In Business News: The EC proposal to lower the ceiling on business incentives could severely undercut investment in the country, the Czech Statistical Office posts the highest Czech current account on record, a Czech district court passes a breakthrough verdict in a dispute over bank fees and one in twelve Czechs now have a problem repaying their debts.
Lower ceiling on business incentives bad news
Photo: Barbora Němcová, Radio Prague International
The EC’s proposal to lower the ceiling on business incentives in the Czech Republic from the current 40 to 25 percent of eligible costs would severely undercut investments, according to the outcome of a poll conducted among 58 large foreign and domestic companies. Two thirds of respondents said they would not invest in new or existing projects if incentives were cut so steeply. Those who said they would still invest admitted the change could influence the height of the investment. Czech officials are against the proposal and are negotiating with the EC.
The EC sets ceilings on investment incentives that can be provided in any part of Europe. The Commission revises the system every seven years to reflect economic changes in the EU and the current system expires at the end of 2013, when new rules will come into effect that will last until 2020.
Highest Czech current account on record
Photo: archive of Radio Prague
The crown rebounded from its weakest level in 16 months this week after the Czech Statistical Office posted the highest Czech current account on record. The current account, a broad measure of goods and money flowing into and out of the country, showed a surplus of 27.7 billion crowns ( 1.4 billion US dollars) in February, exceeding the most optimistic market expectations. Analysts say the balance-of-payments data confirms that the Czech crown is safe in terms of external balance.
Breakthrough verdict on bank fees
Photo: Eva Odstrčilová
A Czech district court this week passed a breakthrough verdict in a dispute over bank fees, ordering the mortgage bank Hypotecni banka to return to one of its clients the entire sum he had paid for loan account management. The judge said it was not clear for what service the fee was being charged. The verdict has been welcomed by around 128,000 other bank clients who are also hoping to get their money back. The bank has appealed the decision and said it will use all the legal instruments available to try to get the verdict overturned.
Growing number of Czechs unable to repay their debts
Photo: archive of Czech Radio
The number of Czechs who are unable to repay loans is growing, according to the Solus association of loan providers which runs a register of debtors. One in twelve Czechs are now unable to pay their debts or make payments on time. The association says that in the first quarter of this year 8.1 percent of Czechs had overdue debt payments, compared to 8.0 percent in the preceding quarter. Payment discipline is reported to have worsened in all regions with the north Bohemian Usti region being consistently the worst performer. More than 45 thousand pensioners in the Czech Republic face legal action over unpaid debts. The number of young debtors is also growing.
Increasing dependence on pork imports
Photo: Filip Jandourek
The Czech Republic’s self-sufficiency in pork dropped below 50 percent in 2012, the Chamber of Agriculture reported this week. Pork sales outstrip all other meat sales in the country with annual consumption of pork reaching 40 kilo per head. The country was completely self-sufficient in its pork production in 2004 but Czech pork has gradually given way to cheaper imports. The higher prices of fodder have made pig-breeding financially disadvantageous, forcing many breeders to end production. The Chamber of Agriculture has described the country’s increasing dependence on pork imports as alarming.
Czech grid operator backs action against excess electricity flows from Germany
Photo: archive of Radio Prague
The Czech grid operator CEPS has backed a plan to build transformers which would protect the Czech grid against excess flows of wind-produced electricity from neighbouring Germany. The CEPS supervisory board approved the investment plan this week. The transformers protecting the system from overload and subsequent blackouts should be finished by 2016. The plan has not met with general approval. Critics say installing phase shifters in the Czech Republic will only deflect the German electricity flows to other neighbour states such as Poland and argue that unilateral action on the part of individual states poses a challenge to efforts to build a unified European electricity grid.
