The Czech government should not pursue tough deficit measures while the economy remains weak, Prime Minister Petr Nečas told the daily Mladá Fronta Dnes. This is the first time he admitted the center right government needs to change its priorities and not focus solely on trimming the debt.
Many economists claim that the government’s stringent fiscal cuts contributed to the economic recession in 2012. As a result, Nečas’s Civic Democrats suffered a heavy loss in the regional and Senate elections last month. The Czech National Bank cut its rates in a move to boost spending. Central banker Pavel Řežábek told Reuters that the government should stop undermining the bank’s efforts to pull the economy out of recession.
Nečas finally admitted voters and companies, fed up with budget cuts and tax increases, are not willing to spend and invest during these bad times. “We have to stop scaring people and show them a light at the end of the tunnel,” Nečas told Mladá Fronta Dnes.
