In this week’s Business News: pace of price rises forecast to speed up; central bank fights independence slur; the Czech Republic climbs competitiveness ladder; phone giant sees earnings slump; and the surprise debt payment demand.
Central bank predicts inflation will speed up
Photo: archive of Radio Prague
The Czech National Bank has warned that inflation will top its 2.0 percent target at the end of this year before falling back. The bank’s latest quarterly forecast says the pace of consumer inflation, the prices households pay for goods and services, will rise to 2.3 percent in the last three months of this year on the back of tax changes. It will then retreat to 1.9 percent at the end of 2011. Inflation in April was a yearly 1.1 percent.
Independence slur angers Czech National Bank
Czech National Bank, photo: Štěpánka Budková
Separately, the country’s central bank has publicly clashed with the European Central Bank over a slur on its independence. In a report about the Czech Republic’s readiness to adopt the euro, the euro zone’s central bank criticized the Czech National Bank’s capital position saying its weakness raised a question over its independence. An independent central bank is a fundamental demand for euro zone membership. In a published reply, Prague said the ECB’s criticism was off the mark and this old argument should not have been raised in this way. On another front, Prague is also fighting proposed new European regulations aimed at tightening up the rules for hedge funds to trade in the European Union. The Czech Republic and sole ally Britain look likely to lose the battle when the issue comes before EU finance ministers next week.
Czech Republic climbs EU competitiveness ladder
Photo: European Commission
The Czech Republic has edged up the rankings for its overall competitiveness compared with other European countries. A table prepared by the World Economic Forum puts the Czech economy in 15th place out of the 27 European Union members in 2009. That is one place better than in the previous year, and ahead of some established EU countries such as Spain, Italy and Portugal but behind Estonia and Slovenia. Czech weak points were picked out as infrastructure and the business environment. Strong scorers were innovation, social integration and liberalisation.
Phone giant experiences drop in fixed and mobile income
The Czech Republic’s biggest phone company, Telefonica 02, has suffered a surprisingly large drop in profits for the first three months of the year. The company, which offers fixed line and mobile services, experienced a 24 percent drop in revenue with both parts of the market badly affected. One of the main factors eating away at earnings is regulatory pressure pushing down the charges it can make for connecting calls between mobile phone operators. That pressure could increase with some political parties saying Czech phone and bank charges are still among the highest in Europe and calling for new and stricter regulation.
Election debt demand sparks fear
Miroslav Kalousek, photo: www.top09.cz
Payment slips demanding 121,000 crowns, around 6,000 US dollars, from every citizen in the country as their share of the national debt created some panic across the country as they were delivered through letter boxes. The demands called for action by May 28 and warned that without remedial steps the bill could rise to 200,000 crowns. The demands were signed by former finance minister Miroslav Kalousek as part as a pre-election marketing stunt by his TOP 09 party to underline rising national debt. But party workers admitted they received thousands of calls from concerned citizens who misunderstood the message. One woman said her 77-year-old mother was under psychological observation after fearing a visit from the bailiffs at any moment because she could not afford to pay the demand.
