The Czech National Bank Governor Zdenek Tuma has called on the government to proceed to the next stage of fiscal reforms in order to keep public finances under control. Mr. Tuma said there would have to be further, stronger and bolder steps, which the government cannot avoid when pursuing its goal of reducing the enormous fiscal deficit. More specifically, Tuma said an overhaul of costly pension and health systems was needed to keep budgets in check and on a sustainable path.
Czech business and consumer sentiment deteriorated in September and the Czech Statistics Office's composite confidence indicator hit its lowest level in eight months. The Statistics Office said the composite indicator - which is a weighted average of seasonally-adjusted indicators in all business sectors and among consumers - dipped from +1 point in August to -1 point, matching a low from January this year. Confidence among businesses dropped to +3 from +5 points in August on worsening mood in all covered sectors, including industry and construction. Consumer confidence fell to its lowest in about three and a half years mainly because of people's fears of rising unemployment. The consumer confidence indicator, measured by an opinion poll, dropped to -17 from August's -12 points.
The Czech National Bank believes that a withdrawal of the two smallest Czech coins from circulation planned for the end of October will have a negligible effect on inflation. The Central bank believes the price increase resulting from rounding up of prices in shops after the 10- and 20-heller coins are withdrawn could raise inflation at most by half a percentage point. The real impact would most likely be much smaller, because shops will probably round off the total price of purchase and not prices of individual items.
The central bank is preparing to withdraw over 200 tonnes of the coins from circulation and destroy and sell them as aluminium scrap. The bank argues that the coins no longer circulate properly and their production cost is higher than their face value.
Dutch imaging company Oce said it planned to move its Netherlands-based printer assembly operations to Eastern Europe and China to reduce costs. The Czech Republic is one of the possible European locations. The company expects to achieve a cost reduction in the order of several tens of percent by transferring its assembly activities to countries with lower labour cost levels, as well as lower purchasing costs. The company intends to focus on knowledge-intensive activities in its main site in Venlo, the Netherlands.