Council of the European Union: EUR 495.2 million in cohesion fund commitments suspended

The Council adopted a decision suspending EUR 495.2 million in scheduled commitments for Hungary under the EU's cohesion fund, taking effect as of 1 January 2013.

It also issued a recommendation under the EU's excessive deficit procedure, setting 2012 as the target year for correction of Hungary's deficit. Adoption of these measures follows a decision taken in January deeming action taken to correct its excessive deficit to be insufficient. This is the first time that a clause enabling the suspension of commitments has been invoked since the cohesion fund was established in 1994. Beneficiary countries can face such a measure if the conditions of sound government finances are not maintained. Commitments suspended for Hungary amount to EUR 495.2 million and the maximum level of 0.5 per cent of nominal GDP. This corresponds to 29 per cent of scheduled commitments for 2013. However, the Council agreed to return to the matter at its meeting on 22 June with a view to lifting the suspension if Hungary applies the necessary corrective measures. Hungary has been subject to an excessive deficit procedure since July 2004, when the Council also issued a recommendation on action to be taken in order to bring its government deficit below the EU's reference value of 3 per cent of GDP. The Council issued further recommendations in March 2005 and October 2006, having found in January 2005 and November 2005 that effective action had not yet been taken. The October 2006 Council recommendation set out measures for correction of the deficit by 2009, one year later than previously scheduled. With the economic downturn however, the 2009 target could not be met, and Hungary obtained a EUR 6.5 billion loan from the EU in November 2008 as part of a EUR 20 billion package of assistance from international lenders. In July 2009, the Council issued a revised recommendation, setting 2011 as the target year for reducing the deficit below the 3 per cent of GDP reference value. It is expected that Hungary's general government balance turned into a surplus in 2011, but only thanks to one-off revenues of almost 10 per cent of GDP linked to the transfer of pension assets from private pension schemes to the state. So whilst it would appear that Hungary formally respected the reference value in 2011, the Council in January 2012 considered it not to have done so on the basis of a structural and sustainable correction. The Council therefore found Hungary's response to its July 2009 recommendation to be insufficient. Meanwhile, Hungary has requested further financial assistance from the IMF and the EU. The recommendation adopted by the Council sets 2012 as the target year for putting an end to the current excessive deficit situation. It calls on Hungary to bring its deficit below the 3 per cent of GDP reference value in a credible and sustainable manner. More specifically, the recommendation calls for an additional fiscal effort to meet a deficit target of 2.5 per cent of GDP in 2012, and for additional structural measures to ensure that the deficit in 2013 remains well below 3 per cent of GDP, even after the phasing-out of one-off measures. It sets a deadline on 13 September for the government to take effective action to this effect, and to specify the measures that will be necessary to progress towards a durable correction of its deficit.

For more information:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/128917.pdf

Socialists and Democrats encourage deeper and broader EU investigation of controversial laws in Hungary

European Socialists and Democrats (S&D) in the European Parliament regret that the European Commission today had to announce that the Hungarian government's clarifications on three recent controversial laws were not sufficient to dispel serious concerns on their compatibility with EU legislation and values. S&D have called for a "deeper and broader investigation". Following today's decision by the European Commission to pursue accelerated infringement proceedings regarding recent controversial laws on the independence of the data protection supervisor, the retirement age for judges and the independence of the central bank, S&D vice-president Sylvie Guillaume MEP said: "Unfortunately, the European Commission's decision confirms that our concerns were well-grounded and that PM Orbán's arguments were not convincing enough to prove the compatibility of these laws with EU legislation.

Source: http://www.socialistsanddemocrats.eu

MEP Zita Gurmai emphasized the need for a European Youth Guarantee

The rapidly growing number of unemployed young women is set to have a deep and sustained impact on society. Member of European Parliament (MEP) Zita Gurmai, member of the Hungarian socialist delegation and leader of the woman organization of European Socialists called PES Women delivered her message at the European Young Socialists Winter University. MEP Gurmai said "our youth employment campaign is a question of social justice, particularly for women. This is a full scale crisis that European decision makers must turn all their attention to". Making a reference to the recent announcement by the European Commission to call for quotas in executive boardrooms, MEP Gurmai said that "The world outside the boardroom is where this crisis is wrecking havoc on women's lives. On international women's day that is where we need to have our focus – on the ordinary women who are struggling to make ends meet, balance work and life, or simple trying to find a job". MEP Zita Gurmai highlighted the gender perspective of the PES campaign, which goes under the slogan "Your Future Is My Future". Studies show that women are often overqualified and underpaid for their jobs, their unemployment rate is higher and they are more likely to end up in precarious jobs. The PES proposals aim to fight the gender segregation in education and in the labour market, and to reconcile the work/private life balance. The suggested improvements would have remarkably positive effects on growth as well as on ensuring the economic independence of women at all stages of their life. A European Youth guarantee - a "new social contract" for young people based on successful existing schemes in Austria and Finland - would need only €10 billion of unused EU funds. Set against the annual €100 billion cost of youth unemployment in Europe it is an easy sell", as MEP Zita Gurmai said.