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Hungary cannot easily replace lost EU funding

Wednesday, December 7, 2022

Significance

EU finance ministers in response postponed decisions on paying Hungary EUR5.8bn under the post-COVID-19 recovery plan, and whether to freeze EUR7.5bn from the ‘cohesion’ funds due Hungary from the 2021-27 EU budget. Due to EU concerns about Hungary’s democratic backsliding, Budapest may lose funds just when it is in its tightest-ever fiscal position.

Impacts

  • Orban will turn towards Russia and China, creating increased security risk for the EU.
  • Western discussion of ‘what to do about Hungary’ will amplify.
  • The EU may have to consider for the first time how to expel a member state.

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