Business News

In today's Business News: The Czech National Bank cut interest rates by half a point to 2.25 percent this week; Prime Minister Mirek Topolánek has warned against excessive regulation and government intervention during the current global economic crisis; car maker Škoda Auto will halt car production on Friday evening for three weeks; the Tatra company, famous for building trucks and other large vehicles is to begin a series of phased layoffs totalling 1,400 people by the end of next year; the soft-drink company Kofola, maker of a cola drink of the same name, has received a 12 million crown fine from the country’s anti-monopoly commission and the Czech government has approved a programme which binds it to replacing government cars with more eco-friendly models.

Czech National Bank cuts interest rates

Czech National Bank, photo: Štěpánka Budková

The Czech National Bank cut interest rates by half a point to 2.25 percent this week. The move came in response to a slowing economy and is designed to stimulate the economy by making lending less costly. The Czech rate is now a quarter percent below the Eurozone interest rate, and according to the Czech National Bank more rate cuts may be on the horizon as economic forecasts are not met. Specifically, the bank has stated that the Czech economy is falling behind its most recent 2.9 percent GDP growth forecast for next year. That forecast has been downsized several times over the past year. If economic conditions continue to slide, a cut that puts interest rates below two percent has not been ruled out.

Czech Prime Minister says financial crisis not a failure of capitalism

Mirek Topolánek, photo: CTK

The Czech Prime Minister Mirek Topolánek has warned against excessive regulation and government intervention during the current global economic crisis. The comments were made during a speech at the London School of Economics in the midst of a European tour ahead of the Czech Republic assuming the EU presidency in January. Speaking to attendees, Mr Topolánek stated that the current crisis was not caused by a failure of capitalism, but by a lack of capitalism. The Czech PM also called efforts at excessive state regulation a form of communism, and argued that the mortgage crisis in the US was caused by the state supporting mortgages for people who were unable to afford them.

Škoda manufacturing halt begins

Photo: CTK

Car maker Škoda Auto will halt car production on Friday evening for three weeks. The move comes amidst falling demand for cars from key export markets such as Germany. Car production is scheduled to resume again on January 12 2009. All three Czech Škoda plants - those in Mladá Boleslav, Kvasiny and Vrchlabí – will be affected by the halt. Initial annual production forecasts of 700,000 units have recently been downsized by 70,000, but even this figure will represent a 7 percent growth in sales. However, last year, sales grew by 14.5 percent, more than double the 2008 predicted rate.

Tatra to lay off 1,400 staff

The Tatra company, famous for building trucks and other large vehicles is to begin a series of phased layoffs totalling 1,400 people by the end of next year. The company, based in Kopřivnice, north-east of the country was founded in 1850, and at that point made regular automobiles, and later trams, only specializing in trucks later on. Following the end of communism in 1989, the company was privatized, first sold to US stakeholders, then later bought back by Czech stakeholders. The company has been relatively successful in the eastern European market, exporting as far afield as Russia. The newly announced layoffs have been blamed on the global economic crisis.

Kofola fined again by anti-monopoly commission

The Czech soft-drink company Kofola, maker of a cola drink of the same name, has received a 12 million crown fine from the country’s anti-monopoly commission. The fine is the second imposed on the company, the first 13.5 million crown fine coming in the summer. Both fines were given as sanctions for alleged price-fixing by Kofola, in which the company manipulated the market by setting the prices for its distributors to sell the product. Kofola has admitted to the breach in the law, and has pledged to work fully to correct the matter. The company, which has annual sales of 4.4 billion crowns can still appeal the fine if it so chooses.

Czech state to by eco-friendly cars

The Czech government has approved a programme which binds it to replacing government cars with more eco-friendly models. By 2014, the entire sate administration should have completed the switch, according to Environment Ministry head Martin Bursík. The Czech state administration uses about 20,000 cars at present, and speaking about the decision, Mr Bursík highlighted that automobile pollution was the third biggest generators of air pollution and greenhouse gases after industry and energy-producers. He also added that the decision would help to promote a Czech-wide interest in more efficient and environmentally friendly cars.