Britain one of Czech Republic’s Highest Exporters

The UK is a vital export destination for the Czech Republic, will Britain leaving the EU heavily affect trade?

In recent years’ trade between the two has grown, last year alone the Czech Republic exported 207 billion crowns across, accounting for 5.4% of the Czech Republic’s total exports. The main items that are shipped over include electrical appliances, car parts and toys. The scale of car parts sold resulted in Skoda being voted as the most reliable car brand in the UK. The UK also exports across, with the Czech Republic receiving 73 billion crowns worth of goods in engineering products and pharmaceuticals.

The Transport Union feels there will not be any significant decrease in trade with Britain leaving the EU as they will feel the pressure in maintaining ties with other countries as most of their exports are with EU member states.

Other impacts may include a potential decrease in tourism as the pound drops and the Czech Republic is not the incredibly affordable destination for the English. If a recession occurs in the UK this may have an effect on Germany’s economy and in turn on the Czech Republic.

We will have to wait and see.


Czech Banks Stronger Than Ever

Czech banks are more equipped to deal with a recession now than the previous year, reported from the annual health check carried out this week. Among these banks are units of Austria’s Erste Group Bank, Belgium’s KBC, Societe Generale in France and UniCredit in Italy.

Banks stated that they would safeguard mortgage lending by putting more strict guidelines and rules in place from October onwards. In order to keep ahead of ‘rising lending’, the central bank has already prepared and installed a Countercyclical Capital Buffer (CCB) rate of 0.5%, effective from the start of 2017.

Another main aspect of the reporting covered the housing sector. In particular unwarranted property price rise which can be brought about by low rates and easily available housing loans.



2016: The Czech Economy so far..

Numbers relating to the Czech Republic’s economy is giving a clearer image of how 2016 is going economically for the country. Employment is at its lowest since January 2009- 415,000 is the current amount of unemployed. This is down by 28,000 to the previous month and nearly 80,000 lower than 2015’s figures.

The fall can be attributed to seasonal work but also due to manufacturing companies hiring staggering amounts of new staff. This is partly due to falters in the manufacturing industry meeting their orders. The latest figures for March show an increase of 3.6% overall compared to the previous year, however while some areas are excelling, others are flailing. Chemical production for example, fell by 18.1% and metal manufacture decreased by 7.2%

It has been mentioned that there is a lack of skilled technicians in the Czech Republic which many politicians are looking to change. The confederation has been leaning on companies to be more proactive in hiring foreigners to fill in these gaps.

“The Ministry of Foreign Affairs has reinforced the number of officials in Lvov and Kiev dealing with these passport and visa issues, but we are talking here about one, two, three or four thousand people and we need 20,000. So whatever happens with this pilot project for higher qualified workers, we have so far not even got 500 so far. And we need thousands of less skilled workers as well in various sectors of industry.”

Jaroslav Hanák- President of the Confederation of Industry.

Read on for more..

Mortgage Rates Possibly Increasing

After two months of increasing mortgage rates, April saw a steep decline and for the first time in history dropped within the 2% bracket. Below details the packages that several of the bigger banks were offering last month:

“Sberbank (lower fixed rate for a fix 3-7 years)

Expobank (increase in fixed rates on all products to fix 2 or more years)

GE Money Bank / Money Bank now Moneta (lower fixed rates in connection with the adjustment action “Mortgage from 1.88%”)

Commercial Bank (reduction of fixed rates on all products except mortgages without proof of income and the ‘American’ mortgages”

After this decrease it does look set that rates are increasing again but some are hopeful with last year’s record dip in May 2015 that they could drop again.

Czech Financial Assets Rising

Over the past five years, the financial assets of a Czech household has risen by 6% according to the Global Wealth Report stated by The Boston Consulting Group. The report assesses 63 countries and ranks them in terms of cash, shares and bank deposits amongst other aspects.

5% of the most affluent Czech people own 45% of the total financial wealth with 0.2% listed as dollar millionaires.

Mortgage Interest Rates Continue to Drop

This March saw mortgage interest rates at historic lows as many banks sought to break the 2% mark.   Unicredit, Expobank, Equa bank, and Raiffeisen are just some of the major players that lowered their rates this quarter.  This decrease in interest rates by major banks puts pressure on remaining financing entities to keep their rates low as well in order to stay competitive.

According to a statistical average across all banks, a 70% loan with a 5-year fixation period decreased from 2.10% to 2.03% in the month of March alone.  Even interest on 100% LTV financing has seen sharp decreases which is a surprise to many financial experts who expected banks to raise the interest rates for 100% LTV specifically.

