Tensions deepen before key EU summit as leaders push back at ‘unreasonable’ Hungarian demands – Europe live | France

Eurozone narrowly avoids recession as German economy shrinks

Larry Elliott

The 20-nation eurozone has narrowly avoided recession after the region’s economy flatlined at the end of 2023, official figures show.

Zero growth in the single currency zone in the final quarter of last year followed a 0.1% economic contraction in the third quarter, meaning that recession – defined as two consecutive quarters of contraction – was just averted. Economists polled by Reuters had expected the eurozone’s economy to shrink by 0.1% in the fourth quarter.

The eurozone’s two biggest economies both performed poorly in late 2023, with Germany contracting by 0.3% and France posting no growth for a second successive quarter, according to Eurostat, the EU’s statistical agency.

There was better news from the other two members of the eurozone’s “big four”. Italy, which had been expected to stagnate, recorded growth of 0.2%, while Spain expanded by 0.6% – three times the 0.2% forecast.

Of the smaller eurozone economies, Portugal grew by 0.8% in the final quarter, Austria expanded by 0.2%, while Ireland’s economy contracted by 0.7% – its fourth successive quarterly fall in 2023.

Read more here.

Spanish MPs are preparing to vote on the deeply divisive amnesty law for Catalan separatists that enabled the prime minister Pedro Sánchez’s socialist-led coalition government to secure a second term in office after last year’s inconclusive general election.

While Sánchez argues that the amnesty – which he previously opposed – is needed to help Spain move on from the confrontations of the past, his opponents have accused him of hypocrisy, cynical manoeuvring and putting his own political survival before the country’s interests.

Speaking as the PSOE and Junts rushed to finalise the text of the bill amid enduring disagreements, the PP leader, Alberto Núñez Feijóo, said Sánchez was making a mockery of Spanish democracy.

He said:

This afternoon, Sánchez and the PSOE will carry out the greatest affront to dignity, equality and the separation of powers seen in a western democracy.

Feijóo also said the prime minister had turned politics on its head by “affording criminals the privilege of writing law and granting themselves an amnesty”.

Even if the bill is approved in congress – where Sánchez and his allies have a narrow majority – it will still have to go before the senate, where the PP has an absolute majority. Once law, the amnesty will be applied by judges on a case-by-case basis.

Read the full story here.

Alexander Stubb, a centre-right former prime minister who is well-known on the European political stage, is the favourite to win the second round of Finland’s presidential election, according to a new poll commissioned by Helsingin Sanomat.

If the vote were held now, Stubb would win 57%, compared to 43% for Pekka Haavisto, a former foreign minister.

The Corruption Perceptions Index average for Western Europe and the EU has dropped for the first time in almost a decade, Transparency International said today.

“The 2023 CPI reveals that anti-corruption efforts have stagnated or declined in more than three-quarters of the countries in the region. Among the 31 countries assessed, only six have improved their score, while eight have declined since 2012,” the organisation said.

The top scorers in the region were Denmark, Finland, and Norway, while the worst performers were Romania, Bulgaria and Hungary.

Daniel Freund, a German Green member of the European parliament, has cautioned that the EU should not link its quest to bring Hungary’s Viktor Orbán onboard with a Ukrainian aid package to rule of law sanctioning mechanisms.

As much as I agree with the EU taking a tougher stance on Hungary: Neither the Article 7 procedure nor the rule of law conditionality must become bargaining chips at the European Council.

There’s enough evidence in Hungary to justify the suspension of voting rights. There’s sufficient legal basis to suspend all EU funds to Hungary due to rampant corruption and a broken rule of law.

Member states should not imply to Viktor Orbán that he’d be off the hook if he drops his veto. Both tools are meant to repair the rule of law in the EU. They should be pursued no matter if Orbán vetoes Ukraine aid or not.

Kaja Kallas, the Estonian prime minister, said today “we need to press ahead with using Russia’s frozen assets for Ukraine.”

“It is not only morally, but also legally the right thing to do,” she said, adding that she looks forward “to discussing next steps with EU leaders this week” at the European Council summit.

