Business News

In Business News this week: the Czech National Bank lowers the key interest rate by one-quarter percentage point to 3.5%; some large exporters are considering pegging employees’ bonuses to the euro; the Prague Stock Exchange goes on sale; prices of consumer electronics in the Czech Republic were second lowest in the EU in 2007; and with the Czech market becoming saturated, shopping centre developers are looking east.

CNB lowers key interest rate to 3.5 percent

Czech National Bank, photo: Štěpánka Budková

The Czech National Bank lowered the key interest rate by one-quarter percentage point to 3.5% on Thursday. The move comes against a backdrop of almost 7-percent inflation and amid worries that the rise of the crown against the euro is harming both exporters and the economy. The Czech currency weakened following the announcement, trading at CZK 24.17 to the euro at close of business on Thursday. Meanwhile, the central bank said it had lowered its growth forecast for the Czech economy this year from 4.7 percent to 4.1 percent, and from 4.0 percent to 3.6 percent for 2009.

Press: big exporters want to peg bonuses to euro

Given the crown’s recent firming against the common European currency and the Czech government’s unwillingness to set a target date for euro adoption, a number of large Czech exporters are considering pegging a portion of their workers’ pay to the euro, Hospodářské noviny reported this week. The firms would pay employees their basic salaries in crowns but calculate bonuses in euros and pay them according to the going exchange rate. However, representatives of trade unions – whose members would take home less if the crown strengthens – are opposed to the idea. Meanwhile, the Labour Ministry is preparing an amendment to the country’s labour law to allow such a system of payment.

Prague Stock Exchange up for sale

The Prague Stock Exchange is going on sale. The majority shareholders said this week that they had decided to begin the process of selling a controlling stake in the company, which began trading in 1993. Among those who have expressed interest are stock exchange operators in Austria, Poland, Germany and Scandinavia, as well as the Brussels-Paris-Amsterdam bourse Euronext. Last year the Prague Stock Exchange made a profit of nearly CZK 200 million. Owners say the sale – expected to bring in CZK 3 billion to 6 billion – should be completed in a matter of months.

Czech consumers had second cheapest electronics in EU in 2007

Prices of consumer electronics in the Czech Republic were the second lowest in the European Union in 2007, according to a study by Eurostat. Czech prices reached 92 percent of the EU average, with only Bulgarian consumers able to buy electronics for less. Price differences among individual EU states are influenced by different taxation systems and exchange rates, an expert told the Czech News Agency. However, the Czech Republic is unlikely to remain near the bottom of the EU electronics prices table – the 15-percent firming of the Czech crown to the euro should mean that this year prices are actually above the eurozone average.

Developers look east as Czech shopping centre boom comes to end

The boom in shopping centre construction in the Czech Republic is coming to an end, according to the international consultancy firm DTZ. The shopping mall market in Prague and many regions is saturated and developers are now beginning to look towards other states to the east of the Czech Republic, said a DTZ study released this week. Countries which are attractive to would-be Czech investors are Ukraine, Russia and Romania.