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Trade Unions have been stepping up their protests against fiscal reforms planned by the government. Central Bank governor has encouraged the cabinet to go ahead with the reforms. Meanwhile, the Ministry of Finance said the Czech Republic will show the biggest fiscal deficit in its history this year. The dominant Czech telephone operator, Czech Telecom, will lay off 1,800 workers by the end of the year. The Czech foreign trade balance fell into a higher than expected deficit in July. Every tenth Czech household defaults on its loans.

Czech wages grew by almost 7 percent on average in the second quarter, after a nearly 8-percent increase the first quarter. The Czech Statistics Office said on Tuesday that the average monthly wage rose to just over 17,000 crowns (or 570 US dollars). The rapid wage growth, coupled with almost zero inflation and record low borrowing costs, has fuelled a consumer boom and this has driven the Czech economy in past quarters.

Prague blue-chips hit a three-year high earlier this week. Meanwhile, the Czech crown fell to its lowest in over a year and a half against the euro. The Czech central bank will most likely change its inflation targeting policy. New Telecommunications Act forces former monopoly Czech Telecom to rent last mile to competitors. Czech Telecom to sell off some assets. The largest Czech coal-burning power station out of operation. Power Utility CEZ eying mulls eastward expansion. Sixteen buildings in Prague's Wenceslas Square are up for sale again.

In this week's Economics Report, the failing Fischer travel empire looks for salvation, the government is to try again to persuade the EU to allow a bailout for Trinecke Zelezarny, and the Labour Minister wants to retain the so-called "13th and 14th salaries" despite plans to cut the public spending deficit.

The Trade and Industry Ministry has published its long term energy policy plan up until the year 2030. It has been tailored to gradually meet all EU criteria, but still aims for maximum self sustainability. The ministry has revised an earlier decision to phase out black and brown coal mining and also plans to build three more nuclear reactors. The plan has come as a shock to environment activists who claim that it would be a serious setback for the Czech Republic.

Special financial police unit to be set up. Police say Pirate of Prague now regarded as fugitive. Important mines sell-off for later this year. Campaign aims to encourage Czechs to holiday at home. Falkon Capital to recover Russia's Soviet-era debt to Czech Republic. Rents falling in Prague. Three licenses to be issued for fixed wireless access network in Prague.

This week, Czech lawmakers started debating a package of fiscal reforms as proposed by the centre-left government of Prime Minister Vladimir Spidla. Mr. Spidla has staked the future of his three-party coalition cabinet on the success of the reforms which are vital for cutting a widening public finance deficit to meet the Maastricht criteria for euro adoption. However, the government has only the tiniest majority of one vote in the Lower Chamber. Some coalition MP have already voiced their objections to the shape of the reforms and suggested they

The president has vetoed a law that would have raised the value added tax on some goods and services by 17 percent. The government will keep indebted aircraft maker Aero Vodochody afloat and consider privatising it. The majority shareholder of the Czech Republic's second largest telecoms group Ceske Radiokomunikace indefinitely delayed a public buyout offer to minority shareholders.

Czech politcians have been discussing the possibilities of adopting the single European currency between 2006 and 2010. At least two years before that, the country would have to join the ERM-2 exchange rate mechanism and fix the currency in a relatively narrow fluctuation band. The Czech National Bank has urged the government to stay out of the ERM-2 as long as possible so that the economy has enough time to ready for such a step.

Czech producer prices declined for the seventeenth consecutive month in June. Prime Minister pledges to step down if fiscal reform plans fail. Czech firm are believed to stand a good chance to win infrastructure contracts in Iraq. Inflow of foreign direct investment to central and Eastern Europe is expected to slow down.