Were the EU to block Hungary’s access to funds (if it vetoes financing for Ukraine at this week’s summit), as reports on Sunday suggested, this would probably have a smaller direct impact on Hungary’s economy and financial markets than most would think. But downside risks to the forint have clearly increased. And the secondary and longer-term effects of lost EU funding and worsening Hungary-EU relations could be significant, including lower FDI inflows and a higher country risk premia.
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