Czech’s REJECT Eurozone Entry*
THE Czech people have rejected joining the struggling euro with even the country’s president recognising that the people do not want to adopt the currency.
By Jon Rogers
While financial experts say they country could sign up as the general conditions are right, leader Milos Zeman has said that the people are against the move.
He said: “We have been fulfilling the Maastricht criteria, but there is a mental barrier to its adoption. A mere 30 per cent of Czechs are in favour of entering the eurozone.”
The governor of the Czech Republic’s central bank, Jiri Rusnok, has also said that the country is ready to adopt but added that it might be better to wait until wages and prices approached those of the bloc’s core members.
According to Mr Rusnok, the Czech Republic is ready to give up the koruna but many believe it will not happen for at least five to 10 years.
He added while wage rises in some of the leading European economies are almost zero, the average salary increase in the Czech Republic is currently around five per cent.
Currently the nominal rate of wages rises in the country was 5.3 per cent in the first half of the year with average wages equivalent to €10 an hour.
Across the European Union countries though the figure is around €25 with this rising to €30 in some eurozone countries.
Czech Prime Minister Bohuslav Sobotka said:
“For us to remain at the core of the European Union, sooner or later we will have to respond to the question of not whether, but when the Czech Republic is capable of adopting the single European currency.”
The move comes after the latest economic data indicates while the eurozone countries are showing some signs of life they are continuing to struggle.
IHS Markit’s latest monthly health check across the countries have indicated, while the private sector has recorded signs of improvement, the rate of growth has slowed.
A statement from the company said:
“Although the rate of growth waned to a five-month low, high order book inflows and elevated levels of business confidence meant job creation remained one of the strongest recorded over the past decade as firms continued to expand capacity to meet rising demand.
“Price pressures eased, however, largely reflecting lower global commodity prices.”
JP Morgan took a more positive approach to the eurozone stating:
“The macroeconomic momentum appears to have eased somewhat in June, in particular in the Services sector.
“In light of the sharp improvement we have witnessed in the past nine months, this pause is not really a surprise and, in our opinion, should not be interpreted as an indication that the economy is about to roll over.
“Activity in the Eurozone remains at very healthy levels and consumer confidence is at its highest level in 16 years. In addition, despite the recent drop in commodity prices, inflation dynamics remain supported by a large backlog and supplier delivery delays worsening to the greatest extent for just over six years.”