Politics & Economics

Wage Growth and Living Standards in the Czech Republic Will Slow Down

The Czech Republic is facing the biggest turning point in its modern history as it has exhausted all previous growth drivers, lost its competitive advantages and fallen into the so-called middle-income trap, a new study has found. The study on Czech competitiveness was conducted by the Czech Chamber of Commerce. According to its findings, the country could face long-term economic stagnation and a slowdown in wage growth and living standards. Further convergence with the level of more advanced European countries will be complicated given the current structure of the economy, the study also found. “If the economy continues to converge and reach the level of Western countries, it will have to escape the middle-income trap, i.e. move towards higher value-added production. In such a situation, it is possible to remain competitive even with relatively more expensive labour,” said Chamber of Commerce President Zdeněk Zajíček. However, according to experts, the problem with the Czech economy today is that it generates only low-added value. Compared to other EU countries, the value added generated is one of the lowest in the EU, with the Czech Republic ranking 24th out of 27 countries. The economy has not yet escaped the middle-income trap, failing to...

by Prague Morning Aug 21, 2023

Israeli Prime Minister Benjamin Netanyahu to Visit Prague

Israeli Prime Minister Benjamin Netanyahu is set to visit the Czech Republic in October for a collaborative government meeting. The meeting will mark a renewed effort in discussions between the two nations. The news was confirmed by Seznam Zprávy, following a briefing from Veronika Kuchyňová Šmigolová, the incoming Czech ambassador to Israel. Netanyahu will visit Prague on October 9th. However, any unforeseen global or domestic circumstances could potentially lead to a change in this schedule. Netanyahu is currently grappling with pressure concerning contentious judicial reform and has also faced scrutiny regarding his selection of coalition partners and ministers. Israeli Finance Minister Bezalel Smotrich and Interior Minister Itamar Ben Gvir, both representing ultra-nationalist parties, will not take part to the trip. “The finance minister will not attend the meeting as there are no pertinent topics for discussion with him,” said the incoming Czech ambassador to Israel, Veronika Kuchyňová Šmigolová. She further highlighted the diverse range of subjects on the agenda, encompassing defense, science, research, innovation, education, and transport. Czechia is probably the most enthusiastic supporter of Israel in the EU and have long tried to protect Israel in votes at the UN. For example, when former US president Donald Trump moved...

by Prague Morning Aug 18, 2023

Czech Government Approves Bill to Tax Multinationals

The Czech government approved on Wednesday a bill allowing the taxation of large multinational companies which tend to book their profits in countries with a lower tax burden. The bill affects firms whose annual revenues exceeded 750 million euros in at least two of the past four years. The aim is for multinationals to pay a profit tax of at least 15%. “We will join countries that refuse to allow corporate profits to be diverted into tax havens,” Finance Minister Zbynek Stanjura said during a televised press conference. The bill has to be approved by the parliament and signed by the president to become a law. It is based on a European Union directive approved last December as a part of an OECD/G20 initiative to face the digitalization of the economy. The Finance Ministry expects the new tax raise the annual state budget revenues by 4-6 billion crowns. The opposition ANO party has said it will support the bill, but is against a fast-track procedure, saying it wants time to table proposed amendments to the bill.

by Prague Morning Aug 17, 2023

Czechs Facing Financial Strain as 25% Struggle to Support Families Amid Debt

The financial situation of Czechs is getting worse. One in four has already experienced a situation where they lacked money for everyday life. However, Czechs do not lack financial self-confidence and they value their knowledge of the world of money. The number of those who have experienced financial difficulties has risen by more than six percentage points year-on-year. While last year 54 per cent of people dealt with financial discomfort, today it is almost 60 per cent. This information was gathered from a global survey of 500 participants, ages 18 to 75, that Kantar carried out on behalf of the International Personal Finance group. The increase is more noticeable when there aren’t enough finances to cover living expenses, when income isn’t enough, or when loans are denied. At least once, one-fourth of Czechs have struggled with having insufficient money to support their family. Comparing this to last year’s one-fifth figure shows a huge increase. The proportion of people in this age group who experience such situations has increased from 20% to 34% in only one year. In addition, a higher number of people have reported having their loan applications rejected by banks (up 30%) or other lenders (up 85%) than...

