Euro outsiders not making much accession progress, ECB says
"Public finances have deteriorated in most countries since the 2024 Convergence Report, with debt-to-GDP ratios in some cases rising significantly," the ECB said.
European Union nations outside the euro have made little to no progress in convergence in recent years and even Hungary, the nation most actively discussing accession, meets none of the key criteria, a European Central Bank report showed on Wednesday.
All EU members except for Denmark have a legal requirement to adopt the common currency but non-compliance is not penalised, so only a few are actively working on joining, with most others preferring to retain the leverage provided by an independent monetary policy.
"Progress towards compliance with the convergence criteria has been held back by external shocks," the ECB said in a biennial report, echoing a similar conclusion made two years ago and suggesting that progress has essentially stalled.
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"Public finances have deteriorated in most countries since the 2024 Convergence Report, with debt-to-GDP ratios in some cases rising significantly," the ECB said.
While Bulgaria joined the currency bloc at the start of the year, the five prospective members --the Czech Republic, Hungary, Poland, Romania and Sweden -- all appear many years away from membership.
Hungary's new government promised to meet key conditions, commonly known as the Maastricht criteria, by 2030 but the country is among the furthest away.
It has the highest debt and interest rate level among the five, while its budget deficit, inflation rate and its currency's volatility level are all outside reference values.
In addition, its central bank law does not comply with requirements and it needs to improve the rule of law and tackle corruption, the ECB's report said.
"Further improving the quality of public institutions and ensuring that they are free from undue political interference, fighting corruption, implementing adequate product market policies and safeguarding the rule of law, are prerequisites for private sector-led economic growth," the ECB said of Hungary.
Hungary also faces structural challenges related to ageing as well as emerging skill mismatches in the labour market, the ECB added.
