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EU crisis deepens as Hungary in turmoil

HUNGARY became the latest country to seek IMF and EU help today as Europe moved to toughen the fiscal rules behind the single currency.

The latest developments came as Finance Minister Michael Noonan admitted there could be further leaks on the Budget because of the amount of documentation sent to Europe.

Mr Noonan was forced to confirm there will be a 2pc hike in VAT after a leak from a German parliament finance committee last week.

"I can't give you a commitment that there won't be leaks in the future because to get the money that we require, a lot of documents are generated and they are all over the European countries. So we can't control what happens once they leave our hands," Mr Noonan said in Limerick last night.

"We are depending on money from various funds from Europe and the IMF to keep the country going," he added.

Meanwhile, in a dramatic U-turn, Hungarian Prime Minister Viktor Orban has asked the EU and the IMF for "possible" financial assistance in the face of economic woes.

IMF managing director Christine Lagarde confirmed that the IMF had received a request from the Hungarian authorities for possible financial assistance.

The European Commission said the request would be studied "in close consultation with EU member states and with the IMF".

Hungary's move came as European Central Bank policymaker Juergen Stark warned that the sovereign debt crisis has spread from the eurozone's periphery to its core economies and was now affecting economies outside of Europe.

"These are very challenging times...The Sovereign debt crisis has re-intensified and is now spreading over to other countries, including so called core countries. This is a new phenomenon," Mr Stark said in a speech to Ireland's Institute of International and European Affairs in Dublin.

"The sovereign debt crisis is not only concentrated in Europe, most advanced economies are facing serious problems with their public debt," he added.

The European Commission is to publish plans tomorrow for new powers to place distressed eurozone economies in a form of EU "administration" as part of its battle against the worsening sovereign debt crisis.

The plan, resisted for months by Germany, aims to radically expand the reach of budgetary oversight by the European authorities.

mlavery@herald.ie


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