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Czech Republic

 Flag of Czech Republic
Last reviewed: 31 March 2009

Country information

Map of The Czech Republic

Area: 78,866 sq km
Population: 10.47m
Capital City: Prague
People: Czech (81.2%); Moravian (13.2%); Slovak (3.1%); Polish (0.6%); German (0.5%); Roma (0.3%), Others (1.1%)
Languages: Czech
Religion(s): Roman Catholic 39.2%; Protestant 4.6%; Orthodox 3%; non-religious 39.8%, other 13.4%.
Currency: Czech Crown (CZK)
Major political parties: Civic Democratic Party (ODS); Czech Social Democrat Party (CSSD; Christian Democratic Union/Czechoslovak People's Party (KDU/CSL), Communist Party of Bohemia and Moravia (KSCM), Green Party (SZ).
Government: Parliamentary Democracy led by a coalition of the Civic Democratic Party (ODS), the Christian Democrats / People’s Party and the Green Party (note: the government resigned on 26 March 2009, but remains in office until the appointment of a successor).
Head of State: Vaclav Klaus (since 2003, re-elected for second and final term in 2008)
Prime Minister: Mirek Topolanek (since January 2007)
Foreign Minister: Karel Schwarzenberg (since January 2007)

Membership of international groupings/ organisations: Member of North Atlantic Treaty Organisation (NATO); European Union (EU); International Monetary Fund (IMF); Interpol; Organisation for Co-operation and Security in Europe (OSCE); Organisation for Economic Cooperation and Development (OECD); United Nations (UN); United Nations Conference on Trade and Development (UNCTAD); United Nations Educational, Scientific and Cultural Organisation (UNESCO); Western European Union (WEU) (associate)

ECONOMY

Basic Economic Facts

GDP: CZK 3,530  BN (US$  175 BN) (2007)
GDP per head: CZK 341,989  (US$ 16,955 ) (2007)
Annual Growth: 0.7% (2008, 4th quarter)
Inflation: 6.3 %  (Average rate in  2008) / 5.4% (February 2009)
Major Industries: road vehicles, metallurgy, industrial and office machinery and equipment, electrical equipment
Major trading partners: Germany, Slovakia, Poland, Austria, France, United Kingdom, China
Exchange rate: £1 = approx. CZK 29.4  (March 2009)

The Czech Republic is one of the most stable and prosperous of the post-communist states. Economic growth has been driven, in particular, by high levels of foreign direct investment (FDI), domestic consumer spending, and Czech exports. Economic growth since EU accession has been strong, but the country has been badly affected, especially by the downturn in key export markets, and both Government and Central Bank are predicting negative economic growth in 2009. Industrial production fell by 23.3% and  unemployment increased slightly in the fourth quarter of 2008, the first such increase since 2005.  However, the unemployment rate of 4.4% remains one of the lowest in the EU.

Czech trade is mainly with the EU. Over 85 % of its exports are to EU countries and just under 70% of imports are from the EU, with an increasing amount from China. The Czech Republic has been extremely successful at attracting FDI, much of it in automotive and electronics. In 2007 the Czech Republic attracted 6.673bn Euros of FDI.

In January 2007, the coalition agreement establishing Prime Minister Topolanek’s government outlined a clear commitment to cutting the budget deficit from 4% of GDP then to 3% in 2008, 2.6% in 2009 and 2.3% in 2010 with expenditure and the size of the deficit closely tied to the rate of real-terms GDP growth. In January 2008 the government  introduced a single 15%  personal income tax rate based on calculated ‘super-gross’ income including employer’s 35%  health and social insurance contribution. ‘Super gross’ rather than gross income forms the base for deductions for mortgage interest, pension funds and life insurance contributions (effectively leaving the tax payer worse off in these areas). The lower rate of VAT (applied to staple foods and other daily necessities) rose from 5% – 9% and excise tax on tobacco increased slightly. ‘Green taxes’ applied to coal and coke (around 10%), electricity (1%) and gas gave an average 3.3% rise in domestic energy costs.  The government have called for new legislation to ensure any increases in mandatory spending (welfare, subsidies, pensions and healthcare) is capped at 50% of all spending by 2010.

The Czech Republic joined Schengen at the end of 2007, but entry into the Euro seems unlikely in the short term. Meanwhile the Czech crown continues on sustained period of appreciation. Following the recent global financial crisis, the Czech Republic banking sector seems to be in reasonably good shape, and has not to date required recapitalisationThe Finance Ministry has increased the amount guaranteed in bank accounts to 50,000 euro.

