Hungary's government suffered an unexpectedly large defeat in the opposition-sponsored referendum on Sunday to strike down health and university fees. With 50.5% of the voters presented, each of the three questions on the ballot received 84% support. The government coalition moved quickly to say it would respect the outcome of the referendum, which asked voters to strike down fees of doctor and hospital visits as well as charges for university tuition. It also dismissed claims that the referendum was a surrogate election or that the government should quit. Our view: Most polls had forecast a much smaller turnout (some 35-45%) at the referendum but heavy debates in the run-up of the campaign seemingly mobilized voters. The relatively strong participation as well as the strong opposition of the symbols of the government’s reform plans is likely to result in a lowered support of the government at the two coalition parties. This could lead to the further dilution of the reform plans, put pressure on the budget and weaken the Hungarian currency.