Business News

Photo: European Commission

In Business News this week; the cost of electricity is set to rise by 10%; the Czech crown has a record-breaking week against both the euro and the dollar; the Czech Republic lags behind when it comes to claiming EU funds, and Czech Airlines has started offering low-cost tickets on many of its European flights.

Cost of electricity for homes set to rise by 10%

Photo: archive of ČRo 7 - Radio Prague
Thursday's press was ablaze with the news that electricity prices for homes look set to go up by around 10% from January 2008. For firms, the rise in cost could be as high as 15%. These figures are the predictions of analysts, based upon Czech energy giant CEZ's new price-list, which was released on Thursday. CEZ has raised baseload power prices by 14.4%, in a move analysts attribute to the increased costs of energy distribution, and the new 'green tax' which was approved as part of the government's reform package in August. According to Tomas Kanka of Global Brokers, the price-hike is a pure question of demand outweighing supply. Critics say that hundreds of firms could be forced into bankruptcy by the price increase, though CEZ responds that the cost of electricity for homes and firms remains lower than its pure market value.

Crown sets records against the dollar and the euro

Finance Minister Bohuslav Sobotka
It's been a good week for the Czech crown; on Monday, it hit a new record against the euro, trading at 27.40 CZK/ 1 EUR. All week, the crown has been setting new records against the beleaguered dollar as well; when trading ended on Thursday, the exchange rate was at 19.56 CZK to the US dollar. But this has led to warnings that the Czech economy could run out of steam in the next couple of years, should the crown continue unabated on its upward trajectory. The chairman of the Czech Exporters' Association, Jiri Grund, warned on Thursday that Czech firms would fast lose their competitiveness, with a strengthening crown, and higher energy costs, coupled with higher wages. The solution? According to Mr. Grund, the quick adoption of the Euro. The Czech Republic was set to join the Euro in 2010, but Finance Minister Miroslav Kalousek has recently postponed the adoption until 2012 at the earliest.

Czech Republic lagging behind in claiming of EU funds

Photo: European Commission
Sticking with Europe, the Czech Republic is still lagging behind when it comes to making the most of EU funds. Statistics released by the European Union on Monday showed that the Czech Republic was still the second worst at tapping into EU grants, claiming only around 44% of the funds available. The figures were based on the period spanning from January 2004 to January 2006, in which time Czechs claimed around 17.5 billion CZK (875 million USD) from the European Structural Fund. Of all of the EU's recent member states, only Latvia fares worse than the Czech Republic, claiming a mere 36% of funds on offer. Slovenia comes top on the list of claimants; making use of around 80% of the money it is allocated. Czechs are calling this first bite of the cherry a 'trail period', and are determined to claim more of the 730 billion CZK allotted to them in the second phase of EU funding, from 2007 to 2013.

Czech Airlines to offer low-cost tickets on European flights

The original ČSA logo
Czech national carrier CSA launched a new website this week, offering cheap tickets on its flights to over 35 European destinations. One way tickets will cost as little as 1990 CZK (100 USD) including all taxes, and returns can be found for less than 4000 CZK. CSA has not included more lucrative destinations such as Paris or Moscow in the programme, but a spokesperson for the company said that it would be offering low-cost flights to eastern European destinations in particular, where other budget airlines failed to fly. Tickets have been put up for sale at, and due to a technical mix-up, particularly enthusiastic customers found themselves able to buy flights one day early, when the sales system was accidentally activated on Tuesday. Through this move, CSA seeks to control around 20% of the low-cost market at Prague's Ruzyne Airport within the next couple of years, which would mean shifting 600,000 tickets annually.