The decisions by Poland and Hungary this week to veto the EU budget and recovery fund brought to a head a conflict about the rule of law that threatens to suspend EU funds. There's a lot at stake, including EU funds worth 16% of GDP or so over the next seven years for each country as well as question marks about the future relationship with the EU. Meanwhile, Turkey's central bank stepped up to plate this week by assuring investors that a shift towards more orthodox policymaking is truly underway. Local markets may have further to rally over the coming months but we are still sceptical that this shift in policymaking will stick.
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