Business News

In the week’s Business News: the only way is up for interest rates; ministry retreats from promise to ease burden of health and insurance payments; revolutionary media concept comes a cropper; coal and coke giant turns around fortunes; and hole in finances threatens tunnel builder.

Central bank board member says interest rates must rise

The near three year continuous fall in Czech interest rates looks even more likely to end soon. With the main interest rate set by the Czech National Bank now at the record low level of 0.75 percent, as the song goes, the only way is up. But that looks like being sooner than later after central bank board member Kamil Janáček this week said it was certain that the era of record low rates and their reduction had come to an end. He pointed out that it was a question of time how long the country could sustain interest rates which are a quarter of a percentage point lower than those in the euro zone. He joins hawks on the board who have already made similar comments.

Employers likely to lose out on cut in health and social payments

The coalition government looks like it is already stepping back from election pledges to cut costs for employers as it scrambles to fill state coffers. A promise to cut employers’ health and social insurance contributions from 2.3 percent to 1.4 percent from the start of next year looks like it has been thrown out the window according to initial proposals from the Ministry of Labour and Social Affairs. The change would have saved employers around 10 billion crowns. It looks like employers will also be hit for an extra 2 billion crowns thanks to higher sick pay contributions.

Local media revolution under threat

It was hailed as a worldwide media revolution, but now looks like it is coming to an end. The future of Czech company PPF’s year old venture into the publishing and media world is now under discussion with a decision seen next week. PPF took local media down a new track when it wheeled out a new concept of papers based on local cafes come editorial offices where the public were invited to come talk to reporters and help write stories. The Naše Adresa, our address, concept was tried in the north-west and south-east of the country. PPF also built a futuristic newsroom in Prague and hosted seminars about how media could evolve with the help of the latest technology.

NWR turns a profit in second quarter

Photo: Czech Coal

Central Europe’s biggest producer of hard coal and coking coal, New World Resources (NWR), has turned a profit in the second quarter of the year thanks to higher demand and prices. The company, whose fortunes are mostly based on mines in the east of the Czech Republic, made an operating profit of around 129 million euros in the second quarter following a loss of around 16 million euros in the preceding three months. Revenues are up by around a quarter compared with the start of the year. Even so, analysts had been expecting a bigger rebound and the share price fell back sharply.

Metrostav threatened with hole in finances after tunnel collapse

Blanka Tunnel

Construction company Metrostav looks like getting a hole in its finances after a massive crater appeared on the grounds of a government ministry near the centre of Prague in July where it was tunnelling. Officials from the state Mining Office have started proceedings to fine the company up to 5.0 million crowns following its third tunnel collapse during work on part of the capital’s ring road, according to Czech Television. The official findings of their probe will not be made public until October. Separate financial penalties could be levied by city hall.