The Czech Republic´s central bank has again aggressively moved to increase its key interest rate in a continuing effort to tame soaring inflation. The 1 percentage point hike Wednesday to 3.75% was the fifth straight increase since June and was higher than expected by analysts. The bank, which considers high consumer prices a major threat, also had indicated it would raise the rate. Inflation jumped to 6% in November, the highest level in 13 years and well above the bank´s target of 2% target. Banks controlling monetary policy worldwide have started shifting their focus from stimulating the coronavirus-battered economy to combating soaring consumer prices that arrived during the recovery. Last week, the Bank of England became the first in a major advanced economy to raise interest rates since the pandemic began. Others, including the European Central Bank and U.S. Federal Reserve, are moving to exit pandemic-related economic stimulus. In the Czech Republic, the last time the central bank changed its rates was Nov. 4, when it increased the key interest rate by a point and a quarter to 2.75%. It was the first such move under the new government led by conservative Prime Minister Petr Fiala, which was sworn in...
It was mentioned that the standard contracted volume of gas of around 80-90 mln cubic meters per day is delivered to Slovakia via Ukraine. Russian gas is being supplied to Slovakia in full as stipulated by bilateral contracts, a source in the directorate of the Slovakian gas transport system operator Eustream told TASS on Tuesday. A similar statement regarding his country was made by Ambassador-at-Large for Energy Security at the Ministry of Foreign Affairs of the Czech Republic Vaclav Bartuska. “The standard contracted volume of gas of around 80-90 mln cubic meters per day is delivered to Slovakia via Ukraine,” Eustream said. Meanwhile, when providing comments to reporters on the halt of Russian gas being pumped to Germany through the Yamal-Europe gas pipeline, Bartuska stressed that Russia did not restrict its supplies to EU countries, adding that there is no threat of disrupted gas deliveries, including to the Czech Republic. “Russia’s redistribution of gas transportation does not concern us [Czech Republic],” he said, adding that the Russian gas currently flows via the Nord Stream gas pipeline commissioned a decade ago. On Monday Gazprom again did not book pumping capacities for natural gas transit through Poland via the Yamal-Europe gas pipeline...
A report into the levels of actual individual consumption (AIC) in the European Union — used as a measure of material prosperity of households — showed significant differences across EU member states in 2020. According to Eurostat, the member state with the highest AIC index per capita last year was Luxembourg with a score 45 percent above the EU average. Germany followed in second at 24 percent above the average with Denmark, the Netherlands and Austria making up the top five with scores 22 percent, 17 percent and 16 percent above the bloc’s average respectively. In total, nine EU member states had an AIC index higher than the EU average. The lowest score was recorded in Bulgaria, languishing 39 percent below the EU average. Other countries that performed poorly included Croatia (32 percent below), Hungary and Latvia both at 30 percent below average, and Slovakia at 29 percent below average. Poland also found itself among the countries with an AIC per capita lower than the EU average, at 17 percent below the average. Within the last three years, the AIC per capita compared to the EU average has changed in the majority of member states. Clear growth was recorded in Romania, where the index increased up to...
The Czech Statistical Office (CZSO) published the current employment structure of the Czech Republic. The data shows that foreigners make up 14,2% of the workforce with 741,967 registered foreign employees. A big part of the foreign employees works in administration, customer support service, manufacturing, and construction industries. Both the number of foreign employees (644,164) and the number of foreign holders of a trade license (97,803) increased year-on-year in 2020, despite the ongoing covid-19 pandemic, CZSO said in its report published this week. From 2010 to 2019, the proportion of foreigners in the Czech labor market has grown steadily, though the Czech Republic is still below the European Union average in this regard. The trend was only interrupted last year due to the COVID-19 pandemic and related restrictions (-20,000 by mid-2020). The construction sector, where foreigners make up 28% of the workforce, was the hardest-hit. Despite this strong increase, the country still has a below-average share of foreigners in Europe compared to its overall population. The share of non-nationals rose in all sectors of the economy, and even make up the majority of workers (54%) in the administrative and support services sector. Ukrainians (145,000), Slovaks (121,000) and Vietnamese (62,000) are the main...