HISTORY

Recent History

The first Czechoslovak Republic was founded on October 28, 1918. Under the leadership of Tomáš Masaryk, it was a relatively stable and democratic state. In September1938, the Sudeten lands (areas bordering Germany and Austria with a predominantly ethnic German population) were ceded to Germany under the Munich Agreement, and in March 1939, six months before the outbreak of World War II Germany occupied the remainder of Czechoslovakia. After it was liberated in 1945 Czechoslovakia fell under the Soviet sphere of influence, and a Communist government took control in February 1948. The August 1968 invasion by other Warsaw Pact countries ended a short period of reform known as the Prague Spring and was followed by a period of harsh repression. The 1989 Velvet Revolution saw the Communists ousted and a democratic government installed with Václav Havel as President. Differences between the Czechs and Slovaks led to the separation of the two countries ('the Velvet Divorce') on 1 January 1993 and the formation of the Czech Republic. The Czech Republic became a member of NATO in March 1999 and the European Union on 1 May 2004, after a referendum on 13 and 14 June 2003 revealed nearly 80% support for EU membership on a turn-out of 55%.

Longer Historical Perspective

The development of the Czech nation is rooted in the 9th century when the Kingdom of Bohemia emerged. Bohemia was a major medieval and early modern political, cultural and economic state. The power of Bohemia reached its zenith with the reign of Charles IV in the 14th century. The religious reform movement (1419-1436) of Jan Hus created religious dualism for the first time in Christian Europe and was a precursor to the Reformation of the 16th century. From 1526 until 1918 Bohemia was part of what was to become the Austro-Hungarian Empire.  The Thirty Years War that devastated Central Europe started with a revolt by Bohemian nobles in 1618. Their defeat at the Battle of the White Mountain, on the outskirts of Prague, ushered in a period of Germanic domination until Czech and Slovak nationalist movements gained greater momentum in the nineteenth century.

INTERNATIONAL RELATIONS

The Czech Republic's Relations with Neighbours

The Czech Republic is a founding member of the Visegrad Group (V4) with Hungary, Poland and Slovakia. The group seeks to work together to promote their common interests.

The Czech Republic's Relations with the International Community

The Czech Republic has now largely achieved its prime post-communist foreign policy goal of integration into the Euro-Atlantic mainstream. It joined the Council of Europe in 1990, the OECD in 1995, NATO in 1999 and the EU in 2004.

The Czech Republic has played an active part in international military operations. It is contributing to the NATO-led Kosovo Force and the EU Force in Bosnia. In Afghanistan in March 2008 the Czech Republic took responsibility for the   provincial reconstruction team in the eastern Afghanistan province of Logar. The Czech Army also has Special Forces in Afghanistan supporting the US-led Operation Enduring Freedom.

THE CZECH REPUBLIC'S RELATIONS WITH THE UK

The Czech Republic and the UK continue to enjoy strong and positive relations at all levels including cultural, commercial and popular. Britain and the Czech Republic are both popular destinations for each other's nationals to holiday, study and work. There are around 3,500 British working in the Czech Republic and over 500,000 visited in 2008. In 2006, it was estimated that over 25,000 people living in the UK were born in the Czech Republic or the former Czechoslovakia.

At an inter-governmental level the UK and Czech Republic are close partners across a wide range of multilateral and bilateral issues. The Czechs currently  hold the EU Presidency in until June  2009. The chosen theme of 'Europe Without Barriers' reflects their wish for an open and competitive Europe and the advantages gained by the Czech Republic from EU membership and the Four Freedoms; movement of goods, services, capital and people. The British Embassy in Prague works closely with the Czech Government, public authorities, private sector and NGOs on a large range of issues of common interest ranging from economic, trade and environmental policy to advice to tourists.

British Council Czech Republic

GEOGRAPHY

A landlocked country, the Czech Republic borders Austria, Germany, Poland and Slovakia. Bohemia, in the west, is comprised of rolling plains and plateaux surrounded by low mountains; Moravia, in the east, is hilly country. 34% of the Czech Republic is covered in forests and woodlands, while about 41% of land is arable.

TRADE AND INVESTMENT

Trade and Investment with the UK

In 2008 UK exports to the Czech Republic were £1.5 billion, making the Czech Republic Britain’s 31st largest export market. Czech exports to the UK were £3.5 billion in 2008. The exports are dominated by Skoda cars and manufactured goods. Two way trade is therefore worth some £5 billion. This is impressive, given the relatively small size of the market (10.2m people).

The UK is responsible for approximately 3% of Foreign Direct Investment in the Czech Republic. Principal UK investors include International Power, LogicaCMG, Vodafone, Tesco and Shell. Several British household names can now be seen on the streets of Prague and other cities including Tesco, Next, Marks & Spencer, Mothercare, Halfords and Debenhams. Further information about the Czech Republic's economy can be found at UK Trade & Investment Country Profile: Czech Republic.

