Czech business confidence picked up in February after a three-month decline as industrial companies hoped foreign and domestic demand were on the rise, a survey showed on Thursday. But fears of a further rise in already record unemployment weighed on the mood among consumers, which hit a four-year low. The Czech Statistics Office said its business confidence index rebounded to a seasonally adjusted 104.4 from January's 102.2, posting its first rise after peaking at its highest level in nearly two and a half years in October. This runs counter to signs of weakening business confidence in neighbouring Germany, the Czech Republic's biggest single trade partner, which takes more than a third of all its exports. The bureau added its consumer confidence index dropped to 80.1, a level unseen since January 2000, from 86.6 a month ago.
The Czech foreign trade balance showed its best monthly result since 1995 in January with a lower than expected deficit of 0.2 billion crowns (or 7.72 million USD). Seasonal factors have traditionally helped narrow the Czech trade gap from December to January as companies resume production after the year-end break and imports drop after a surge ahead of Christmas. Investors in the foreign exchange market have been eagerly awaiting the release, with many analysts saying a lower than expected figure could boost the value of the crown.
The Czech Republic will not be advocating a lower VAT for its restaurants and hotels in Brussels, the daily Lidove noviny wrote, quoting Finance Minister Bohuslav Sobotka. Sobotka said on Wednesday the Czech Republic should not initiate negotiations with the EU on an exception for restaurant owners to pay a lower VAT after the country's accession to the EU. Unlike Poland and Hungary, the Czech Republic failed to negotiate a transition period. On the contrary, Sobotka is expecting the increased tax to help the state coffers to an extra 3 billion crowns. Last week when France managed to negotiate an exception, Mr Spidla said Czechs would continue negotiating and that France's success would undoubtedly strengthen the country's position. According to the paper, Mr Sobotka is not willing to launch a new round of talks on a lower VAT for restaurants.
The former monopoly Czech fixed-line operator Cesky Telecom lost about 70,000 clients in 2003, according to unofficial data, the business daily Hospodarske noviny reported this week. This is about two per cent of Telecom's 3.661 million clients. Almost 300,000 clients have left the company since 2000. Telecom is now trying to attract clients back, offering for instance discounts on new fixed lines. Analysts attribute the development mainly to strong competition from mobile operators. Experience from the European Union, which the Czech Republic joins in May, shows that no alternative fixed-line operator has snatched a substantial number of individual clients after market deregulation because they are not very lucrative.