by Prague Morning Aug 16, 2023

European Anomaly. Czechia Could Face a Second Economic Crisis – Analysis

While many nations are emerging from the economic crisis, certain European countries are witnessing a renewed deceleration in their economies. The Czech Republic, according to recent projections, finds itself in a precarious position. Here, purchasing power and consequently, household spending are declining, following Hungary’s lead. The International Monetary Fund (IMF) unveiled its summer forecast in late July, bringing optimism to nineteen of the world’s twenty largest economies, SeznamSpravy reports. Notably, the United Kingdom’s GDP is expected to grow by 0.4 percent beyond earlier projections, attributed to increased consumption, investments, declining energy costs, and reduced Brexit impact. In contrast, Germany anticipates a 0.3 percent economic contraction, marking its third consecutive shortfall. The country’s economic struggles, exacerbated by the pandemic’s arrival in 2020 and the repercussions of Russian aggression in 2022, have raised concerns of a lingering downturn. This grim outlook has prompted headlines like “situation turns toxic” in the automotive industry and warnings of “dark clouds gathering over the construction industry.” While Germany’s challenges capture attention, it is not alone in its difficulties. Sweden, Hungary, and the Czech Republic have been grappling with inflationary pressures and distinct catalysts behind their struggles. Sweden’s economic woes stem from a burst property bubble, which eroded...

by Prague Morning Aug 09, 2023

Euro Area Unemployment at 6.4 Percent, Czechia at 2.7 Percent

The European Union’s unemployment rate remained stable at its historic low of 5.9% in June, according to Eurostat. The unemployment rate for the 20 countries using the euro currency meanwhile stood at 6.4%, the EU’s statistics office said on Tuesday. This means that 12.802 million people in the EU, 10.814 million of them in the eurozone, were unemployed in June 2023. The unemployment rate has steadily declined across the EU since the peak of the pandemic in 2020. Women are more likely than their male counterparts to be out of work in the EU with respective unemployment rates of 6.1% and 5.7%. How EU countries compare Spain continued to register the highest unemployment rate across EU countries in June at 11.7%, followed by Greece at 11.1%. At the other end of the spectrum, Malta registered the lowest unemployment rate at 2.6%, followed by Czechia and Poland, both at 2.7%. Most EU countries saw the unemployment rate stay stable or dip slightly from May, but Bulgaria, Czechia, Croatia, Lithuania, Luxembourg, Austria, and Finland all saw the monthly rate increase slightly. Youth unemployment In June 2023, 2.739 million young persons (under 25) were unemployed in the EU, of whom 2.204 million were...

by Prague Morning Aug 03, 2023

Czech Economy Pulls Further Away from Recession

The Czech economy grew slightly on a quarterly basis in the second quarter, showing signs of recovery as domestic demand rose while inflation pressures eased somewhat, preliminary data showed on Monday. The Czech data was the first in central Europe to show second-quarter developments, with a quarter-on-quarter rise of 0.1% after stagnation in the first quarter, and a year-on-year drop of 0.6%, a touch more than expected. While the Czech Statistical Office did not give a breakdown of the data, it said domestic demand contributed to growth and household consumption stagnated on a quarter-on-quarter basis. Since last year, central Europe’s economies have been hit by the strain of high prices cutting sharply into consumer activity, hitting growth sharply. Only slight relief is expected in 2023. Inflation in the Czech Republic fell to single-digit levels at the end of last quarter and the central bank is expecting it to cool further later this year. But interest rates remain high and the central bank is showing no rush to cut borrowing costs. Capital Economics said the data showed the recession the country felt at the end of 2022 was over but a recovery would be weak this year. “The recovery is likely...

by Prague Morning Jul 31, 2023

Czech Authorities Freeze Assets of Russian Oligarch Vladimir Yevtushenkov

The channel CT24 reported that the Czech authorities have frozen the assets of Russian oligarch Vladimir Yevtushenkov. According to Czech media, Yevtushenkov secretly controls an electric dryer company and owns the Savoy Westend hotel in Karlovy Vary. The total property of the Yevtushenkov family in Karlovy Vary is valued at 500 million Czech crowns (about $23 million). Yevtushenkov was put on the Czech sanctions list in June 2023. He is also under sanctions from the UK, Australia, New Zealand, and Ukraine. Forbes estimates Yevtushenkov’s fortune at $1.7 billion, claiming he still owns a 59% stake in the Sistema conglomerate, which operates several large Russian businesses including telecoms provider MTS and online retailer Ozon. In April 2022, Yevtushenkov reduced his stake in the company to 49.2%, transferring 10% to his son Felix and thus ceasing to be a controlling shareholder. His son and his wife are also on various sanctions lists.

