Tag Archive for czech

Czech Economic Programme produces Growth

Many have claimed these are long overdue, but the Czech Government currently working as a coalition have released it’s predictions for the period up to 2017. Overall it’s a fairly optimistic outlook, with public spending recovering without any increase in debt levels.  It is expected that this increase in public spending will largely be covered by higher growth levels.  There was some expectation about information on various efficiency drives and cost cutting initiatives promised by the coalition – unfortunately there was little about these.

For anyone who follows Czech economics and politics there will be little surprise that one of the hot topics is that of the level of Value Added Tax (VAT) being set.  This has been a major source of disagreement between the parties who make up this coalition.  It is thought that there will  be some sort of agreement with a plan to introduce a lower level of VAT in the near future.  In the interim period is it expected that the current rates will drop a single point to 14 and 20% respectively.  Many want these drops to be much higher as well as simplifying the current rates into a single VAT and removing the lower and higher rate levels.

Growth figures look encouraging yet unspectacular, it is hoped that the Czech economy will grow by 2.0 % in the 2015 period.  This is up a few ticks from the current growth rate of 1.7%, public deficit figure currently are running at 18 and look set to rise over the next year before falling back to a manageable 1.7% of GDP in 2017.

There are specific reasons that public spending has jumped over the last 12 months.  One of the major reasons is the end of certain measures in the country’s austerity programme.  This year sees the end of a public sector pay freeze, and increased wage settlements will pay a large part in the increase in the levels of the public deficit rise.  There are also several large infrastructure projects being initiated over the next few years, some of these supported by EU grants and loans.  Some of the most important are directed at increasing the country’s telephone and broadband infrastructure.  This is especially important as there is a growing need to support the digital marketplaces and economy – there are many encouraging start ups which could end up being the next Facebook or Twitter!

Henry Cavanagh