Business News


In Business News this week: a poll suggests that a majority of Czech business leaders oppose contributing to the EU’s efforts to save the euro; Central Bank governor says that the loan to the IMF will have to be very seriously considered; The government’s economic advisory council NERV acquaints PM with detailed crisis scenario.

Czech business leaders against euro loan

Photo: archive of Radio Prague
A poll released by the daily Lidové noviny on Thursday has suggested that the majority of Czech business leaders oppose the Czech Republic contributing to saving the euro, the EU’s common currency. Almost 4,700 business owners would say no to loaning 90 billion crowns in the effort to save the euro, charging the country had enough of its own debt problems already. Those in favour, just 28 percent, argued that a refusal to help would have negative consequences for the country – a member of the EU since 2004 but not a member of the eurozone. Negative consequences feared include the possibility that some labour markets could be closed for Czechs. The Czech centre-right coalition government itself has not yet decided whether to contribute the needed funds which are more than 10 percent of the country’s total currency reserves.

Central bank says loan to IMF needs serious consideration

Czech National Bank,  photo: Štěpánka Budková
In related news, Central Bank governor Miroslav Singer said this week that the loan of 90 billion crowns to help save the euro would have to be very seriously considered. The governor said the central bank needed to maintain its own reserves high in view of the danger of upheaval in the eurozone and possible far-reaching structural changes which would impact the Czech Republic. The statement was slammed, however, by the bank’s former vice governor Ludek Niedermayer who said that in his view the central bank had a long-term problem with excessive foreign currency reserves and that making the loan would work in the bank’s favour. He moreover pointed out that the independence of the central bank had its limits and although the government would hear its position and might be swayed by it he could not imagine the central bank refusing to loan the money if the government reached that decision.

PM gets crisis scenario for the economy

Petr Nečas,  photo: CTK
The government’s economic advisory council NERV acquainted the prime minister with a detailed crisis scenario for the Czech economy this week. The package of 40 measures should be adopted if there is danger of the GDP dropping by more than 2 percent. The measures include a single VAT rate of 20 percent, a freezing of pensions, layoffs of police officers, higher bank taxes and shorter university studies, among others. The Finance Ministry is expected to present a concrete plan of action in January 2012, when a more precise forecast of the Czech Republic´s economic development will be made available.

Czech-Chinese-US companies to start production of new aircraft

Miroslav Křížek
It was reported this week that a consortium of Czech, Chinese and US companies wants to produce a new type of plane in the Czech Republic, Miroslav Křížek of the government agency CzechInvest, told journalists on Monday. The deal, which should be sealed in the coming weeks, will be one of the biggest contracts the Czech aviation industry has had in years, he said. No further information was disclosed regarding the type of plane to be produced or what companies will be involved in its production. A significant part of the capital for the project is being put up by China.

Czech banks’ and institutions’ economic predictions for 2012

An analysis carried out by the Česká spořitelna bank predicts the Czech economy will decline by 0.4 percent next year, the bank said on Wednesday. After Raiffeisenbank, Česká spořitelna is the second bank to expect recession in the country in 2012. Raiffeisenbank predicts a 1.2 percent decrease of the Czech GDP. A regular survey of prognoses by different institutions compiled by the Finance Ministry predicts a growth of 0.8 percent on average while the ministry itself expects a growth of one percent. The Czech National Bank puts the growth figure at 1.2 percent, but it forecasts a 0.4-percent decrease in an alternative scenario taking into account problems in the eurozone.