face elevated credit risk as lending relationships and projects are reassessed.

Sectors less dependent on political alignment and those with more competition and exposure to other countries in the EU may benefit from the change in government, although gains are likely to materialise progressively rather than immediately.

• Independent SMEs and start‑ups: Fairer procurement, reduced arbitrary regulatory pressure and improved access to EU‑backed financing could favour innovative and export‑oriented SMEs.

• Export‑oriented manufacturing and automotive: Export‑focused industries, including automotive and battery‑related investments, are less tied to domestic rent‑seeking structures and may benefit from reduced political risk, improved EU relations and a more stable framework for reinvestment decisions.

• Professional services: Legal, audit, forensic, compliance and restructuring advisers are likely to see increased demand during the transition. Investigations, contract reviews, asset sales, governance reforms and EU‑funded project oversight are expected to drive advisory activity in the short to medium term.

• Technology and digital services: A more predictable rule‑of‑law environment and the normalisation of EU funding flows could improve Hungary’s attractiveness as a regional hub for technology and business services, particularly for firms previously concerned about governance, media freedom or data‑related risks.

Overall, beyond the initial transition, if the new government delivers on its reform agenda, a more predictable economic policymaking, transparent regulation and stronger institutional governance could improve confidence and support higher levels of domestic and foreign investment.

Over the longer term, Magyar has also expressed openness to eventual euro adoption, which, if pursued, could reduce currency volatility and transaction costs for investors.