S&P: Lower EU funds might affect CEE countries ratings

Expected lower inflows of EU funds in the new European Union financial perspective beginning in 2021, might affect CEE countries ratings in a negative way, S&P rating agency said. “With Brexit, and increasing talks about a two-speed EU, as well as growing friction between nationalist governments in the CEE countries and their European partners, S&P Global Ratings believes that the next EU budget cycle, structural and investment funds can not only contract, but also weaken the potential economic growth in the region in the medium-term,” the report said. According to the agency, when the UK leaves the EU as the second largest net payer, funds available in the new perspective since 2021 “will almost certainly be reduced.” S&P also pointed out that lower inflows of EU funds could put pressure on expenditures and overall public budgets in the long run on account of significant infrastructure needs, which in turn could weaken the fiscal balance and lead to increased public debt.