Czechia- The New Czech Republic

The change of name stems from a Latin word first used in 17th Century and has been in circulation since 1993 by other countries as a noun for the country, but not used publicly as a term for the country by English speakers. It has been considered as a more ‘friendly’ and less formalised name as the current by officials but has been met controversial opinion ranging from positive to negative.

The decision has yet to be approved by the cabinet and the UN, and after the initial change from Czechoslovakia to the Czech Republic, now to Czechia there may be confusion surrounding the name, particularly as there is still a large portion worldwide that refers to the country as Czechoslovakia despite the split over 20 years ago.

There are several reasons why the change could cause problems other than confusion, the cost of changing a country’s name can be staggering. It has been reported already that $40 million has been invested into a new tourism campaign built around the name. Not only that, the Czech Ministry for Regional Development advertised the country with the slogan ‘The Czech Republic- The Land of Stories’ since 2012 and have spent almost 1 billion crowns on this marketing campaign to bring in tourists. As a portion of this investment came from the European Union it may breach some terms of the agreement by now replacing the name.

Budget Surplus Highest in History

The first quarter of this year was the highest in history for the Czech Republic reaching an astonishing 44 billion czk. The Ministry of Finance reported that the growth in revenue from taxes and transfers from the EU have contributed to this. In the first quarter for 2016 total budget revenue reached 342 billion czk with outgoings of 299 billion.

The cash transfers from the EU have risen by over 19% to total 78.8 billion which has been said due to funds being restricted from the EU between 2007 and 2013.

“If the state wanted, it could in my view achieve a better balance than the CZK 70 billion that it reckoned with at the start of the year.”

Jan Bureš- Chief Economist of Poštovní Spořitelna

The record high however does not mean that a high balance will continue through to December as explained below;

“As we learned this morning, the state budget as a whole operated for the entirety of last year with a deficit of only 0.4 percent of gross domestic product. This year I would expect the opposite – that the deficit of the entire state budget, not just of central government, will grow in comparison with last year.”

Pavel Sobíšek- Economist at UniCredit Bank.

Five Czechs Make Forbes Rich List

The Forbes annual list of billionaires has been published with five Czech’s making it onto the top 1000 worldwide. The owner of PPF Group Petr Kellner is listed as the richest at 69th place with wealth estimated at $10.6 billion.

“Petr Kellner made a successful bet last year splitting his telecom group into two entities: O2 Czech Republic, which remains publicly traded … and Cetin, which was taken private” 


Mr Kellner was listed at 106 the previous year with wealth estimated at $8.4 billion. Following him is Finance Minister Andrej Babiš with $2.5 billion worth and landing him 688th

“His most recent proposal to cut the value added tax on draft beer to ten percent from twenty-one percent won rave reviews across the political spectrum. Babis’ agricultural conglomerate, Agrofert, is also growing despite the fact Babis does not go to company headquarters as often as he used to”


The remainder of the five are as follows:

  • No 959: Radovan Vitek Owner of CPI Property Group with $1.9 billion
  • No 1,118: Karel Komárek of KKCG with $1.6 billion
  • No 1,712: Pavel Tykač of Czech Coal with $1.2 billion

Worldwide, Bill Gates holds his place as richest billionaire with a staggering $75 billion.

China Investing Heavily in the Czech Republic

CzechInvest negotiated an investment with China for an amount exceeding 1 billion czk, the industries invested in will be mainly mechanical and electrical engineering, and in the automotive industry.

Currently holding a foreign office in Shanghai, CzechInvest has been situated in China for the last 14 years. They have widespread knowledge of negotiating with Chinese investors and believe strongly in building friendly relationships first, and that business follows afterwards. During this time, CzechInvest has assisted the facilitation of 12 investment projects with Chinese firms totalling 2.6 billion. This has also helped create over 1,500 jobs for the country.

Comparatively to 2014, this investments shows large growth with more in discussion that could total 5 billion czk.

“The Czech Republic is finally starting to reach the level of other countries into which Chinese capital has been flowing into since 2003. For example, China was the biggest investor in Germany in 2014 with a nearly 20% share in all investments. In the same year, China invested $12 billion in the United States and 18 billion dollars in the EU”

Karel Kučera, CEO of CzechInvest

Karel Kučera and Prime Minister Bohuslav Sobotka recently visited Shanhai as well as other areas in the country such as Liaoning, Anhui and Zhejiang to discuss other investment projects and their plans for the Czech Republic.