Pavel Renews Support for Euro Adoption, Says Czech Republic Should Not Let the Crown Limit Growth

Czech President Petr Pavel has reiterated his support for adopting the euro, arguing that the Czech Republic should be prepared to abandon sentiment attached to the Czech crown if it becomes an obstacle to the country’s future development and influence within Europe.

Speaking at the reVize Česka conference in Prague, Pavel said the Czech economy’s deep integration with the eurozone makes participation in key European decision-making forums increasingly important.

“The fact that our economy is closely intertwined with the eurozone should lead us to conclude that it is better to sit at the table where decisions are made rather than remain outside and simply deal with their consequences afterwards,” Pavel said.

The president argued that euro adoption would strengthen the Czech Republic’s position within the European Union and provide greater influence over economic policies that already affect the country. He also maintained that the Czech Republic’s long-term prosperity depends on being part of a strong and integrated Europe.

Pavel’s comments stand in contrast to the position of Prime Minister Andrej Babiš and the governing coalition, which remains opposed to adopting the common European currency.

Responding after a cabinet meeting, Babiš described the euro as a further loss of national sovereignty within the European Union. He argued that major eurozone countries dominate decision-making while smaller member states have limited influence.

“The Czech Republic needs the crown,” Babiš said, despite his frequent criticism of Czech monetary policy and interest rate decisions.

The debate comes as the government has indicated it no longer intends to prepare annual reports assessing the country’s readiness to join the eurozone. Although the Czech Republic committed to adopting the euro when it joined the European Union in 2004, no target date has ever been set.

Economic opinion remains divided. Petr Dufek, Chief Economist at Banka Creditas and a member of the Czech Banking Association’s Prognostic Panel, said the euro should primarily be viewed as an economic rather than political issue.

According to Dufek, while the Czech Republic currently fulfils the technical conditions required for eventual euro adoption, retaining an independent currency continues to provide important advantages through autonomous monetary policy.

He argued that if the Czech Republic had already adopted the euro, inflation and housing prices could currently be higher than they are today.

To join the eurozone, countries must satisfy five Maastricht criteria covering inflation, long-term interest rates, public finances and exchange-rate stability. One requirement is participation in the ERM II exchange-rate mechanism for at least two years before adoption.

The euro is currently used by 21 of the European Union’s 27 member states, with Bulgaria becoming the latest country to join the currency bloc in 2026.

Pavel’s intervention is likely to reignite debate over the Czech Republic’s monetary future, particularly as questions about economic competitiveness, European integration and long-term investment continue to shape the country’s policy agenda.

Source: CZK

Pavel Warns Against Rapid Debt Growth, Calls for Strategic Investment in Defence and Innovation

Czech President Petr Pavel has warned that the pace of public debt growth represents a greater risk to the country’s finances than the overall level of debt itself, urging policymakers to focus borrowing on investments that strengthen the long-term competitiveness of the Czech economy.

Speaking at the reVize Česka conference in Prague, Pavel said the country faces a challenging economic environment characterised by higher interest rates and growing pressure on public finances.

“We are tempted to continue living on debt, yet we are in a decade of high interest rates, and irresponsible management can become very costly,” Pavel said.

According to the latest figures, the Czech national debt increased by CZK 42.3 billion during the first quarter of 2026 to a record CZK 3.72 trillion. The approved state budget anticipates that the debt could rise to nearly CZK 4 trillion by the end of the year. The Czech National Bank expects government debt to reach 45.7 percent of GDP in 2026, up from 44.3 percent last year, before rising further to 47.2 percent in 2027.

Pavel stressed that public borrowing should be directed towards projects that generate future economic growth rather than expenditures with limited long-term returns. He argued that debt is not inherently problematic if it finances investments that improve the country’s future position and productivity.

Among the priorities identified by the president were defence-related investments, which he said should be viewed not only as spending on military equipment but also as support for technologies with both civilian and military applications.

Pavel highlighted the Czech Republic’s strengths in sectors such as clean technologies, nanotechnology and software development, adding that the defence industry could become an increasingly important driver of future economic growth.

