By Sandor Peto
BUDAPEST, Dec 12 (Reuters) - Hungary's ruling Socialists chose a rising party stalwart on Saturday to lead them into next year's election in an uphill struggle, burdened by unpopular budget cuts amid a deep recession.
A party congress elected economist Attila Mesterhazy, 35, as prime ministerial candidate for the parliamentary election due in April or May 2010.
The Socialists have been in power for almost eight years. Opinion polls show they are set to lose the 2010 vote, with centre-right opposition party Fidesz holding a huge lead as the country suffers its biggest recession in almost two decades.
Mesterhazy became party vice-president and head of the Socialists' parliamentary group earlier this year, in a year marked by political turmoil after the resignation of former prime minister Ferenc Gyurcsany in March 2009.
'We have to raise our heads, straighten our backs and show that we want to win,' Mesterhazy told the congress.
Hungary was the first European Union member to secure International Monetary Fund (IMF) and EU financing last October to prevent financial meltdown.
It had to cut state spending sharply to meet the conditions of international lenders and assure investors that the lavish spending of previous years will not be repeated, at a time when other EU states increased spending to dampen the crisis.
The government expects the economy to contract by 6.7 percent this year and a further 0.6 percent in 2010, and unemployment is seen rising further from 10 percent.
Prime Minister Gordon Bajnai, who has presided over most of the spending cuts since April as head of a crisis management cabinet, warned at the congress against loosening fiscal policy.
He also said Fidesz' pledge to lift next year's deficit was dangerous for the economy.
Hungary has massively overshot its budget deficit targets in election years in the past and Fidesz said the deficit could rise to 7.0-7.5 percent of GDP next year. The government targets a 3.8 percent deficit and has said this goal was achievable.
Fidesz also promised tax cuts and boosting employment.
Mesterhazy said the success of the economic stabilization efforts should be the ground for Socialist politics, and that will pay off after the economy recovers from recession.
'The surplus to be produced by the economy will be spent on those most hit by the crisis,' he said.
FACING ELECTION DEFEAT
The Socialists have lost too many voters to have any realistic hope of winning the election, analysts said.
'This could be enough only to prevent Fidesz gaining a two-thirds majority in parliament,' said Attila Juhasz, Deputy Director of think tank Political Capital.
While Mesterhazy could unite the party for the campaign, a heavy election loss might bring the Socialists to the brink of collapse, similar to the break-up of Poland's main left-wing party in 2004, Juhasz added.
The Socialist party has been struggling with a big credibility deficit since mid-2006 when their prime minister Ferenc Gyurcsany admitted in a speech to lying about the state of the economy to win re-election in April 2006.
(Reporting by Sandor Peto and Krisztina Than; Editing by Janet Lawrence) Keywords: HUNGARY SOCIALISTS/ (sandor.peto@thomsonreuters.com; +36 309 423 482; Reuters Messaging sandor.peto.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
BUDAPEST, Dec 12 (Reuters) - Hungary's ruling Socialists chose a rising party stalwart on Saturday to lead them into next year's election in an uphill struggle, burdened by unpopular budget cuts amid a deep recession.
A party congress elected economist Attila Mesterhazy, 35, as prime ministerial candidate for the parliamentary election due in April or May 2010.
The Socialists have been in power for almost eight years. Opinion polls show they are set to lose the 2010 vote, with centre-right opposition party Fidesz holding a huge lead as the country suffers its biggest recession in almost two decades.
Mesterhazy became party vice-president and head of the Socialists' parliamentary group earlier this year, in a year marked by political turmoil after the resignation of former prime minister Ferenc Gyurcsany in March 2009.
'We have to raise our heads, straighten our backs and show that we want to win,' Mesterhazy told the congress.
Hungary was the first European Union member to secure International Monetary Fund (IMF) and EU financing last October to prevent financial meltdown.
It had to cut state spending sharply to meet the conditions of international lenders and assure investors that the lavish spending of previous years will not be repeated, at a time when other EU states increased spending to dampen the crisis.
The government expects the economy to contract by 6.7 percent this year and a further 0.6 percent in 2010, and unemployment is seen rising further from 10 percent.
Prime Minister Gordon Bajnai, who has presided over most of the spending cuts since April as head of a crisis management cabinet, warned at the congress against loosening fiscal policy.
He also said Fidesz' pledge to lift next year's deficit was dangerous for the economy.
Hungary has massively overshot its budget deficit targets in election years in the past and Fidesz said the deficit could rise to 7.0-7.5 percent of GDP next year. The government targets a 3.8 percent deficit and has said this goal was achievable.
Fidesz also promised tax cuts and boosting employment.
Mesterhazy said the success of the economic stabilization efforts should be the ground for Socialist politics, and that will pay off after the economy recovers from recession.
'The surplus to be produced by the economy will be spent on those most hit by the crisis,' he said.
FACING ELECTION DEFEAT
The Socialists have lost too many voters to have any realistic hope of winning the election, analysts said.
'This could be enough only to prevent Fidesz gaining a two-thirds majority in parliament,' said Attila Juhasz, Deputy Director of think tank Political Capital.
While Mesterhazy could unite the party for the campaign, a heavy election loss might bring the Socialists to the brink of collapse, similar to the break-up of Poland's main left-wing party in 2004, Juhasz added.
The Socialist party has been struggling with a big credibility deficit since mid-2006 when their prime minister Ferenc Gyurcsany admitted in a speech to lying about the state of the economy to win re-election in April 2006.
(Reporting by Sandor Peto and Krisztina Than; Editing by Janet Lawrence) Keywords: HUNGARY SOCIALISTS/ (sandor.peto@thomsonreuters.com; +36 309 423 482; Reuters Messaging sandor.peto.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.