While economic numbers show a cautious improvement, politics look as bas as ever in the Czech Republic. After a change in the election law (challenged by the President as unconstitutional), the Parliament voted for a series of amendments to the law on the Czech National bank that even some government members says are unconstitutional again. So what use of such a constitution? Should not we scrap it altogether and simply do whatever the political parties tell us to do?
The Ministry for Social Affairs proposes to eliminate some aspects of the so-called "social trap" whereby unemployed who find a low-paid job are currently penalized by the 100% tax as their benefits are cut one-for-one. The ministry wants this to change and low-paid workers should be able to hold on a part of their social benefits. While it makes some sense, the ministry left out the issue of relatively high social benefits in the first place and the change would make the system even more expensive than it is now.
The koruna appreciated slightly on Friday, as markets shrugged off fears of a CNB intervention and closed just above the 35.40 CZK/EUR level, strongest since March 2000, when the CNB did intervene to weaken the currency. There were no changes vis-a-vis the dollar where the koruna moved sideways around the 37.85 CZK/USD level.