The EU executive on Tuesday launched a never-used procedure against Hungary that could see the Hungarian government stripped of EU funding for falling short on anticorruption and flouting democratic standards.

The move comes two days after Hungarian Prime Minister Viktor Orban won re-election with an overwhelming majority, claiming his victory as a win over liberal values defended by Brussels.

The nationalist and ally of Russian President Vladimir Putin is frequently accused in Brussels of backsliding on democratic norms.

The European Commission "will now send the letter of formal notification to start the conditionality mechanism," European Commission head Ursula von der Leyen said to applause at a plenary session of the European Parliament in Strasbourg, France.

The latest clash with Hungary is over its public procurement system, conflict of interests and corruption and could see Budapest lose EU cash if endorsed by a super-majority of the 27 member states.

Orban's chief of staff Gergely Gulyas urged the European Commission "not to punish Hungarian voters for expressing an opinion not to Brussels' taste" in the elections.

"Brussels is making a mistake," he added, "the basic rules of democracy must be accepted by the Commission".

Gulyas urged the European Union to "return to common sense and dialogue".

Regularly criticised by the EU for undermining the rule of law, Orban attacked the "Brussels bureaucrats" in his victory speech, after securing a fourth term in office.

Hungarian Prime Minister Viktor Orban and members of the Fidesz party celebrate his election victory on the banks of the Danube River of Budapest, on April 3, 2022
Hungarian Prime Minister Viktor Orban and members of the Fidesz party celebrate his election victory on the banks of the Danube River of Budapest, on April 3, 2022 AFP / Attila KISBENEDEK

The conditionality mechanism was created in 2020, after a summit at the height of the coronavirus pandemic that agreed common borrowing to build an 800-billion-euro ($900 billion) pile of grants and loans for EU countries to recover.

Budget hawks, including the Netherlands and Nordic countries, demanded the conditionality mechanism to put guard rails around the spending of taxpayers' money.

Hungary and Poland challenged the new procedure in the EU's top court. But the European Court of Justice in February greenlit its use, saying the European Union "must be able to defend those values".

The commission has been under pressure from the European Parliament to apply the conditionality mechanism against Poland and Hungary. The legislature launched legal action to make the commission act.

"This is long overdue. The failure of the Hungarian government to manage public money transparently is well known and documented," said French MEP Gwendoline Delbos-Corfield.

"How can a member state use EU funds properly when the independence of the judiciary has been destroyed and there are no sufficient safeguards against corruption?" she added.

The use of the mechanism adds to a long list of other procedures the commission has taken over rule-of-law concerns against Hungary and Poland that has included court ordered fines.

The issue of corruption is also the reason for the commission's blocking of the Hungarian recovery plan, worth 7.2 billion euros in European subsidies.