His comments come as political debate intensifies over proposed changes to public budget rules. A legislative amendment currently under consideration in the Senate would allow the government greater flexibility to increase spending on strategic infrastructure projects and security-related measures during periods of heightened geopolitical risk. Critics argue the proposal could weaken fiscal discipline and increase long-term budgetary pressures.

The president also pointed to structural challenges facing the Czech economy, including insufficient investment in education, regional disparities in educational quality, shortages of skilled labour, slow progress in state digitalisation and fragmented management of research and innovation.

Prime Minister Andrej Babiš meanwhile reiterated concerns about meeting NATO defence spending commitments, indicating that achieving expenditure equivalent to two percent of GDP may prove difficult under current fiscal conditions.

Pavel concluded that maintaining sustainable public finances while investing in strategic sectors will be critical if the Czech Republic is to strengthen its competitiveness and economic resilience in the coming years.

Source: CTK

Czech Budget Deficit Reaches CZK 170.2 Billion in May as Investment Spending Accelerates

The Czech state budget recorded a deficit of CZK 170.2 billion at the end of May 2026, widening from CZK 106.1 billion in April, according to data released by the Ministry of Finance of the Czech Republic.

Although the deficit deepened during May, the result remained broadly in line with the same period last year, when the budget posted a shortfall of CZK 170.5 billion. The ministry noted that May traditionally brings a deterioration in the budget balance due to the timing of tax collections and several large expenditure items.

Total state revenues increased by 5.7 percent year-on-year to CZK 818.4 billion, supported by stronger tax collection and higher inflows from European Union funds. At the same time, expenditures rose by 4.7 percent to CZK 988.6 billion.

Finance Minister Alena Schillerová said the May result reflected seasonal fluctuations in public finances, as quarterly tax revenues are not collected during the month while significant payments, including advances for regional education, are concentrated within the period.

The minister also highlighted increased investment activity by the state. Capital expenditure rose by 24.8 percent year-on-year to CZK 76.7 billion, with funding directed primarily towards transport infrastructure projects through the State Fund for Transport Infrastructure and defence modernisation programmes.

On the revenue side, corporate income tax delivered one of the strongest performances, increasing by 13.1 percent year-on-year to CZK 54.9 billion. Personal income tax revenues reached CZK 72.8 billion, up 8.5 percent, reflecting continued wage growth across the economy.

Social security contributions generated CZK 351.3 billion for the budget, a 6.5 percent increase compared with the same period last year. The growth was supported by rising salaries and changes to the minimum assessment base for self-employed workers.

Value-added tax revenues increased by 4.4 percent to CZK 169.8 billion, while excise tax collection rose 3.2 percent to CZK 67 billion. Revenue from excise duties on mineral oils grew by 7.1 percent to CZK 33.6 billion.

Social benefits remained the largest expenditure category, reaching CZK 401 billion, an increase of 3.8 percent year-on-year. Pension payments accounted for CZK 309 billion of this total. Spending on unemployment benefits rose particularly sharply, increasing by 39.6 percent to CZK 8.7 billion following changes to support payments during the initial months of unemployment.

Analysts cautioned that achieving the government’s planned full-year budget deficit of CZK 310 billion may prove challenging. Factors weighing on public finances include lower excise tax revenues following the reduction of diesel taxation, increased expenditure on energy support measures and higher public-sector wage costs.

Economists also pointed to external risks, including weaker-than-expected economic growth and the potential impact of continued geopolitical tensions on the Czech economy.

The approved 2026 state budget projects revenues of CZK 2.118 trillion and expenditures of CZK 2.428 trillion, resulting in a planned deficit of CZK 310 billion. In 2025, the Czech Republic closed the year with a budget deficit of CZK 290.7 billion.

Source: CTK

Czech Unemployment Rate Holds at 3.2% in April as Labour Market Remains Stable

The unemployment rate in Czechia stood at 3.2% in April 2026, according to the latest figures released by the Czech Statistical Office. While the rate was 0.4 percentage points higher than a year earlier, seasonally adjusted data indicate that unemployment has remained unchanged at 3.2% for eight consecutive months, suggesting continued stability in the labour market.

The employment rate among people aged 15 to 64 reached 75.3% in April, down by 0.5 percentage points compared with the same month last year. Employment remained significantly higher among men, at 79.7%, while the rate for women stood at 70.8%.

