“The Czech Republic is currently among the worst-hit countries when it comes to Covid,” says Rowan Legal Partner Michal Nulicek. “We have more than ten thousand new cases every day – which is a lot, considering that the entire country has about ten million people living in it.”
The Czech Republic is under a heavy lockdown, with travel limited, schools closed, and a many businesses forced to test their workers twice a week, Nulicek reports. “Vaccination efforts are continuing,” he says, “but we have to wait for an increase in vaccine supply before we are able to roll it out to the general population.” In the meantime, he says, Covid-related measures are “changing all the time, so it’s not very transparent and predictable as to what will happen next.”
All of these efforts to combat Covid have slowed the government’s ability to make progress on other legislation, Nulicek says. “A lot of legislative activity has been postponed or placed on hold – even that which is related to implementing EU laws and directives.” As a result, he says, it appears those implementation efforts – despite rapidly approaching deadlines – will be delayed. The Czech Republic will have parliamentary elections in October, and Nulicek says that the overall situation is building momentum for the opposition. “It will be interesting to see what happens, come October.”
In the meantime, Nulicek says, the economy is not doing great. “The overall situation has started to take its toll,” he says. “Recently, a number of companies have declared their income for the past year and there has been a sizable decrease, especially in automotive industry companies like Skoda.” In addition, he says, “offline retail is heavily impacted, as are, of course, restaurants and hotels. We’ve also seen first major insolvencies with three Czech clothing companies – Pietro Filipi, Kara, and Blazek – all filing for bankruptcy.”
Nulicek reports that the price of residential housings is “constantly increasing as well.” Still, he says, “there are not many new developments when it comes to real estate transactions. There is a steady demand, but not a lot of supply, when it comes to residential units.” Nonetheless, he reports at least one major development project going on in Prague, with the Sekyra group seeking to “revitalize huge parts of the city, including the former railway station, the Smichov district, and other plots of land, primarily brownfield.”
Nulicek says that the Czech government has lowered taxes in the hope that people will start spending after the Covid-19 crisis ends. He says this may not last, however. “With all the subsidies towards businesses, the strain on the budget grows, and it is likely that the new government will have to increase taxes following the elections later on in the year.”
Finally, Nulicek describes a major effort to introduce a digital identity in the Czech Republic. “The government, in cooperation with the banking sector, is developing a project that should enable citizens to use their Internet banking details as a means of proving their identity and gain access to government and banking services online – all in one place.” The first things to get connected will be state services and state offices, but private companies are expected to join the project soon. “New legislation on the digital service that provides the framework for this has already passed,” he says. “Hopefully we’ll see the first state services exist online by the back half of 2021.”