Czech Business Today

On 27^th May, the European Commission presented a plan to facilitate the recovery of the European economy after the coronavirus crisis. The plan includes an increase in cohesion funds, a new instrument to support recovery and resilience, which will finance assistance to the Member States most affected by the crisis, and a strengthening of instruments to mobilise private investment and investment in strategic sectors. The funding comes from the EU’s multiannual financial framework for 2021-2027. The size of the recovery package and the criteria for allocating the new funds will then be decided by the Member States and the European Parliament.

In a debate organised on 22^nd May by the Representation of the European Commission in the Czech Republic together with CEBRE and Confederation of Employers´ and Entrepreneurs´ Associations of the CR, representatives of the Commission, Czech Government office, Czech entrepreneurs and trade unions discussed how the European recovery plan could help the Czech Republic.

The speakers agreed that investments in infrastructure, especially in digitisation and transport, but also in green technologies, will be important for the recovery of the domestic economy. The May recommendations of the Commission for the Czech Republic and the National Investment Plan should be a good guide for the use of the EU Recovery fund. Investment priorities should also be reflected in the operational programs for the forthcoming Cohesion Fund programming period. Above all, it is necessary to identify priority projects at an advanced stage of readiness so that the investment impetus in the economy can come as soon as possible.

At the same time, administrative burdens, which are one of the key obstacles to development, need to be removed. According to the Czech Chamber of Commerce, it would help entrepreneurs if some ambitious goals were postponed, as entrepreneurs will have to deal with the consequences of the crisis in the short term, even though they have expected to release investments in green technologies this year.

According to Lukáš Kovanda from the Government’s National Economic Council, the Czech Republic should focus on strengthening the Czech-Moravian Guarantee and Development Bank so that it can provide repayable assistance to companies in sufficient volume. European funds could also be used to kick-start financial instruments.

The Czech Republic is concerned that a change in the allocation criteria for drawing cohesion funds, e.g. in terms of taking into account the decline in GDP or employment after the COVID crisis, will be disadvantageous for the Czech Republic. On the other hand, the Czech government has an appetite to use the SURE tool to support short-time work scheme, thus protect jobs and self-employed against the risk of unemployment and loss of income.