The Czech government has approved a constitutional amendment to prevent it and future cabinets from borrowing and spending beyond their means, setting a limit on state debt. If approved by a constitutional majority in parliament, the measure will set the debt ceiling at 55 percent of GDP, lower by five percent than outlined in the EU’s fiscal compact.
The opening of Prague’s Blanka Tunnel, slated for April, faces further delays as cables destroyed by water will have to be replaced, an undisclosed source has told the Czech News Agency. The leadership at City Hall is to discuss the matter this week, according to ČTK.The electric cables were damaged by heavy rainfall last year and by dampness within the tunnel. Security and safety tests also remain to be conducted, the news agency said, which could further push back the grand opening. The tunnel cost Prague almost 37 billion crowns.
The government has approved a constitutional bill on budget responsibility which includes the setup of a national budget council and debt brake at 55 percent of GDP, cabinet spokesman Martin Ayrer told the Czech News Agency on Monday. The so-called financial constitution´s main aim is to limit a rise in state debt, a measure required by the European Union. It also reduces the size of debts of regions and municipalities. In order to pass, the bill will require a constitutional majority and will have to be signed into law by the president. According to available information, the centre-right opposition parties TOP 09 and the Civic Democrats are willing to back the bill, although TOP 09 has called for even stricter conditions.
President Miloš Zeman says he will not appoint people who are in favour of devaluing the Czech crown to the board of the Czech National Bank. Speaking on Wednesday, he said he would, however, name board members who back the Czech Republic’s adoption of the euro. Mr. Zeman reiterated his belief that the central bank had intervened to weaken the crown in order to stave off accession to the eurozone as this would reduce their powers. He is due to appoint four of the seven members of the board of the CNB, including a governor, during his term as head of state.
Tax havens and tax avoidance are a big issue at European level with rarely a week going by without some scandal about a big business earner paying a pittance in taxes with, or without, the help of certain states. Surprising as it might seem, many Czech companies have also fled from their roots to register elsewhere for fairly pragmatic tax and investment reasons and because of reasons they are not so keen to talk about.
The diversified business empire of Karel Komárek is having its fair share of problems from being frozen of the Russian oil business to failing to make the hoped for impact as a gas and electricity retailer on the Czech market. In adversity comes opportunity might be the new catchphrase for his optimistic managers.
Czech unemployment climbed in January to 7.7 percent, up from December’s 7.5 percent, according to the Ministry of Labour and Social Services on Monday. The downturn was expected at the start of the year with the traditional fall off in jobs in the construction sector delayed by warmer than usual weather in December. Year on year, the latest jobless total of 556,191 is still an improvement on the almost 630,000 without work at the start of 2014.
In Business News this week: Czech National Bank announces prolonged forex intervention until second half of 2016; Czech firm Excalibur Army to provide tanks for Iraq; nearly 25,000 new firms established in Czech Republic last year; 47 percent of Czechs in favour of relaxing limits on coal mining; Czech Airlines to launch signature aroma.
The European Commission has released its latest economic growth forecast for the Czech Republic, which predicts a growth of 2.5 percent for 2015 and 2.6 for the following year. The deficit in public financing is expected to reach two percent of GDP and drop to 1.5 in 2016. The forecast is slightly more pessimistic in comparison to the latest EC outlook released in autumn.
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