Like many other cities in central and eastern Europe, Budapest has undergone major changes since the collapse of the Iron Curtain, leaving it in a good position to face the new economic realities, according to its mayor, Gábor Demszky.

There has been an enormous restructuring since 1990. It was an industrial city and now it is practically a white-collar city with some old industry but with new industry as well, in sectors such as IT, electronics and pharmaceutical companies. “This is a city of knowledge,” says Mr Demszky. The GDP per capita in Budapest is now at the level of Milan in Italy.

Holding on

So far, Budapest is holding onto these white-collar jobs despite the dire economic straits in which Hungary finds itself. “Up until now there have been no bankruptcies and no dismissal of thousands of people from workplaces, unlike in the countryside,” he says.

However, tax receipts are down, due to the global slowdown. “For that reason we have to cut our expenses where we can and where we have to,” he says. “It will be very painful, naturally, but we have plenty of huge projects, altogether about 30, which are on the way and because they do not need private bank loans – they are financed by the EU, by the Hungarian government and by the municipality – it is absolutely certain that they will be realised.”

Projects of promise

Among these projects is a new metro line and a wastewater treatment plant that is the largest environmental project in the region.

“If you go around the city, everywhere you look the area is under reconstruction. For instance, we have 10 beautiful bridges across the river and two of them are under reconstruction,” says Mr Demszky.

“More than 40% of our budget is spent on infrastructure projects and schools and hospitals – we invest,” he adds.