Nečas says government cuts could slow growth next year

22-08-2010

The prime minister, Petr Nečas, says that government cost-cutting measures could cause growth in the Czech economy to slow by 0.6 or 0.7 percent next year. Speaking on a TV debate programme he said, however, that the cuts were necessary – otherwise debts would pull the country’s economy down in the medium term. Mr Nečas’s coalition government has pledged to balance the budget by 2016. To achieve this, it plans to reduce state sector salaries and expenditures by 10 percent, cut social welfare and limit support for building savings.

The Czech National Bank predicts GDP growth of 1.8 percent in 2011, while the Finance Ministry is more optimistic, foreseeing growth of 2.3 percent.