Business News

In this week’s Business News: the postponement of early elections spells even more trouble for next year’s budget; the average wage is up – but only because low paid workers have been laid off; the fall and rise of the Prague Stock Exchange seems to have attracted new investors; foreign coffee and fast food companies see room on the Czech market; and the collapse of SkyEurope doesn’t impact Prague Airport so much, says its director.

Election hold-up spells even more bad news for budget

Photo: Štěpánka Budková

Prior to this week’s political crisis, the 2010 budget – with a record deficit a certainty – was already a huge cloud on the horizon for the Czech Republic. But now that a Constitutional Court decision has put back early general elections originally due to take place on October 9 and 10 things look even gloomier. A possible new election date of the end of the first week in November means there would simply not be enough time to approve a budget for next year by the end of December. That would likely result in a stop-gap budget, which would have a number of negative consequences, among them a freeze on EU structural funds.

Average wage up slightly – due to layoffs of low paid workers

The Czech average wage rose by 2.8 percent in the second quarter of this year, according to official figures released this week. That may sound positive at a time when good news is in short supply. However, the increase is at a significantly slower pace than in the past, and in terms of wage growth 2009 is shaping up to become the Czech economy’s worst year ever. What’s more, that small rise is somewhat illusory. It is actually due to the fact that relatively low-paid workers have been let go because of the financial crisis, making the average higher. Incidentally, the average monthly wage in the Czech Republic now stands at just under CZK 23,000 a month – that’s around USD 1,250.

Fall and rise of stock exchange attracts new investors

Another apparent consequence of the financial crisis is an increase in the number of Czechs trading in shares, Hospodářské noviny reported on Friday. Sharp falls in share prices followed by a strong recovery in the first half of this year attracted around 10,000 new investors to the Prague Stock Exchange, the newspaper said. Around 80,000 people now own shares on the Prague bourse.

Overseas coffee and fast food chains see room on Czech market

The crisis doesn’t seem to have dented the plans of international coffee and fast food chains to open outlets in the Czech Republic. In fact, Hospodářské noviny reported this week that many such firms are looking into entering the Czech market. On Monday, for instance, Australia’s Gloria Jean’s Coffees opened their first branch in Prague. Caffe Nero, which is big in the UK, is also planning to open in the city, as are Malta’s Caffe Jubilee, Denmark’s Chicago Roadhouse and Chocolate Graphics International from Australia.

Collapse of SkyEurope not so painful after all, says Prague Airport chief

Photo: CTK

The collapse of the Slovak budget airline SkyEurope earlier this week won’t actually have that much impact on Prague Airport, its director Miroslav Dvořák told reporters. From the start of 2009, the low-cost carrier – already seriously shaky – gradually began to withdraw from Prague, with other airlines soaking up its business. Whereas last year, SkyEurope accounted for a full 10-percent of the market at Prague Airport, by the time it went under that was down to 5 percent, Mr Dvořák said.