At the same time, the economic activity rate edged down by 0.1 percentage points year-on-year to 77.9%. The participation rate for men reached 82.1%, compared with 73.5% for women.

According to Dalibor Holý, Director of the Labour Market and Equal Opportunities Statistics Department at the Czech Statistical Office, the labour market appears broadly stabilised despite the modest increase in unemployment.

The Labour Force Sample Survey, which forms the basis of the data, follows internationally recognised methodology established by the International Labour Organization and provides results that are comparable across European Union member states.

Using the methodology applied by Eurostat for the broader 15–74 age group, Czechia recorded an unemployment rate of 3.1% in April 2026, maintaining one of the lowest unemployment levels in the European Union.

The figures suggest that while labour market conditions have softened slightly compared with last year, employment levels remain high and the overall market continues to demonstrate resilience amid a challenging economic environment.

Source: CSO

Premium Property Markets Shift Beyond Major Cities, With Lifestyle Destinations Gaining Investor Attention

Premium residential property markets across Europe are increasingly outperforming the broader housing sector as investors direct capital towards lifestyle-oriented destinations rather than traditional metropolitan centres, according to market commentary from RRJ Group.

The trend reflects changing investor preferences, with growing interest in locations that offer access to natural amenities, recreation and quality of life alongside long-term capital preservation.

Data cited from Knight Frank’s Wealth Report 2026 indicates that prime residential property prices continued to rise across many global markets, with more than half of the surveyed cities recording annual growth above 3 percent. Prague emerged as one of Europe’s strongest-performing premium residential markets, while destinations such as Marbella, Porto and several Alpine resort locations also recorded solid growth.

At the same time, some established luxury markets have faced pressure. London was among the weaker-performing European markets, reflecting the impact of tax changes and regulatory developments, while Tokyo recorded some of the strongest global growth in the premium segment.

According to Radosław Jodko, investment expert at RRJ Group, premium real estate is increasingly being viewed as a distinct asset class rather than simply a prestige purchase.

He argues that investors are placing greater emphasis on factors such as access to nature, waterfront locations, privacy and lifestyle amenities. As a result, mountain resorts, coastal destinations and lake regions are attracting increasing attention as alternatives to traditional city-centre investments.

The trend is also visible in European tourism markets. Eurostat data shows that residential property prices have been among the fastest-growing in countries such as Portugal, Spain and Croatia, where demand is supported by lifestyle and tourism-related factors.

In Poland, premium residential investment has traditionally been associated with Baltic Sea destinations. However, Jodko believes that the country’s lake regions, particularly Masuria, are increasingly attracting investor interest.

He points to the area’s limited development potential, environmental protections and growing demand for second homes as factors supporting long-term value growth. Similar characteristics have contributed to the success of established premium destinations elsewhere in Europe, including Portugal’s Algarve region and Alpine resort markets.

At the same time, market participants caution that not all properties located near lakes or coastal areas qualify as premium assets. Factors such as architectural quality, finishing standards, professional property management, service infrastructure and privacy remain important determinants of long-term performance.

According to RRJ Group, maintaining these standards will be essential as Poland’s premium residential market continues to develop. The company notes that international experience has shown that excessive development and expansion can weaken exclusivity and ultimately affect property values.

As investors increasingly seek scarce and difficult-to-replicate assets, locations with limited supply and strong environmental characteristics are expected to remain key areas of interest within Europe’s growing premium residential sector.

Dekpol Developer Launches Pre-Sales for Altera Residential Project in Wrocław

Dekpol Developer has launched pre-sales for Altera, a new residential development planned at 54-56 Braniborska Street in Wrocław’s Szczepin district. The project will comprise 116 apartments and ground-floor commercial units, with construction scheduled to begin in the second quarter of 2026.

Located close to Wrocław’s city centre, the development is intended to serve both owner-occupiers and investors. Apartment sizes will range from 32 sqm to 92 sqm, while prices start at PLN 665,000.

The single-phase project will consist of one building with nine above-ground floors and two underground levels. In addition to residential units, the scheme will include retail and service space on the ground floor as well as a playroom for residents.