by Prague Morning Jul 31, 2023

Prague Officials Seek to Cancel Concert by Renowned Russian Opera Singer

Prague’s authorities are considering banning a concert by the Russian opera singer Anna Netrebko set to take place in the city in October, Seznam Zprávy reported. The news site said the event’s organiers would seek financial compensation from the city if it is blocked. This announcement comes amid growing political opposition from Prague’s leadership towards the concert, owing to Anna Netrebko’s past connections with Russian President Putin and her appearance on the Ukrainian sanctions list. Jiří Pospíšil, the deputy mayor of Prague overseeing cultural affairs, has expressed his determination to find a way to halt the concert, stating that holding the performance would be insensitive to the struggling Ukraine and that current times demand greater consideration for symbolic gestures. The concert, scheduled for October 16th at Smetana Hall in the Municipal House, is being organized by the Nachtigall Artists agency. Despite concerns about political interference, the agency’s producer, Alena Kunertová, has expressed confusion and emphasized that Netrebko had publicly denounced the war and distanced herself from President Putin. The concert has already generated significant interest, with approximately eighty percent of tickets already sold. In the event of cancellation, both the agency and the artist herself would seek compensation, as...

by Prague Morning Jul 28, 2023

Czech Government Sue Russia Over Lease Payments on Embassy Land

The Czech Foreign Ministry said it filed a lawsuit against Russia for compensation of 53 million crowns over lease payments on land in Prague and other cities used by the country’s embassy. In May, the Czech centre-right government rescinded orders from the 1970s and 1980s, made by the country’s then Communist rulers, that granted Russia the use of dozens of plots of lands free of charge. Russia would henceforth have to pay leases on the plots, the foreign ministry said after the orders were cancelled in May. That decision move marked a further deterioration of bilateral diplomatic relations that have been frosty since before Russia’s invasion of Ukraine. Foreign Minister Jan Lipavsky said on Wednesday the lawsuit, filed in a Prague court, was for “unjust enrichment” by Russia over the past three years. “We took this step because we did not receive any response (from Russian authorities) during pre-court calls,” he said in a statement, adding the ministry would not give further details. Czech European Affairs Minister Martin Dvorak said in May that unauthorised profits from the land could not be allowed to support the “occupation of Ukraine”. Russia’s Foreign Ministry said that retroactive demands for rent looked “like a...

by Prague Morning Jul 26, 2023

Russia Accuses Czech Republic of Human Rights Violations

The Russian Foreign Ministry has accused the Czech Republic of committing human rights violations in an extensive report titled “On the situation with human rights in individual countries.” The report examines the human rights situation in 43 countries, with a particular focus on the Czech Republic. According to the document’s authors, the Czech authorities have shown reluctance to address “chronic human rights problems” and instead appear to be adopting a “Russophobic course.” The report states: “The Czech Republic harbors ongoing issues that its authorities seem unwilling to resolve, as they actively engage in actions detrimental to foreign policy, particularly in their dealings with Russia. In recent years, Prague has notably taken a systematic slide towards a Russophobic stance, making human rights a key domestic and foreign policy priority. This slide has taken aggressive forms, including waging a ‘war’ against monuments commemorating Soviet soldiers, and whitewashing Nazi collaborators openly.” “Furthermore, there are increasing attempts to push the concept of ‘equal responsibility of totalitarian regimes’ for the outbreak of the Second World War in Czech socio-political discourse. This campaign seeks to equate symbols of the USSR and the Red Army with the Nazi swastika, leading to their prohibition, while also attempting to...

by Prague Morning Jul 26, 2023

The Czech Republic Appoints First-Time Ambassador to Kosovo

Fifteen years after the recognition of Kosovo’s independence, the Czech Republic is appointing an ambassador to Kosovo for the first time. Namely, Bohumil Mazánek, a career diplomat, former ambassador to Lithuania, consul general in Shanghai and Katowice, and chargé d’affaires in Thailand will be the first Czech ambassador to Kosovo. The announcement was made by the Ministry of Foreign Affairs of the Czech Republic in a press release. The President of the Czech Republic, Petr Pavel, at the proposal of the Government, has appointed 26 new ambassadors of the Czech Republic to the world, including Bohumil Mazánek in Kosovo, announced the Ministry of Foreign Affairs of the Czech Republic. “The Ministry wants diplomatic relations with Kosovo to be at the highest level because it is necessary to correct the absurd issue that the Czech Republic recognizes the independence of Kosovo, has an embassy in the country but does not have an ambassador”, said the spokesperson of the Ministry of Foreign Affairs of the Czech Republic, Daniel Drake. Until now, the Czech Republic only had a charge d’affaires at its embassy in Kosovo, because presidents Vaclav Klaus and then Miloš Zeman were opponents of the decision of the government of the...

by Prague Morning Jul 25, 2023

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