Czech Business Today

At the end of February, the European Commission published its Country Reports in the framework of the European Semester. As for the Czech Republic, the European Commission appreciates that Czech economy has returned to growth track and even outperformed the expected growth rates. The situation was caused by an increase in the domestic demand, household consumption and exports. 

As regards public finance, the situation has improved as well. The general government deficit is about to reach 1.3 % of GDP and the debt to- GDP ratio stays under the 60 % of GDP threshold. On the other hand, the Commission sees insufficiencies, many of which it has criticized continuously. First of all, while there is relatively low level of unemployment, the conditions on the labour market remain difficult for certain groups, for example, parents with young children, low-skilled workers or disabled people. Secondly, the efficiency and transparency of public institutions are insufficient according to the Commission; creating barriers to structural reforms and growth. Furthermore, the lack of development in the field of transport infrastructure slows down economic growth and limits efficiency of using EU funds in this sector. Burdensome and costly tax collection, high number of regulated professions or high taxation on labour are also criticised by the Commission. Although there has been some progress, the overall efforts to implement country specific recommendations from previous year are viewed as limited by the Commission. Czech entrepreneurs ́ and employers ́ organizations agree only partly with the criticism. 

There is a clear room for improvement in certain areas, especially those related to tax issues, labour conditions or in the number of regulated professions. On the other hand, the Commission report focuses rather on minor issues while not taking into consideration the broader image and the need to support competitiveness and growth of Czech economy, improve conditions for attracting investment and decreasing regulatory burden. Therefore, Czech business organizations hope that this year’s Country Specific Recommendations will focus more on these crucial points that are necessary to improve the overall business and investment environment in the Czech Republic.