Hungary’s GDP change this year may also depend on Hollywood’s strike

Film production in Hungary has also been hit hard by the strike by US screenwriters, which began on 1 May, and of Hollywood’s leading actors, which has been going on since mid-July. According to the calculations by Andersen Hungary, the downtime will reducer Hungary’s GDP by almost 0.35 percent over a year and will result in a total loss of HUF 70-80 billion in tax revenues for the central budget.

The Hungarian film industry closed another record year in 2022. The production volume exceeded HUF 250 billion, 90 percent of which came from American funds (in 2016 this figure was only HUF 85 billion).

Growth was driven by three main factors. First, the success of the Hungarian support system, which has brought an increasing number of foreign film productions to Hungary. The weakening of the forint and the strengthening of the dollar also helped the process (this trend has turned around this year). The third factor was the rise in service fees, which is experienced globally in the recovery from the Covid-19 epidemic.

Currently, Hungary is among the top 10 film production locations in the world. The main profile is to serve overseas studios; in Europe, only the UK film industry represents a greater volume. This is why film production in Hungary and its nearly 20,000 employees have also been hit hard by the strike by US screenwriters, which began 1 May and that of Hollywood actors, going on since mid-July.

According to Károly Radnai, managing partner of Andersen Hungary, the two parallel strikes make a different impact on productions made in Hungary. “The strike by screenwriters only implied a medium-term slowdown; it didn’t cause any immediate damage. It didn’t affect any productions that were already in progress or pre-production here; there were no shutdowns – only the arrival of new projects has slowed down. By contrast, the strike by the Hollywood actors’ union led to the immediate stoppage of almost all larger productions, as filming couldn’t continue without the lead actors and major cast members,” said Károly Radnai.

In 2016, Andersen’s the tax experts also contributed to a study published by the Hungarian National Film Fund, according to which every forint spent on film productions in the country generates a budgetary income of HUF 0.32 and increases GDP by HUF 0.8. “The reason for this is that, behind the spending, there is an intricate high value-added supply chain, predominantly linked to Hungary, with 95 percent of its funding coming from abroad. Although tax rates have somewhat changed since then, the ratio of the tax burden to GDP in the national economy has not changed substantially, so we have a reason to assume that the ratios published in the study are still similar,”  believes Károly Radnai.

Based on the calculations, the Hungarian film industry’s share of GDP is currently 0.35 percent. Consequently, the downtime reduces Hungarian GDP by almost 0.03 percent each month, which will result in a total loss of HUF 6-7 billion in tax revenues for the central budget.