Speaking in Brussels, the Czech prime minister, Petr Nečas, has said he will reject the latest draft European Union budget for the 2014 to 2020 period. He says he cannot accept a reduction in the bloc’s cohesion fund that would see the amount available to the Czech Republic fall from EUR 26.7 billion in the current seven-year budget period to EUR 19.5 billion in the next one. The funds are available to all regions except Prague. Mr. Nečas has said that the Czech Republic, unlike a number of states, is not threatening a veto, but, he added, neither would it approve any plan whatsoever. EU leaders are set to return to the negotiating table at noon on Friday, though there are fears that no agreement will be reached.
Three different rates of the value added tax could be in place in January 2013 due to a possible delay in approving the government’s tax legislation, the Czech branch of the advisory firm PricewaterhouseCoopers said on Friday. If the process of approving the tax package is delayed, a single VAT rate of 17.5 would come into force on January 1. This will be replaced by two rates of 15 and 21 percent, respectively when the government legislation comes into effect later in the month. This would be an unprecedented situation for the country’s businesses and firms, PwC said.
President Václav Klaus on Friday re-appointed Mojmír Hampl and Vladimír Tomšík members of the board of the Czech National Bank. Their second six-year term will begin on December 1; they now serve as deputy-governors of the bank and will retain their positions. President Klaus said the bank could do more to boost the growth of the Czech economy; Vladimír Tomšík however noted the central bank’s main responsibility was to maintain the stability of the Czech currency and the inflation rate was close to the bank’s target. The Czech crown strengthened slightly upon the news.
In Business News this week: the Czech cabinet approves a draft budget for next year; CEZ has problems in Albania – and a bid for a power plant at home; the Czech Republic buys into the Transalpine Pipeline, with a view to reducing reliance on Russian oil; e-tailers in the Czech Republic are to join forces next Tuesday for a day of sales with free delivery; and the “Absurdity of the Year” is announced.
The prime minister has announced that the Czech delegation to Brussels will strongly voice their disapproval of the proposed EU budget for 2014-2020 at an EU summit later this week. Yet, the prime minister said on Wednesday that he is not planning to veto the long-term budget proposal, unlike a number of other EU members. The priority for the Czech Republic is to remain a net recipient of EU funds and to prevent a decrease in spending for cohesion policies.
The cabinet has approved a new 2013 draft budget, reflecting the present economic situation and government-proposed austerity measures. The new budget proposal has a projected 100 billion crown deficit and a net decrease in revenues and expenditures of 4 billion crowns, compared to the previous budget proposal. The deficit set by the proposal makes up 2.9 percent of the GDP. This is the third budget proposal that the Finance Ministry has submitted. The Chamber of Deputies is set to hold the first hearing on the budget next Wednesday.
The Czech economy has now been in recession for 15 months, which is the longest period since the late 1990s. The ongoing crisis in the eurozone, low household demand as well as the government’s austerity measures are all considered to be the major factors behind the faltering economy. Last week, the Prague-based Banking Institute – College of Banking held a conference focusing on ways of restarting economic growth. One of the keynote speakers was Jens Arnold, a senior economist at the international economic organization OECD. He suggested that raising
Cards issued under a new electronic system streamlining welfare and social benefit payments will – in the end – not be compulsory. The prime minister made the announcement on Tuesday, making clear the system – which has come under criticism from both non-governmental organisations and political circles – will be revised.
The Czech National Bank sees no reasons for the policy of quantitative easing, the bank’s governor, Mojmír Hampl, told a conference in Prague on Tuesday. The problems of the Czech economy differed from those of the countries which opted for the move, Mr Hampl said; the Czech Republic has a stable financial sector, it does not have issues with liquidity and does not face the threat of the so-called deflation trap. Governor Hampl also suggested there was a big difference between the real and the perceived state of the economy whose foundations were sound.
The Czech Republic could receive some 30 percent less money from EU’s cohesion funds in the period of 2014-2020 as a consequence of the bloc’s tighter budget, Czech Foreign Minister Karel Schwarzenberg said. Between 2007 and 2013, some 26.7 billion euros was earmarked in the funds for the Czech Republic. The cuts are likely to affect all EU member states, according to Mr Schwarzenberg.
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