Optimism about the prospect of an end to the war in Ukraine came and went this week and, given the complexity of the issues at stake, it is likely to be some time yet before a breakthrough in talks is achieved. Meanwhile, President Putin stepped up pressure on the West as he set today as the deadline for gas payment in rubles. While we expect gas to keep on flowing, it may simply strengthen Europe’s efforts to reduce its reliance on Russian energy. Finally, Hungarians go the polls on Sunday and a victory for the ruling Fidesz party seems likely. The most immediate tasks will be to rein in the budget deficit and tackle Hungary's growing macro imbalances.
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