EU presses Hungary on new austerity measures

The European Union stepped up the pressure yesterday against Hungary, saying its fiscal policies were unsustainable and threatening legal action over a new constitution that some fear could push the country back into authoritarianism.

The warnings escalated the standoff between Hungary’s government and the EU and underlined the difficulty Budapest will face in negotiating a vital rescue package from the EU and the International Monetary Fund.

Hungary – which is in the 27-nation EU but uses its own currency, the forint – has been sharply criticised for a new constitution that the EU fears hurts the independence of the country’s judges, its central bank and its data protection agency.

Some civil rights organisations and the European Parliament have warned that the former Soviet bloc nation of ten million, which led the fight against communism with its 1956 revolution, risks losing its democratic footing.

EU economic affairs commissioner Olli Rehn yesterday criticised the fiscal policies of prime minister Viktor Orban’s hard-right government, warning the EU could withhold valuable development funds if Hungary continues to resist taking new cost-cutting measures.

The European Commission is analysing whether Hungary’s new laws violate the EU treaty.