On his first day in office, Czech Prime Minister Petr Fiala sent a message to capitals around the world, one heard from Brussels to Budapest to Beijing: Our country is turning west. The message came in the form of Fiala’s choice for foreign minister, Jan Lipavský, a 36-year-old China hawk, Russian critic and vocal defender of the EU and NATO. In late October, he pledged to “pursue a renewed human rights tradition,” and vowed “strong cooperation at the EU and NATO level.” He specifically called out Russia and China as both representing a “threat to the Czech Republic,” arguing Czech foreign policy had to “properly reflect this.” The Czech Republic, he argued, had surrendered some of its principles in recent dealings with Russia and China. The country’s current relationship with the Kremlin, he added, is useless. Perhaps most notably for China, Lipavský favors deepening ties with Taiwan, a self-ruling island Beijing considers part of China. In October, Lipavský called Taiwan “an important economic partner of the Czech Republic … many times more important than the People’s Republic of China.” The statement will certainly rile Beijing, which has punished other EU countries such as Lithuania for warming to Taiwan. In addition to disagreements over Russia...
A new coalition government took office in the Czech Republic on Friday, with the coronavirus pandemic and soaring inflation presenting immediate policy challenges. President Milos Zeman swore in the Cabinet at the presidential chateaux in Lany, west of Prague, ending the government of his ally, populist billionaire Andrej Babis, as prime minister. Two political coalitions that together collected a majority of parliament seats in the country’s Oct. 8-9 election signed a power-sharing deal to rule together. The new partnership holds 108 seats in the 200-seat lower house, relegating Babis and his centrist ANO (YES) movement to the opposition. ANO narrowly lost the election with 27.1% of the vote. A three-party, liberal-conservative coalition known as Together, composed of the Civic Democratic Party, the Christian Democrats and the TOP 09 party, came in first with 27.8% of the vote. Together has formed a government with a center-left liberal coalition made up of the Pirate Party and STAN – a group of mayors and independent candidates – which placed third. Despite their differences on many issues, including climate change, same-sex marriage and the adoption of the euro, the coalition parties all support the Czech Republic’s membership in the European Union and NATO membership....
On Friday, President Miloš Zeman will appoint the government of incoming Prime Minister Petr Fiala, including the disputed nominee for foreign minister, Jan Lipavský. Fiala announced he would get all his nominees on Monday at a press conference after meeting with the president. However, according to Fiala, the president’s reservations about Lipavský persist. The new cabinet will be appointed on Friday, Dec. 17, at 11:00 a.m. at the Lány chateau, the residence of the president. The incoming government wants the confidence vote in the Chamber of Deputies to take place in mid-January when it finishes its program statement. Last Friday, Zeman confirmed that he did not want to appoint Lipavský as the country’s foreign minister, citing his insufficient qualification and reserved stance towards Israel and the Visegrád Four. Lipavský and the head of state also share different views on relations with Russia and China, which Zeman did not mention in an official statement as the reason for his objections. The government coalition planned to fill in a competence lawsuit against the president over the dispute. Fiala called Zeman’s change of mind a “surprising end of the hour-long meeting.” “The government, including candidate Lipavský, will be appointed this Friday as proposed to...
The president of the Czech Republic is set to swear in the country’s new government on Friday. The prime minister-designate Petr Fiala announced President Milos Zeman´s decision to appoint his 18-member Cabinet after visiting the head of state at the presidential chateaux in Lany, west of Prague, on Monday. Two coalitions that collected a majority of support in the Oct 8-9 vote have signed a power-sharing deal to rule together led by Fiala as the premier, and he was sworn in on Nov 28. A three-party, liberal-conservative coalition known as Together, composed of the Civic Democratic Party, the Christian Democrats and the TOP 09 party, led the election with a 27.8% share of the vote. Together teamed up with a center-left liberal coalition made up of the Pirate Party and STAN – a group of mayors and independent candidates – which came in third place with 15.6% of votes. The new partnership holds 108 seats in the 200-seat lower house of Parliament, relegating populist Prime Minister Andrej Babis and his centrist ANO (YES) movement to the opposition. Babis narrowly lost the election with 27.1%. The five parties in the future governing coalition are closer to the European Union than the...
