UK and European local government leaders have warned that councils could take a hit from a new European Commission policy linking the payment of regional funds to the financial state of national governments.

All the political groups in the 344-member Committee of the Regions, which represents local and regional government across the 27 states, have issued a statement attacking the EC's decision to withhold 495 million euros of Cohesion Fund money to Hungary in 2013. The EC says this is because of the state of Hungary's budget deficit.