In an interview with Le Point, published this morning, Hungary’s Viktor Orbán repeated a position Budapest has articulated over the past days: that it is now open to providing Ukraine aid from the EU budget, as long as a unanimous decision would be taken every year to allow assistance to continue – effectively giving Budapest an annual veto.

We decided to make a compromise offer: fine, we do not agree with the budget amendment. We do not agree that we should give EUR 50 billion [to Ukraine], which is a huge amount. We do not agree that we should give it for four years and so on.

But let it be, Hungary is ready to participate in the solution of the twenty-seven, if they guarantee that every year we will decide whether or not we will continue to send this money.

And this annual decision must have the same legal basis as today: it must be unanimous. Unfortunately, this position is understood or interpreted by some countries as a means to blackmail them every year.

The centre-right European People’s party group spokesman on budgets, the Portuguese MEP José Manuel Fernandes, said today that leaders should not give in to “blackmail” from Hungary’s leadership.

In a statement, he said:

It is not acceptable for one EU prime minister, Viktor Orbán, to harm European citizens – the 450 million European citizens – with his blackmail and with his blockade tactics. This political blackmail should never be rewarded.

The MEP added:

Today’s challenges require EU solidarity, backed up with concrete actions and coordinated polices.

Nationalism is not a solution. ‘Proudly alone’ is not a solution and, therefore, we ask that the Council decides quickly on the revision of the EU’s long-term budget, the Multiannual Financial Framework (MFF).

The EU budget currently lacks the financial resources needed to meet our objectives. It must be reinforced with enough resources to tackle pressing issues such as migration, for strategic investments, and to enhance the competitiveness of the Union. We also urgently need to confirm financial support for Ukraine in the form of the €50 billion Ukraine Facility.

European governments are losing their patience with Hungary ahead of this week’s summit.

A senior European official said that member states are hearing different things from Hungary’s negotiator, János Bóka, compared to what the country’s leader, Viktor Orbán, is communicating publicly and that there is a belief that the prime minister is seeking to keep his cards open ahead of talks in Brussels.

The official added:

This time patience is really running thin on Hungary.

This person also noted that they believe Orbán is interested in trying to get more of Hungary’s EU funding unfrozen – but that this would be politically a “killer” for the European Commission president, Ursula von der Leyen, who is expected to seek a second term.

With only days to go until Thursday’s summit of EU leaders, it is still unclear whether 26 heads of state and government can convince Hungary’s Viktor Orbán to agree to long-term financial aid for Ukraine.

A senior European diplomat told the Guardian this morning that member states are united when it comes to opposing Budapest’s demands.

I hope so, even though as usual he will try to extract as many concessions as possible.

This time, however, I hope that there is little for him to gain – Member States are quite united against unreasonable four demands of Hungary – and at the same time there are messages being passed about possible consequences for Hungary’s continued obstructive behaviour.

A senior European official, meanwhile, said the summit can go several ways.

Hard to say, I think all options are open.

European capitals are on tenterhooks as leaders prepare to meet in Brussels later this week for a summit intended to seal a deal on long-term funding for Ukraine.

Hungary’s prime minister, Viktor Orbán, blocked a proposed €50 billion EU package for Kyiv late last year, prompting leaders to schedule the February 1 gathering with the hope of reaching a compromise.

The package, a mix of grants and loans, would provide a lifeline for Ukraine’s economy.

But while Budapest insists that it has proposed a compromise, the sides have yet to come to an agreement. Hungary appears to want a deal that would allow it to block the flow of aid to Kyiv in the future.

Meanwhile, frustrations are growing with Hungary’s leadership – and not just because of the Ukrainian aid.

Budapest is continuing to delay Sweden’s Nato accession, as the Hungary parliament remains the only legislature within the defensive alliance that has yet to sign off on Swedish membership.

A meeting between Orbán and his Swedish counterpart, Ulf Kristersson, could take place on the sidelines of the EU summit in Brussels this week.

Good morning and welcome back to the Europe blog.

Send tips and comments to lili.bayer@theguardian.com.