According to the developer, the project’s location provides convenient access to key destinations across the city. Wrocław’s Market Square, Magnolia Park shopping centre and Legnicka Business Garden can be reached by tram in approximately 13 minutes. Educational facilities, shops and cultural institutions, including the Contemporary Museum and the Academy of Theatre Arts, are also located nearby.

The architectural concept was developed by Studio Ideograf and draws inspiration from Wrocław’s historic urban architecture. The design incorporates elements associated with traditional city tenement houses, including rhythmic façade divisions, large glazed areas and arcades, while adopting a contemporary architectural form.

Dekpol said the project has been designed to respond to demand for centrally located housing in Wrocław, targeting singles, families and buyers seeking rental investment opportunities.

The development marks another investment by Dekpol Developer in Wrocław. The company previously completed a nearby residential and commercial project on Braniborska Street.

Construction is expected to be completed at the turn of the first and second quarters of 2028. Dekpol Developer is the investor, Dekpol Budownictwo will act as the general contractor, and Studio Ideograf is responsible for the architectural and interior design.

President Petr Pavel Visits Construction of Czech Republic’s First Church to Use 3D-Printed Concrete

President Petr Pavel has visited the construction site of the Church of the Holy Trinity and the Cardinal Josef Beran Community Centre in Neratovice, a project that will become the first religious building in the Czech Republic to incorporate 3D-printed concrete elements.

The development, designed by architect Zdeněk Fránek, includes a church, community centre, parish facilities and a multifunctional hall. The project is being developed by the Neratovice Community Centre Foundation, with international construction group HSF System, part of PURPOSIA Group, serving as the general contractor. The gross construction cost is estimated at approximately CZK 204 million.

During the visit, President Pavel was introduced to the progress of the project and the planned use of 3D concrete printing technology for the church tower and parish building.

Construction is currently focused on foundation works for the parish building, retaining walls and the external walls of the community hall. One of the most distinctive features of the project will be the church tower, which is being developed using 3D concrete printing technology. Testing of individual printed components is currently underway to verify geometry, assembly processes and surface quality before full-scale production begins.

The technology is being supplied by Coral Construction Technologies, a subsidiary of HSF System that specialises in the development of concrete 3D-printing solutions. According to the company, the process uses standard transport concrete enhanced with specialised additives, allowing the creation of complex shapes without the need for traditional formwork.

The project combines contemporary construction methods with symbolic architectural design. The main building mass is intended to represent an ark, symbolising the presence of God in the world, while the tower represents humanity reaching towards the divine. The church will be dedicated to the Holy Trinity, while the community centre will bear the name of Cardinal Josef Beran.

Beyond its religious function, the complex is intended to serve as a community hub for worship, education, cultural events and social activities. Facilities will include a community hall, parish offices and spaces accessible to the wider public. The church tower will also incorporate a climbing wall.

The project responds to the needs of the local parish, which serves 13 municipalities and has outgrown its existing facilities. It also carries historical significance, as Neratovice was deliberately developed without a church when the town was expanded in the 1950s.

Construction of the Church of the Holy Trinity and the Cardinal Josef Beran Community Centre is scheduled for completion in autumn 2028. The project is being financed through donations, with fundraising efforts continuing.

Hungary Restructures Ministerial Responsibilities Following Formation of New Government

Hungary’s new government, led by Prime Minister Péter Magyar, has introduced a reorganisation of ministerial responsibilities that affects areas including foreign direct investment (FDI), taxation, competition policy, public procurement and healthcare.

The changes, set out in Government Decree No. 90/2026 (V.13.), include the creation of new ministries, the redistribution of portfolios and the abolition of several previous ministerial positions.

FDI Oversight Reassigned

Responsibility for reviewing foreign direct investment transactions has been divided between two ministries.

Under the revised framework, notifications submitted under Act L of 2025 must be filed with the Minister of Economy and Energy, István Kapitány, who now oversees domestic economic affairs. Previously, this responsibility belonged to the Minister for National Economy.

Notifications under Act LVII of 2018, which covers investments affecting Hungary’s security interests, must now be submitted to the Minister of Interior, Gábor Pósfai. This function was previously handled by the Minister of the Prime Minister’s Cabinet Office, a position that has since been abolished.

The changes affect companies planning acquisitions or investments that fall within Hungary’s FDI screening regime.

