At a meeting of Czech ambassadors in Prague on Monday, Prime Minister Andrej Babiš stressed the importance of being a reliable and active partner in the EU and NATO. At the same time the head of government defended the country’s stance on migration and its decision not to join the Eurozone in the foreseeable future.
The Czech Republic has been among the EU’s top budget performers, running overall fiscal surpluses in the past two years on the back of an economic boom and a fall in unemployment to under 3 per cent – the lowest level in the bloc. So why is the government now looking to run deficits at a time of slowing growth?
The average mortgage rate rose marginally to 2.5 per cent in July,
according to data compiled by the Fincentrum Hypoindex, whose figures are
based on the real values of freshly agreed contracts, including
refinancing. Last month the average rate stood at 2.49 per cent.
About 2,000 fewer mortgage contracts were signed in July while the volume of mortgages fell month-on-month by almost 4 billion crowns to 15.5 billion crowns, according to Fincentrum.
Analysts quoted by the state news agency said the dip was partly a seasonal phenomenon, but mainly potential buyers are hoping that real estate prices have peaked and waiting for the market bubble to burst. But a further cooling can be expected, with stricter central bank guidelines rules on mortgages due to come into effect from October 1.
At its last policy-setting meeting in early August, the Czech National Bank raised the key interest rate by 25 basis points to 1.25 per cent. It was the third hike in interest rates since the end of the bank’s forex interventions against the crown. Bank governor Jiří Rusnok has not ruled out further increases this year.
The Ministry of Finance has produced a plan to reduce the number of state
employees in the Czech Republic, iDnes.cz reported. Almost one in every 20
Czechs works for the state and recently President Miloš Zeman criticised
the growing “army” of officials, the news site said.
Ministry officials say the plan is not radical and would not lead to many layoffs. However, it is the first such programme in a decade and follows increased hiring by state organisations under previous governments.
Under the scheme unoccupied positions that ministries keep as a back-up – and for which they receive cash from state coffers – would be discontinued. The Minister of Finance, Alena Schillerová, said this could save up to CZK 3.4 billion.
After steadily dropping for five straight months, the unemployment rate
rose slightly in July to 3.1 per cent. However, seasonal factors are behind
the increase, including the entry of new high school graduates on the
According to the Labour Office, the number of unemployed is in fact at its lowest level since 1997 for the month of July.
The number of vacancies now stands at nearly 310,000 and only three regions have more jobseekers than openings: the Ústecký region in northwestern Bohemia and the Moravian-Silesian and South Moravian regions in the east of the country.
Czech utility ČEZ's second quarter revenues and profit dropped
sharply despite increased electricity production due to higher wholesale
electricity and emissions prices after forward selling production at lower
levels. ČEZ said however that the hit from its hedging operations should
dissipate in the second half of the year.
The Prague-listed company’s revenues dropped to 40.9 billion crowns in the second quarter, compared with 48.1 billion in the same period in 2017. Net profit for the quarter dropped to 0.5 billion crowns taking half-year net profit to 7.7 billion crowns, down 54% compared year on year.
Prime Minister Andrej Babiš (ANO) wants a decision on financing majority
state-owned utility ČEZ’s nuclear power plant expansion by year’s end,
he told Reuters in an interview.
The Prague-listed company has refused to invest in new plants without some form of state support. Instead, it proposes spinning off its renewables and energy services, leaving coal and nuclear sources in state hands.
Babiš says ČEZ is big enough to build new nuclear units without being split up and wants a subsidiary to be the main vehicle to build new reactors. ČEZ operates plants in Dukovany and Temelín that together covered 38 per cent of Czech energy needs last year. Its Dukovany reactors start to expire around 2035.
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