Hungary’s economic dive alarms EU

Hungary’s DAM, also known as Diosygor Steel, has laid off nearly all its workers, 878 of them. The factory suspended all production about three months ago. The EU is concerned that DAM is the tip of the eastern European iceberg, in terms of melting employment prospects.

Hungary’s economy contracted by 2.3 percent in the fourth quarter of last year alone. Its jobless figure, 8.4 percent, is also worse than the EU average, and it is rising faster.

The country is outside the euro zone, leaving borrowers struggling to pay foreign currency loans, as the Hungarian forint falls. Parched of funding, apartment construction in parts of Budapest has stopped. Even in the newly completed South Buda Business Park, the chance of selling or renting is near nil.

Apart from emergency help already used for Hungary and Latvia, the EU has earmarked some 160 billion euros of regional aid funds for eastern members until 2013. Most of this to be released gradually, project by project.

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tags: Economy, EU Summit, Hungary