Page 46 - bne monthly magazine October 2022

46 I Central Europe bne October 2022
on renewable energy payments for households, and a discounted elec- tricity tariff make Czechia fourth in the EU relative to its GDP in terms of aid provided to citizens. According to Reuters, the government's claimed spending is equal to 2.9% of GDP.
Last month, the cabinet agreed to increase the amount of money allocated for the energy savings tariff, which will be distributed across the winter through contracted electricity and commod-
ity prices as per the level of energy consumption.
Minister of Industry and Trade Josef Sikela said the discounted electricity tariff would translate to aid for house- holds with low consumption to approxi- mately CZK11,000 (€446), medium consumption of CZK14,000-15,000 (€568-608) and high consumption of above CZK18,000 (€730).
However, NGOs and analysts warn that aid needs to be more targeted to have the most effective impact. A third of households is struggling to cover their monthly expanses, sociologist Daniel Prokop points out. “Help should be targeted towards the poorer half or poorer third, households with children”, Prokop told Czech Radio.
Some 700,000 Czechs (roughly 6.4%
of the population) remain trapped in endless enforcement procedures, facing debts impossible to pay off during their lifetimes.
Slovak ruling coalition collapses
Cabinet tensions over how to respond to the cost of living crisis led to the collapse of the Slovak ruling coalition this week.
The right-wing Freedom and Solidarity Party (SaS) pulled out of the govern- ment over the way Finance Minister Igor Matovic pushed through his welfare plans with the support of a far- right opposition party when he could not get them through the cabinet.
The government's measures include monthly subsidies to families of €30 per child, a €50 monthly contribution to be
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used for children's after school activities, a tax bonus for children under six and under 15 of €70 and €100 respectively.
Prime Minister Eduard Heger’s govern- ment now commands 67 votes in the 150-member parliament, and even with the support of a handful of independent deputies it will lack a majority.
The two main opposition parties, Robert Fico’s Smer and Peter Pellegrini’s Hlas, are comfortably leading opinion polls and have collected enough signatures for a referendum on early elections, though the question is likely to be referred to the Constitutional Court.
The political scene is likely to become more stormy, particularly if – as likely – a vote of no-confidence is held in Matovic.
“There will be a period of friction, depression, rage,” Martin Barto, a member of SaS’ National Council, told bne IntelliNews. “There is a real threat of a really big political upheaval.”
Hungary tries to rein in budget deficit
Hungary is different from its neigh- bours in that it already had price caps and welfare handouts and in fact has had to unwind some of them to keep its budget deficit under control.
There were big demonstrations when Viktor Orban’s radical right-wing regime ripped up its manifesto pledges and moved to cut the budget deficit caused by its handouts before the election. Thousands protested in Budapest in
July at the end of tax breaks for small entrepreneurs and a hike in utility price caps.
Hungary has capped retail fuel prices at HUF480 ($1.23) per litre since Novem- ber, well below current market prices. Sharp rises in gas and electricity prices have forced the government to set the limit at national average consumption levels, with market prices applying above that.
Hungary has now imposed an export ban on fuels and recently loosened logging regulations to meet increased demand for solid fuels such as firewood.
Households squeezed in Southeast Europe
In much of Southeast Europe the impact of the war in Ukraine has meant a further hike in food prices, and the lack of locally produced food in the shops is visible. Instead, retailers are resorting to costly imports to fill their shelves.
In Bulgaria, the poorest of the EU’s 27 member states, households are reducing non-essential spending to a minimum to face the coming winter and to be able to buy food and pay for their bills.
“I think twice before deciding to travel this summer. I have never thought about my budget before as my income is excellent and I can afford a high living standard for my family. However, the fuel has jumped a lot and we have cancelled several trips,” Desislava, 50,
a mother of three, tells bne IntelliNews.
Food stores remain busy for now, but this is mainly thanks to the summer tourist season and the Ukrainian refu- gees in the country. Many expect that after the end of the summer season the consumption will decrease significantly.
“I am nearly having a panic attack every time I enter the store – full of crowds, buying so many things, that employees have no time to refill shelves,” Daniela, 46, says.
She spends the summer at the Black Sea coast and does her weekly shopping at the local supermarket. As August ended, however, the crowds disap- peared too.
Croatia, which is more dependent on tourism than Bulgaria, is expected to see a similar fall in economic activity as this year's summer season comes to an end. One segment that aims to do well out of the crisis is pawnbrokers; there has been a surge in advertising among pawnbrokers encouraging cash- strapped Croatians to turn to them as
a solution to the crisis.
The beginning of autumn brings a new set of financial worries. Two surveys
of parents in Romania show they are increasingly concerned about the costs of