Business News

Finance Ministry 2010 budget plans back on the table

The Czech budget for next year has elbowed its way back to the top of the economic and political agenda this week after the abandonment of early autumn elections. Caretaker Prime Minister Jan Fischer has said he will only continue in office for longer if politicians approve a 2010 budget with a deficit under 170 billion crowns. Politicians cold shouldered a tax-raising and cost cutting package tabled by Finance Minister Eduard Janota before the summer which sought just that. The centre-right Civic Democrats did not like tax rising proposals and the left-wing Social Democrats objected to cuts in social spending and hikes in sales tax. But faced with the possibility of even greater chaos if Prime Minister Fischer resigns, there are now signs of compromise all round.

Czech crown strengthens amid political storm

The recent political turmoil has done nothing to weaken the robust Czech currency. The crown actually climbed this week to a 10-month high and at one point pushed the euro to below 25 crowns. Analysts say one of the reasons is the still relatively high interest rates compared with the near zero levels of some West European countries. Another is the expectation of a big buy order for crowns following the announcement that South Korean conglomerate Doosan is going to buy Czech turbine maker Škoda Power for around 450 million euros.

New board takes over at Czech Airlines

Photo: www.csa.cz The strong crown will do little to help struggling state-controlled carrier, Czech Airlines. The government this week brought in new management to pilot the airline faced with record losses, a sharp drop in revenues and no cash reserves to help it cope. A large part of the new team was involved in the cost-cutting restructuring of Czech steel companies. New supervisory board chairman Václav Novák has warned that cuts in labour costs are unavoidable to keep the airline going. The airline this week began to lay-off several dozen of its around 4,500 staff but a deal on much deeper cuts will be needed with unions.

Coffee Heaven sees Czech sales slip

The Czech Republic is no longer a paradise for international coffee bar operator Coffee Heaven. The Central European coffee house specialist complains in its latest annual results that it was badly hit by a slump in demand from Czechs and fall off in thirsty tourists visiting Prague. The Czech Republic is the group’s second most important market after Poland. Coffee Heaven now says it will concentrate on developing sales in Poland and Hungary.

Postponed elections promises boost for advisors and advertisers

The postponement of October’s elections is good news at least for hard pressed advertising firms and media consultancies helping the political parties with their campaigns. Such companies have been among the biggest casualties of the financial crisis. Parties had already begun spending part of their estimated half billion crown budget on their campaigns and will not be able to cancel all of the poster space and ad campaigns already booked ahead. Some ad sector experts now expect the parties will have to find around a third as much new money again to payroll a new general election campaign next summer.