The Czech unemployment rate grew slightly in September to reach 8.4 percent, up by 0.1 percent in the previous month, according to figures released by the Czech Statistical Office released on Monday. The number of people seeking employment grew by some 6,500 while there were around 4,000 fewer vacancies registered in that month. The lowest unemployment rate – around 3.5 percent – was recorded in Prague while the highest rates was seen in the north Bohemian district of Most with 15.8 percent and the district of Bruntál, in the north-east of the country, with 15.6 percent.
The state-run power company ČEZ has excluded France’s Areva from a multi-billion dollar contract for the completion of the Temelín nuclear power plant, leaving just two contenders - Russian and US firms - in the running for the country’s biggest-ever energy deal. The news has left analysts speculating on the political and economic implications of this development.
The French industrial conglomerate Areva has been eliminated from the tender for the completion of the Temelín nuclear power plant. In an announcement that surprised experts on Friday, the plant’s operator, the energy company ČEZ, said that the French had not met the business and legal requirements of the public tender. The exact reasons for their exclusion can only be published after the company has completed all options of appeal, a ČEZ spokesman said. Two other participants remain in the tender: the US-Japanese Westinghouse and the Czech-Russian consortium of Skoda JS, Atomstroyexport and Gidropress. The costs of completing Temelín are expected to reach 200-300 billion crowns. The winner of the tender is to be announced next year.
In Business News this week: Czech energy giant ČEZ excludes Areva from Temelín tender; EU stress tests reveal potential safety risks at Czech nuclear plants; largest Czech forestry firm goes bankrupt; Czechs continue to spend less on consumer goods; and truck maker Avia plans to expand to US market.
The six Civic Democrat deputies who are vehemently opposed to the government proposed VAT hike for 2013 say they will torpedo the government’s austerity package for next year if a compromise solution is not found. A series of negotiations with the Civic Democrat leadership has not brought the two sides any closer to agreement. The respective bill is crucial for next year’s state budget and the prime minister has linked it to a vote of confidence in his government. Civic Democrats opposed in principle to tax hikes claim that the money should be found by cost-cutting measures and through privatization, but this solution has been criticized in view of time-pressure.
The Czech Republic is planning to more than double its quota in the IMF, a move that should strengthen its position in the organization. Currently the country’s quota amounts to 1,002 billion Special Drawing Rights. The Finance Ministry’s proposal, approved by the government on Wednesday, envisages an increase to 2,180 billion Special Drawing Rights. A member country's quota determines its maximum financial commitment to the IMF, its voting power, and has a bearing on its access to IMF finances.
The Czech government approved a draft 2013 state budget on Wednesday evening that will allow for a 3% GDP deficit. The draft anticipates a 100-billion crown deficit which will require the passage of a package of tax changes, including higher VAT rates. These have proven controversial as six MPs from the senior governing Civic Democratic Party have joined the opposition on the issue. A working group has been formed in the party to resolve the dispute. Trade unions have also rejected the package, arguing that the financial risks of the proposed budget amount to 45 to 60 billion crowns and relies on legislation that has not yet been passed. The Chamber of Deputies must pass the budget bill for next year by December.
The Czech National Bank has cut interest rates to a new record low. The bank’s benchmark rate fell by a quarter point to its lowest ever rate of 0.25%. The Lombard rate, used when lending money to commercial banks against securities as collateral, was cut by half to 0.75%. The discount rate, which applies to fines for unpaid loans and unpaid taxes, fell by 0.15 points to 0.1%. Economists expected the move due to the weak economy and the relatively strong crown. The Czech Republic has one of the lowest interest rates in the region. The European Central Bank´s benchmark rate for all euro-zone countries stands at 0.75%.
Shadow finance minister Jan Mládek of the Social Democratic Party claims the government and Finance Ministry are in gross violation of the law in accepting a budget proposal based on un-ratified legislation. Mr Mládek told a press conference on Thursday that the proposal was only pulling the wool over the public’s eyes, as the final draft would have to be entirely changed in order to each agreement with the rebel MPs from the Civic Democrats. A rejection of the planned VAT increase by those MPs could force a stopgap budget in 2013, which Mládek says would cost the country some 20 billion crowns and entail more expensive food and medicines for citizens.
Coalition party TOP 09 has warned that the government will fall if the Civic Democrats fail to restore party discipline and support its key reform bills. The coalition government’s long-term austerity plans have been thwarted by six rebel deputies from the prime minister’s Civic Democratic Party. The rebels rejected a bill on tax hikes which aimed to bring the gap in public finances under 3 percent of the GDP in 2013 and indirectly got the bill on church restitutions shelved. The future of the pension reform bill, which has just been vetoed by the president, will also hinge on their support. The government has linked the bill on higher taxes to a vote of confidence in the Necas administration.
Over 1,000 skeletons discovered during renovation of Kutná Hora “bone church”
Language exams for foreigners seeking permanent residency permit to become tougher
Prague’s historical Koh-i-noor factory to be converted into residential area
The history of the “German Czechs”