Economist: Austerity package to tackle national debt should be manageable for Czech households

A fierce battle is expected in the lower house this week over a government-proposed austerity package aimed at reducing the steep deficit in public finances. A recent poll by Generali Investments indicated that 81 percent of Czech citizens are concerned about its impacts on their finances. I spoke to Prague-based economist Lukáš Kovanda about whether this fear is grounded.

Could explain what changes the austerity package will bring and whether Czechs are right to be concerned about them?

“The package contains a number of tax hikes, and people are concerned that with tax hikes their living standards would worsen. These new taxes could add up on top of worsening living standards that have taken place because of high energy prices and inflation – this is the worst it’s been in the Czech Republic in the last 30 years. Many people are facing the worsening of their economic situations, accompanied by a huge decline in real wages – it’s the worst in the history of the Czech Republic since 1993. Now this consolidation package has brought some factors that may worsen their living standards. So this why they are sceptical about this package.”

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Author: Amelia Mola-Schmidt