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The sweeping floods that hit the Czech Republic have caused enormous damage. According to estimates, the damage is likely to be higher than that caused by the disastrous floods which hit the Eastern part of the Czech republic five years ago. Insurance companies say the current catastrophe will certainly be among the biggest in the Czech modern history.

Finally this week, the government has approved a proposal banning tobacco advertising and sponsorship of events by tobacco firms. The proposal comes after parliament approved a similar law in May, only to have the Senate reject it weeks later saying the measure was too broad and should instead focus on protecting children and young people from tobacco products.

The new centre-left government finally won a vote of confidence in parliament on Wednesday night for its plans to boost the welfare state and secure the Czech Republic's membership of the European Union in two years. The government has a one-vote majority in the 200-seat lower house, and will have a delicate balancing act staying in power for its full four-year term.

Coming up this week, as the government gets the go ahead to embark on a series of ambitious social spending programmes, we ask whether the rising budget deficit is cause for concern, especially if the Czech Republic is serious about adopting the euro in 2010. But first some of the business stories making the headlines this week.

The Czech Republic could start using the euro by 2010, Finance Minister Bohuslav Sobotka said on Tuesday. To meet the Masstricht criteria necessary to adopt the euro...