In Business News this week: the Czech economy is out of recession, but new GDP figures are worse than expected; a draft 2010 budget has been approved, with a whopping deficit of 230 billion crowns; analysts warn that the country’s credit rating may slide if next year’s budget deficit is not cut, and Škoda scales down Fabia production as Germany’s scrap incentive scheme comes to an end.
The Czech government has just approved a draft budget for 2010 that includes a record deficit of 230 billion crowns, or more than 13 billion USD. The caretaker cabinet has also been debating measures that could save around 70 billion crowns. But, with elections set for later this year, the main Czech parties have shown little enthusiasm for the government’s proposals.
In related news, the unemployment rate in the Czech Republic rose to 8.5 percent in August, which is the highest rate in over three years. Last August, the jobless rate was at 5.3 percent. In total, there are more than 480,000 people out of work in the country, according to data released by the government on Tuesday. The areas hit worst by the rising unemployment include the north Bohemian district of Most with over 16 percent and the northern Moravian district of Karviná with almost 15 percent. The lowest number of unemployed was registered in Prague, with 3.4 percent.
In this week’s Business News: the postponement of early elections spells even more trouble for next year’s budget; the average wage is up – but only because low paid workers have been laid off; the fall and rise of the Prague Stock Exchange seems to have attracted new investors; foreign coffee and fast food companies see room on the Czech market; and the collapse of SkyEurope doesn’t impact Prague Airport so much, says its director.
The Czech Prime Minister, Jan Fischer, is scheduled to meet with members of the Czech scientific community on Monday for a new debate on science and research funding. The Czech Academy of Sciences has recently staged several protests against a planned 50 percent cut in funding over the next three years, while Czech universities said that any drop in state subsidies would dramatically decrease the quality of education. Monday’s round table will also be attended by Education Minister Miroslava Kopicová and the head of the Confederation of Czech Industry. Jaroslav Míl.
In related news, the State Fund for Transport Infrastructure is set to work with a record budget of 96 billion crowns, or nearly 5.5 billion US dollars next year, Transport Minister Gustáv Slamečka told reporters on Monday. The government approved the increase as many Czech motorways and other types of roads are under construction. The authorities also hope the increased budget will keep the unemployment rate lower.
The head of the Finance Ministry’s international legal department, Radek Šnábl, resigned on Monday over the fact that in April, he received a two year suspended sentence for tax fraud. Radek Šnábl said he had tendered his resignation to the then finance minister, Miroslav Kalousek, shortly after the verdict was announced but Mr Kalousek did not accept it. Mr Šnajbl represented the state in several international arbitration disputes. He has signed a non-competition clause that he would not work against the Finance Ministry.
Prime Minister Jan Fischer met Thursday with Finance Minister Eduard Janota and the heads of the country’s two largest parties to familiarise them with Finance Ministry proposals for the 2010 state budget. Mr Janota has proposed increasing VAT rates, raising the tax on automobile fuels, and cutting budget spending. Speaking after the meeting, Social Democratic Party chairman Jíři Paroubek said he objects to the Finance Ministry’s recommendation that the measures be approved as a package. Mirek Topolánek of the Civic Democratic Party said that it would be up to the post-election government either to approve the caretaker government’s budget or to put forward its own plan. The Ministry of Finance has said that in the absence of the proposed changes, the budget deficit for 2010 could rise to 230 billion crowns.
Around 800 people gathered on Prague’s Palachovo náměstí on Tuesday to protest against proposed cuts in Czech science funding. The protestors organised the event in support of the Czech Academy of Sciences, which is set to have its budget halved gradually over the next three years. A group called ‘Věda žije!’ (Science Lives) organised the protest; according to news website Novinky.cz, three quarters of this organisation’s members are employees of the Academy of Sciences. At Tuesday’s protest, however, the majority of participants were reported to have been young people, invited to attend by the website Lide.cz.
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