According to a report released by the European Commission yesterday, Hungary and Slovenia are seen to have an outside chance of meeting the targeted 2010 Euro zone accession date, while other new EU entrants are seen comfortable with this date. For Hungary, the document identified the budget deficit (which they see at 6.7% for this year and 7.0% for 2007), highest in the EU, as the key setback in Hungary's economy. The EC document also mentions the Government's declared intention to consolidate state finances.
We see the news as slightly negative as the Government pledges that the 2010 euro entry date is feasible with the (not yet detailed) upcoming budget reforms. We believe such comments could make the markets nervous and reflect on today's trading.