Czech President Milos Zeman said on Friday he had rejected the nomination of a foreign minister in the incoming cabinet over the candidate’s reservations toward Israel and toward cooperation with other members in a central European alliance. Zeman said in a statement he was ready to appoint the rest of the cabinet but the rejection sets the stage for a legal battle with the new prime minister, Petr Fiala, leader of the centre-right Civic Democrats. Fiala has backed the foreign minister nominee, Jan Lipavsky, from the liberal Pirate Party, which is part of Fiala’s coalition that won an election in October. Zeman, who is not the head of the executive under the constitution but has frequently exerted pressure on cabinets, said Lipavsky lacked qualifications. Zeman said he was rejecting Lipavsky’s “distanced” stance on Israel and on the central European Visegrad group, whose fellow members Poland and Hungary have been at loggerheads with European partners over the rule of law. The Czech Republic has had strong ties with Israel and Fiala’s coalition pledged to hold that line. Lipavsky signed a letter alongside more than 400 other lawmakers from Europe in February in protesting Israel’s expansion of settlements in the West Bank....
Czech inflation accelerated to a fresh 13-year high in November, and while the acceleration was less pronounced than in the past four months, the central bank seemed likely to continue with policy tightening. Inflation in central Europe’s economies is running hotter than many European peers with external factors like supply problems and rising energy costs mixing with domestic drivers such as tight labour markets and strong wage growth. Central banks around the region have reacted with sharp rate rises, with Czech policymakers among the most aggressive, having delivered 200 basis points in hikes since September. Czech inflation data on Friday showed the headline rate rose to 6.0%, the highest level since October 2008. However, the growth from the previous month’s reading – 0.2 percentage points – slowed down after four months of steady acceleration. Analysts see the central bank raising interest rates further, in line with its outlook, as they point to the government’s waiver on value-added tax on energy as a factor preventing inflation from rising much stronger in November. “Inflation is more than 1 percentage point above the central bank’s forecast. The crown’s reluctance to strengthen also speaks in favour of monetary policy tightening,” Komercni Banka analyst Michal...
The potential adoption of the euro would further increase the benefits resulting from Czech Republic’s trade links with the euro area countries, according to an analysis conducted by the Czech National Bank. On the other hand, Czech Republic’s adoption of the euro currency would bring risks arising from the loss of the Czech National Bank’s independent monetary policy and the stabilizing role of the koruna’s exchange rate. Czech’s central bank divided its assessment into three groups: low-risk, neutral and high-risk indicators for adopting the euro. The document points out that the economic level of the Czech Republic measured as GDP per capita in purchasing power parity approached the euro area average in 2020. However, the convergence of price and wage levels did not progress significantly. That is a factor against the early adoption of the euro. The Czech National Bank also pointed out to the role of the euro in Czech companies, which use the common currency more and more. Other low-risk indicators include the high level of economic activity of the Czech population and the low unemployment rate. The analysis considers, for example, the extent of financial intermediation, private sector indebtedness, and the structure of financial assets and liabilities of non-financial corporations...
The future government said it will immediately cancel the current health ministry’s measures for mandatory COVID-19 vaccination from March 2022 for people over 60 and doctors, nurses and police officers as soon as it assumes power. It said it would do so immediately after it assumes power. “The future health minister will cancel this order, we do not agree with that,” said Marian Jurečka, leader of KDU-ČSL party (EPP) that is expected to be part of the future governing coalition. According to Jurečka, the current caretaker government has not used all the available tools to motivate people to get vaccinated. “We will not impose mandatory vaccination for specific age groups. Regarding certain professions, we want to hear from representatives of the unions,” Jurečka told Czech Television. The future government is worried that police officers, healthcare professionals and other crucial workers would quit their job rather than get vaccinated. Still, the caretaker government is convinced that such a step is necessary in the current situation. According to the current Social Affairs Minister Jana Maláčová, the plan of the future government to cancel the mandatory vaccination order is “boundless populism”. “In social services, vaccination against hepatitis is mandatory, but against COVID, it...
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