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Speaking on Wednesday, Finance Minister Miroslav Kalousek said that a recently approved church restitution bill would have an impact on the budget for this year, even though the state has not yet begun making payments to church organisations. He said that was because under European Union rules the CZK 59 billion would have to be accounted as a one-off outlay this year. Mr. Kalousek said the 2012 budget deficit could therefore reach 5 percent of gross domestic product, rather than the projected 3.5 percent.

Over the last two years we have listened to sounds from the Czech Radio archives going back over eighty years. In this, the last of the series, we look at two of the big events of the last decade - the Czech Republic’s accession to NATO and then, five years later, to the European Union. We start with NATO, which the Czech Republic joined in March 1999 along with Hungary and Poland. In 2002 Prague hosted a major NATO summit, at which seven further Eastern and Central European countries were invited to join. At the summit, President Václav Havel gave

Speaking in Brussels, the Czech prime minister, Petr Nečas, has said he will reject the latest draft European Union budget for the 2014 to 2020 period. He says he cannot accept a reduction in the bloc’s cohesion fund that would see the amount available to the Czech Republic fall from EUR 26.7 billion in the current seven-year budget period to EUR 19.5 billion in the next one. The funds are available to all regions except Prague. Mr. Nečas has said that the Czech Republic, unlike a number of states, is not threatening a veto, but, he added, neither would it approve any plan whatsoever. EU leaders are set to return to the negotiating table at noon on Friday, though there are fears that no agreement will be reached.

Speaking in Brussels just ahead of a key summit on the EU’s next seven-year budget, the Czech prime minister, Petr Nečas, said he would fight a proposed cut in the bloc’s cohesion fund; the Czech Republic has had EUR 26.7 billion at its disposal between 2007 and 2013, with the money available to all regions except Prague. Mr. Nečas said plans to reduce that sum to EUR 19.5 billion between 2014 and 2020 were unacceptable. He said the Czech Republic, unlike a number of states, was not threatening a veto, but, he added, neither would it approve any plan whatsoever.

The prime minister has announced that the Czech delegation to Brussels will strongly voice their disapproval of the proposed EU budget for 2014-2020 at an EU summit later this week. Yet, the prime minister said on Wednesday that he is not planning to veto the long-term budget proposal, unlike a number of other EU members. The priority for the Czech Republic is to remain a net recipient of EU funds and to prevent a decrease in spending for cohesion policies.

The European Commission has criticised Czech politicians for making excessive changes among civil service officials in the wake of general elections. In an annual report on the Czech Republic, Commission officials said the politically motivated replacement of senior civil servants was impacting growth and competitiveness, harming the public administration, and resulting in lower drawing on European Union funds than might otherwise be the case.

In a document outlining the future priorities for EU funding for the Czech Republic, the European Commission has criticized the influence of political changes on government administration. The report also takes a strong stand on the country’s insufficient efforts to develop a more competitive economy.

Foreign Minister Karel Schwarzenberg has expressed strong support for Serbian accession to the EU, saying Serbia could always count on Czech backing when it came to EU expansion. Mr Schwarzenberg made the statement on Monday after meeting in Prague with his Serbian counterpart Ivan Mrkic. The Balkans joining the EU is one of the priorities of Czech foreign policy. Kosovo, a former province in Serbia which declared independence four years ago remains a point of contention but Mr Mrkic said Serbia was open to discussion and said the matter would be discussed by the prime ministers. The European Commission has made clear that Serbia will be able to move ahead with accession talks if it takes clear steps towards improving relations.

The Finance Ministry has put forward a new draft of the 2013 state budget, being discussed by the cabinet on Monday, accounting for a drop in revenues and cuts in spending next year by 41 billion crowns. The budget deficit is to remain at 100 billion crowns, the same as in the previous draft. The cuts proposed are to affect science and research, transport infrastructure, teachers’ salaries and programmes co-financed by EU funds. The government must submit the draft budget to the Chamber of Deputies by November 23. The revised version of the budget bill, the ministry revealed, is taking into account current economic forecasts as well as the failure by the government so far to push through a tax package raising both VAT rates by 1 percentage point. The government has tied a vote on the bill this Wednesday to a vote of confidence.

In Business News this week: The percentage of workers in industry and construction aged 40 or less in the Czech Republic is the highest in the European Union; in its new economic forecast, the Czech National Bank has downgraded the GDP estimate for next year; Czech household debt increases.