Cultural Relations with the UK

The British Council seeks to advance UK-Czech cultural relations  and offers a wide range of activities including English teaching, examinations, as well as a programme of events focusing on themes such as intercultural dialogue, knowledge and creative societies and climate change. The British Council is located in the centre of Prague, near Wenceslas Square. It also works very closely in the regions through 10 partner libraries which house a wide selection of contemporary literature, register candidates for examinations, and provide information on the UK. More information available at British Council Czech Republic

Recent Visits

Inward

  • Cyril Svoboda, Deputy Prime Minister and Foreign Minister, March 2006
  • Vaclav Klaus, President, May 2006
  • Mirek Topolanek, Prime Minister, June 2007
  • Karel Schwarzenberg, Foreign Minister, July 2007
  • Alexander Vondra, Deputy Prime Minister and Europe Minister, October 2007
  • Vaclav Klaus, President, November 2007
  • Martin Bursik, Deputy Prime Minister and Minster for the Environment, January 2008
  • Alexander Vondra, Deputy Prime Minister and Europe Minister, May 2008
  • Senate Committee on Foreign Affairs, Defence and Security, June 2008
  • Vlasta Parkanova, Minister for Defence, June 2008
  • Martin Bursik, Deputy Prime Minister and Minister for Environment, November 2008.

Outward

  • Sir Michael Walker, Chief of the General Staff, March 2006
  • Tony Blair, Prime Minister, March 2006
  • Geoff Hoon, Minister for Europe, May 2006
  • Baroness Hayman, Lord Speaker of the House of Lords, September 2006
  • Geoff Hoon, Minister for Europe, March 2007
  • John Prescott, Deputy Prime Minister, April 2007
  • Sir David King, Chief Scientific Adviser, April 2007
  • HRH Princess Royal, October 2007
  • Baroness Cox, House of Lords, April 2008
  • JimMurphy, Minister for Europe, May 2008
  • Alan Johnson, Secretary of State for Health, July 2008
  • Lord Mayor of London, September 2008
  • Lord Grenfell, Chair of Lords EU Committee, October 2008
  • Baroness Delyth Morgan, PUSS, DIUS, October 2008
  • Caroline Flint, Minister for Europe, October 2008
  • Baroness Taylor, Minister for International Defence and Security, November 2008
  • Mark Lyall Grant, Political Director, FCO, November 2008
  • Tim Abraham, Director EU Energy, DECC, December 2008
  • Caroline Flint, Minister for Europe, FCO, January 2009
  • Meg Hilier, Minister, Home Office, January 2009
  • The Rt Hon Jack Straw MP, Lord Chancellor and Secretary of State for Justice, January 2009
  • Pat McFadden, Minister for Employment Relations & Postal Affairs, January 2009
  • Gareth Thomas, Minister of State for Development, January, 2009
  • Rt Hon John Hutton, secretary of State for Defence, March 2009
  • Rt Hon David Miliband MP, Foreign Secretary, March 2009

TRAVEL

Travel advice: Czech Republic

Useful Links

Embassy of the Czech Republic in the UK: www.mzv.cz/london

Official website of the Czech Republic: http://www.czech.cz/en/

POLITICS

Recent Political Developments

Mirek Topolánek’s conservative Civic Democrats (ODS) narrowly won the June 2006 election but an exact draw between left and right wing blocs in parliament meant that he was unable to form a majority coalition government. After one failed attempt and abortive talks on a power-sharing deal with the Social Democrats, Topolánek eventually proposed a three party coalition between the ODS, the centre-right Christian Democrats and the centrist/environmentalist Greens. Seven months of political negotiations (under three successive interim governments) finally ended when this coalition was confirmed by the Czech parliament on 19 January 2007, after two rebel Social Democrat MP’s left the party and became independents. . A public finance reform package that took effect on 1 January 2008 was only passed after extensive negotiation. Further reforms on pensions, health and social welfare proposed by the Government were also fiercely debated during 2008 and further health reforms are now being delayed. In mid-term regional and Senate elections in October 2008, the opposition CSSD party scored sweeping victories and the ODS lost their absolute majority in the Upper House. The Government continued with this thinnest of majorities until it was defeated in the  vote of no confidence on 26 March 2009, the fifth to be called by the Social Democrat and Communist opposition.

President Vaclav Havel’s 13 years as President came to an end on 2 February 2003. Vaclav Klaus, a former Prime Minister, was first elected President by parliament on 28 February 2003 and re-elected for a second and final five year term on 15 February 2008. He is also well-known for his strong and independent views on the European Union, climate change and NGOs. In 2008, President Klaus stood down as a honorary Chairman of the Civic Democratic party.

Elections

The next Presidential election is scheduled for early 2013. The next general election is scheduled for mid-2010. However, in the wake of the government's defeat, early elections are likely, most probably in the autumn of 2009.

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Contacts

Czech Republic

Address:

Embassy of the Czech Republic
26 Kensington Palace Gardens
London W8 4QY

Telephone:

(020) 7243 1115

Fax:

(020) 7727 9654

Email: london@embassy.mzv.cz

Office hours:

 

Website: http://www.czechembassy.org.uk