Tax Policy Returns to Finance Ministry

The government has returned responsibility for tax policy to the Ministry of Finance under Finance Minister András Kármán.

The move reverses the transfer of tax policy responsibilities to the Ministry of National Economy introduced under the previous administration. The restructuring restores a model that was largely in place following Hungary’s transition to a market economy in the early 1990s.

The Ministry of Finance is expected to lead the development of future tax policy initiatives.

Competition Responsibilities Split

Competition-related responsibilities will now be shared between two ministries.

The Minister of Justice, Márta Görög, retains overall responsibility for competition law. However, matters with a significant European Union dimension have been assigned to the Minister heading the Prime Minister’s Office, Bálint Ruff.

These include state aid assessments under Article 107 of the Treaty on the Functioning of the European Union (TFEU), as well as the transmission of court decisions to the European Commission in cases involving Articles 101 and 102 TFEU and the Digital Markets Act.

The changes reflect the Prime Minister’s Office’s broader role in coordinating EU-related matters.

Public Procurement Moves Under Finance Ministry

Public procurement policy and oversight have also been transferred to the Ministry of Finance.

The ministry will be responsible for preparing legislation, formulating procurement policy and overseeing implementation. Operational functions will continue to be managed through the National Development Centre.

The Finance Ministry has also assumed responsibility for the supervision of state assets, including contracts related to privatisation, concessions and public-private partnership projects. Oversight of national public road concession agreements will remain with the Minister of Transportation and Infrastructure.

New Healthcare Ministry Established

One of the most significant institutional changes is the creation of a dedicated Ministry of Health Care, marking the first time since 2010 that healthcare has been managed by a standalone ministry.

The new Minister of Health Care, Zsolt Hegedűs, will oversee healthcare policy, social security, drug prevention and drug policy coordination.

The ministry has outlined plans for reforms affecting healthcare regulation, institutions and administration. Proposed measures include expanding the role of the National Health Insurance Fund, establishing a healthcare quality assurance agency, separating pharmaceutical and public health authorities, and granting hospitals greater professional and financial autonomy.

Additional plans include reforms to primary healthcare services through new Health and Social Centres, the creation of a National Institute for Primary Care and Methodology, and investments in hospital infrastructure, including new elective surgery centres.

The ministerial restructuring represents one of the first major administrative reforms introduced by Hungary’s new government and is expected to influence regulatory processes across several sectors.

Source: CMS

Poland: Report Questions Economic Impact of EU Carbon Trading System

A new report published by the Warsaw Enterprise Institute argues that the European Union’s Emissions Trading System (ETS) is imposing growing costs on businesses and households while creating uncertainty for long-term investment planning.

The study, In Search of the Optimal Climate Policy, examines the economic impact of the EU’s carbon trading framework and compares it with alternative climate policy measures based on tax incentives and investment support mechanisms. The report forms part of a broader research initiative assessing whether elements of the EU Green Deal, including the ETS and Carbon Border Adjustment Mechanism (CBAM), should be replaced or complemented by alternative market-based approaches.

According to the report, companies operating under the ETS faced carbon allowance costs of approximately €46 billion annually based on 2023 emissions data and allowance prices of around €80 per tonne. The authors estimate that the broader economic impact of the system could reach up to €55 billion annually, equivalent to roughly €123 per EU citizen.

The report warns that the planned expansion of the system through ETS 2, which will extend carbon pricing to road transport and building heating, could significantly increase costs. In a scenario where free allowances are fully phased out and ETS 2 is fully implemented, annual compliance costs could rise to approximately €140 billion across the European economy, according to the study. More than €50 billion of that total would come from road transport alone.

A key concern highlighted by the authors is carbon allowance price volatility. The report notes that allowance prices increased from around €20 per tonne in 2020 to as much as €100 in 2022, which it argues creates uncertainty for businesses planning long-term decarbonisation investments. The study also cites statistical analysis suggesting that allowance markets experienced speculative price bubble characteristics between 2017 and 2023.

The report further argues that ETS costs are not evenly distributed across the European Union. It suggests that industrial and energy-intensive economies in Central and Eastern Europe face a proportionally higher burden than wealthier Western European countries due to their economic structures and greater reliance on conventional energy sources.

