Hungarian Prime Minister Viktor Orban came under plenty of fire from European lawmakers for a measure outlawing content for minors that can be deemed to “promote homosexuality.” But speaker after speaker in Strasbourg on Wednesday kept up a barrage of criticism of both the European Commission and the European Council, urging them to punish Orban's government by blocking funds from the EU stimulus package. How can European taxpayers fund a government breaching EU values, the lawmakers asked. It now looks like the commission will withhold its approval of Hungary’s recovery plan beyond a July 12 deadline, according to people familiar with the matter. The official reason would be concern over a lack of safeguards to prevent corruption, although a final decision on a delay hasn’t been made. More broadly, however, the bigger fight remains over whether — and how — the EU will act on its concerns over Hungary’s rule-of-law violations.

What’s Happening
Inflation Target | The ECB has agreed to raise its inflation goal to 2% and allow room to overshoot it when needed, according to officials familiar with the matter. The results of the ECB’s strategy review will be released this afternoon in Frankfurt, followed by a briefing by bank president Christine Lagarde.

Vaccination Slowdown | New signs are emerging that the vaccination pace is slowing in many European nations, raising concerns that the delta variant will continue to make inroads. Countries including Germany, France, Italy and Austria are struggling to maintain the pace of shots, while cases are rising again in Portugal and Spain. 

Gaining Traction | Controversial TV pundit Eric Zemmour, who could run for French president next year, is making a dent in far-right candidate Marine Le Pen’s voter pool, according to a poll released yesterday. Both Emmanuel Macron and Le Pen would obtain 24% of the votes in the first round — but if Zemmour were to enter the race, Le Pen would get 22%.

Travel Shift | Britons who have received both doses of a coronavirus vaccine are set to be given more freedom to travel around the world from July 19, under plans due to be announced today by the U.K. Under existing rules, visitors to more than 100 destinations — including the U.S. and some popular European spots — are required to isolate for 10 days on their return to the U.K.

In Case You Missed It
Brighter Outlook | The commission boosted its growth forecast for the euro area to 4.8% from 4.3% previously, and predicted a better performance in 2022 as well. But commission Vice President Valdis Dombrovskis said the bloc will have “keep a close eye on rising inflation,” driven in part by stronger demand.

Tweaked Demands | The European Central Bank will take greater account of stress tests when setting buffers that lenders should hold on top of the minimum requirements for financial strength. Adjustments to ensure the measure reflects the riskiness of individual banks will start this year.

Simmering Tensions | Russia expelled a senior Estonian diplomat yesterday on charges of espionage, in the latest wave of diplomatic strain between Russia and the Baltics. The Estonian Foreign Ministry called the arrest of Mart Latte, its general consul in St. Petersburg, “staged” and dismissed the allegations as unfounded. 

Reinforcing Border | Lithuania will double the troop presence on its border with Belarus, which has illegally sent immigrants into the Baltic country in protest of EU sanctions against it. Belarusian President Alexander Lukashenko threatened in May to send drugs and undocumented migrants into the bloc unchecked, with Lithuania a prime target as it’s become a temporary home for his political rivals.

Pricey Hydrogen | A German think tank concluded that, without additional government intervention, European carbon prices might triple to more than 200 euros and hydrogen from renewable energy will still struggle to be price competitive with fossil fuels. 

Romanian Rates | Romania signaled it may follow nearby countries in raising interest rates later this year as it maintained the EU’s highest benchmark borrowing costs.

Chart of the Day

Officials in several European countries are warning about the possibility of a fourth wave of Covid-19 cases even as vaccination rates are starting to flag. Daily case rates are already at the highest in five months in the U.K., while the numbers have also been climbing in Spain and Portugal. German health minister Jens Spahn said the country must make vaccines more widely available in public markets and sports clubs. Since May, Germany had been administering more than a million shots on several days each week, but last week only managed that on Wednesday.

Today’s Agenda
All times C.E.T.

• 1 p.m. ECB releases strategy review in Frankfurt, followed by briefing by bank president Christine Lagarde 
• EU Commission Vice President Vera Jourova speaks at an event on the EU’s counter-terrorism efforts 20 years after 9/11
• Commission President Ursula von der Leyen visits Cyprus and Croatia to promote the recovery plan
• EU employment ministers meet in Slovenia to discuss boosting opportunities for unemployed young people.