What we feared is starting to become reality

HUNGARY - In Brief 24 Apr 2018 by Istvan Racz

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Well, it is still about a week to go until the EU Commission is coming forward with its 2021-2027 budget proposal, but there is already an increasing number of signals, including official remarks and leaks alike, which are giving away important parts of the story.Most recently, a Financial Times article, published a few days ago, claimed that the CEE region, most notably Poland, Hungary and the Czech Republic are set to lose big amounts of EU transfers from the so-called cohesion funds (EUR 350bn in total) in the next medium-term budget period, compared to what they have in the current one. Among others, the article says:- Brexit cuts the supply of transfer funds by a large amount (9-10% if counted mechanically), there are also new objectives (like doubling the Erasmus program or giving more on technological innovations), and there is also going to be a new regional focus: shifting transfers more back to the Mediterranean region (Italy, Greece, Spain, etc.), from where funds were diverted by the accession of CEE economies back in the early 2000s;- The formula, on the basis of which transfer funds are distributed will change, to include in addition to GDP per capita factors like unemployment rates among the younger generation, the migration situation of a country, etc.;- Political criteria , e.g. the independence of any member country's judicial system will be a precondition for receiving EU transfers;- The size of the EU's share out of each subsidized project's cost will be reduced (currently it is 84-85% in case of Hungary);- Also the way how funds can be distributed to final beneficiaries will change (although there is no indication yet on what this exactly means).Al...