Access to EU funds: bad news, bad news and some good news

HUNGARY - In Brief 04 Dec 2019 by Istvan Racz

---

Talks on the EU budget for 2021-2027 are moving forward and are approaching the last stage on the road towards a political agreement. Most lately, the Finnish presidency's compromise proposal, the outlines of which were already released a few weeks ago, took a concrete form. This contained the following main features from Hungary's point of view:- the overall size of the EU budget is proposed at 1.07% of EU GNI, against the 1.16% in the current budget (the preliminary version included a range of 1.06-1.09%);- the regulatory threshold, below which member countries' handouts of gross EU transfers would not be allowed to fall is proposed at -27% from the 2014-2020 level (at constant prices), against the -24% set forth by the EU Commission's original proposal;- the latter would be most certainly an effective constraint on the EU handouts to Hungary, as in the absence of the 27% maximum reduction rule, the country's transfer quotas would fall by more, as a result of a reduction of the maximum cohesion fund transfers available to member states, depending on their relative level of economic development (in terms of GDP per capita);- as a result, the net EU transfers available to Hungary between 2021-2027 could indeed reach only 1.5-1.6% of GDP, down from 3.2% between 2014-2020;- the rule-of-law mechanism, which is part of the Finnish proposal as expected, would be constrained to areas which have a direct consequence on the protection of the EU's financial interests, as regards the protection of EU funds from theft and wasting. This means that domestic courts' independence, the public prosecutor system and the mechanism through which EU funds are distributed and their utilisat...