Brussels is proposing a freeze on €495m of EU funds destined for Hungary in 2013, the European Commission said today, the first time it has ever taken such a measure.
"This unprecedented step follows the Commission's repeated warnings to Hungary urging it to step up its efforts to end the country's excessive government deficit, and its subsequent failure to take appropriate action," the commission said in a statement.
The freeze in ''cohesion funding'', aimed at reducing economic disparities across the 27-nation, would take effect from January 2013 and would concern 29% of Hungary's allocations for the year.
The EU executive last month concluded that Hungary had not taken effective action to reduce its deficit below the target of 3% of gross domestic product by 2011 "in a sustainable and credible manner".
"Today's proposal should be seen as a strong incentive for Hungary to conduct sound fiscal policies and put in place the right macro-economic and fiscal conditions to ensure an efficient use of Cohesion Fund resources," Economic Affairs Commissioner Olli Rehn said.
"It is now for the Hungarian government to act before the suspension takes effect," he said.
