22nd May 2017

European Semester 2017 Spring Package: Business environment in Czech Rep. is weighed down by heavy regulatory burden, numerous administrative barriers

Member States should use the window of opportunity offered by the economic recovery to pursue structural reforms, boost investment and strengthen their public finances, European Semester 2017 Spring Package issued by the European Commission suggests.

As for the Czech Republic, the general government debt-to-GDP ratio is expected to gradually decline to 32.7% in 2020. The macroeconomic scenario underpinning these budgetary projections is plausible. While risks to the achievement of budgetary targets seem broadly balanced, the pronounced contraction in public investment in 2016 - linked to the start of a new EU funds cycle - could entail a stronger-than-expected rebound of public investment in 2017, the analysis says.

The Czech Republic continues to show medium fiscal sustainability risks in the longterm. These are derived primarily from the projected impact of age-related public spending, in particular in the areas of health care and pensions. The projected increase in long-term spending on health care is a matter of concern, both in terms of the governance and the cost-effectiveness of the health care system, which relies heavily on more expensive in-patient care. Some measures are currently at various stages of implementation, but results are not yet tangible. Recently adopted or planned measures to amend the pension system may, if implemented, worsen public finances in the long term. 

The Czech Republic faces challenges in preventing corruption as well as inefficiencies in public procurement. While a number of measures in the government’s anti-corruption programme have been implemented and other reforms are pending, in practice corruption is not prosecuted systematically. In general, the Czech public procurement practice still lacks sufficient competition, which is reflected by the high number of single bid procedures and of direct awards, in particular in the IT sector. Inadequate training support and the absence of aggregated purchasing structures and competence centres hamper professionalisation and make it harder to achieve good value for money in public procurement. Very limited use of quality as an award criterion is also symptomatic in this respect. 

The business environment in the Czech Republic is weighed down by a heavy regulatory burden and numerous administrative barriers in particular permitting procedures and tax payments. 

The use of e-government services in the Czech Republic is one of the lowest in the EU, but has increased from 2015. 

R&D intensity has increased significantly in recent years, but this is not being matched by corresponding improvements in the quality of R&D outcomes. 

Educational outcomes are generally good, but basic skills have deteriorated, says the analysis of the European Commission.

Read more details hereCountry specific recommendations 2017.Country specific recommendations 2016.

Members of the American Chamber of Commerce in the Czech Republic