As alternatives, the authors propose two market-oriented mechanisms. The first, Decarbonisation Tax Cuts (DTCs), would reduce corporate tax rates for low-emission products in high-emission sectors. The second, Rapid Innovation Funds (RIFs), would provide tax exemptions for investment financing aimed at supporting new technologies and industrial modernisation. The report argues that both measures could encourage emissions reductions while lowering the economic burden associated with carbon pricing.

The publication comes as European policymakers continue to debate the balance between climate targets, industrial competitiveness and energy affordability. The authors conclude that climate policy should place greater emphasis on innovation and investment incentives while reducing the costs they associate with the current emissions trading framework.

German Outpatient Healthcare Real Estate Investment Surpasses €200 Million in 2025

Investment activity in Germany’s outpatient healthcare real estate sector increased significantly in 2025, with transaction volumes exceeding €200 million, according to the latest Outpatient Healthcare Property Market Report published by Hauck Aufhäuser Lampe Real Estate Investment Management (HAL REIM) in cooperation with CBRE.

The report highlights growing investor interest in outpatient healthcare properties, supported by demographic trends, healthcare sector reforms and the continued shift from inpatient to outpatient care models.

Healthcare real estate transactions totalled approximately €1.2 billion in 2025, representing a 23 percent increase compared with €973 million in the previous year. Within the broader healthcare and care property sector, outpatient healthcare assets recorded particularly strong growth. Transaction volumes reached around €200 million, up from approximately €91 million in 2024, while CBRE forecasts further growth beyond €300 million in 2026.

Prime yields for outpatient healthcare properties remained stable at 4.7 percent during 2025, with market participants expecting limited movement in the near term.

According to the report, the market remains largely driven by single-asset transactions, typically valued below €50 million. Buyers increasingly include international institutional investors, such as open-ended real estate funds, specialist funds and private capital investors. Sellers are predominantly property owners and developers bringing newly completed or refurbished assets to the market.

Investment activity is not concentrated solely in Germany’s largest cities. Since 2016, approximately two-thirds of the €2.1 billion invested in outpatient healthcare properties has been directed towards locations outside the country’s seven largest urban centres.

The report also identifies substantial growth potential within the sector. An updated analysis by Rebmann Research and HAL REIM identified 4,336 outpatient healthcare properties across Germany, compared with 3,441 locations identified in the previous study. The increase reflects both a broader dataset and an expanded definition of healthcare-related tenants, including opticians, hearing aid specialists and medical supply providers.

Based on the number of potentially investable properties and average transaction values, the report estimates the total market value of Germany’s outpatient healthcare real estate sector at more than €37 billion.

Regional differences remain evident. The highest concentrations of outpatient healthcare facilities are found in eastern Germany and city-state markets such as Berlin and Hamburg. In contrast, parts of Bavaria, Baden-Württemberg and North Rhine-Westphalia continue to show gaps in provision outside major urban centres, creating opportunities for future development.

The report also highlights the relatively strong financial profile of outpatient healthcare tenants. Medical practices, medical care centres, pharmacies and physiotherapy providers generally demonstrate low default rates, supported by stable income streams linked to Germany’s statutory healthcare system. Default probabilities among outpatient healthcare tenants are substantially lower than those typically recorded in hospitals, care homes and other inpatient healthcare facilities.

Structural changes in Germany’s healthcare system are expected to further support demand. Recent hospital reform measures are designed to shift a greater share of healthcare services towards outpatient treatment and improve integration between inpatient and outpatient care. In support of these changes, the federal government has established a transformation fund expected to provide more than €50 billion between 2026 and 2035 to modernise healthcare infrastructure.

The report suggests that these reforms could increase demand for medical centres, healthcare centres and other outpatient treatment facilities, while also creating opportunities for cross-sector healthcare properties that combine outpatient and inpatient services.

Reflecting these trends, HAL REIM continues to expand its investments in the sector through its specialist fund, HAL Soziale Infrastruktur Deutschland II. The fund targets core and core-plus healthcare and social infrastructure assets and is seeking to reach a volume of between €200 million and €250 million.

Recent acquisitions include outpatient healthcare centres in Landshut and Mannheim, both featuring diversified tenant mixes across multiple medical specialisations.

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