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COUNTRY PROFILES


PROFILE

Country Profile

Area: 78,864 sq km
Population: 10. 5m
Capital City: Prague
People: Czech (90.4%); Moravian (3.7%); Slovak (1.9%); Polish (0.5%); German (0.4%); Roma (0.1%), Silesian (0.1%), Others (0.3%) (Census 2001)
Languages: Czech
Religion(s): Roman Catholic 39.2%; Protestant 4.6%; Orthodox 3%; non-religious 39.8%, other 13.4%.
Currency: Czech Crown (CZK)
Major political parties: Civic Democratic Party (ODS); Czech Social Democratic Party (CSSD); TOP09 (Tradition, Responsibility, Prosperity), Communist Party of Bohemia and Moravia (KSCM), Public Affairs (VV).
Government: Parliamentary Democracy led by an ODS/ TOP09/ VV coalition Government. The Government has 15 members.
Head of State: Vaclav Klaus (since 2003, re-elected by indirect election for a second and final term in 2008)
Prime Minister: Petr Necas, ODS (since 28 June, 2010)
Foreign Minister: Karel Schwarzenberg, TOP 09 (since 28 June, 2010)
Membership of international groupings/ organisations: Member of North Atlantic Treaty Organisation (NATO); European Union (EU); International Monetary Fund (IMF); Interpol; Organisation for Co-operation and Security in Europe (OSCE); Organisation for Economic Cooperation and Development (OECD); United Nations (UN); United Nations Conference on Trade and Development (UNCTAD); United Nations Educational, Scientific and Cultural Organisation (UNESCO); Western European Union (WEU) (associate); World Trade Organisation.

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ECONOMY

Basic Economic Facts

GDP: CZK 3,775bn (£125bn) (2010)
GDP per capita: CZK 358,957 (£11,925) (2010)
Annual Growth: 1.8 y/y in 2011 and 0.2 y/y in 2012 (predictions from January 2012)
Inflation: 2.1% (February 2012)
Major Industries: road vehicles, metallurgy, industrial and office machinery and equipment, electrical equipment
Major trading partners: Germany, Slovakia, Poland, Austria, France, United Kingdom, China
Exchange rate: £1 = approx. CZK 30.1 (February 2012)
The Czech Republic is one of the most stable and prosperous of the post-communist states. Economic growth has been driven, in particular, by Czech exports, high levels of foreign direct investment (FDI), and domestic consumer spending (which dropped during the economic crisis however). Economic growth since EU accession has been strong. The country was affected by the global economic crisis in 2008/9 and the Eurozone crisis in 2011, especially by the downturn in key export markets, but not as much as some other Central European states. The financial sector remained stable and in profit during the crises. Unemployment remains around 9% on average, with significant regional variations.

Czech trade is mainly with the EU. About 83% of its exports are to EU countries (with one third of all exports to Germany alone) and nearly 70% of imports are from the EU. There is an increasing trade with China. The Government launched a new Export Strategy in January 2012 with the aim to reduce Czech exporters’ dependence on the EU. The Czech Republic has been extremely successful at attracting FDI, much of it in the automotive industry and electronics. In 2010 the Czech Republic attracted €5.12bn in FDI.

In January 2008 the Government introduced a single 15% personal income tax rate based on calculated ‘super-gross’ income including employer’s 35% health and social insurance contributions. From January 2010, corporate tax was reduced to 19%. VAT is 20% with a lower rate of 14% (applied to staple foods and other daily necessities), but from 2013 both rates should unify at 17.5%. ‘Green taxes’ applied to coal and coke, electricity and gas caused an average 3.3% rise in domestic energy costs.

The Czech Republic started its fiscal consolidation in October 2009 with an ‘austerity package’ of tax rises and benefit reductions to lower the rising public deficit to 163bn CZK (£6bn)/ 5.3% GDP in 2010. The coalition Government is committed to decreasing the deficit further to 3.5% in 2012 and below 3% the following year despite the predicted slower economic growth. Key reforms to the health, social and pension systems were adopted in 2011, with the health and social reforms coming into force on 1st January 2012 and the pension reforms (introducing voluntary second pillar) to be launched in full in 2013. Tax reform has not been completed yet and has been postponed by one year for 2013.

No date has been fixed for entry into the euro. The Czech crown has fluctuated as a result of the Eurozone crisis, but the predicted overall trend is gradual strengthening.

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HISTORY

Recent History

The first Czechoslovak Republic was founded on October 28, 1918. Under the leadership of Tomáš Masaryk, it was a relatively stable and democratic state. In September 1938, the Sudeten lands (areas bordering Germany and Austria with a predominantly ethnic German population) were ceded to Germany under the Munich Agreement. During 1938 and 1939 other parts of the country were lost and Nazi Germany established the Protectorate of Bohemia and Moravia and a Slovak state under German control. After liberation in 1945, Czechoslovakia fell under the Soviet sphere of influence. A Communist government took control in February 1948. The August 1968 invasion by other Warsaw Pact countries ended a short period of reform known as the 'Prague Spring' and was followed by a period of harsh repression.

The 1989 Velvet Revolution saw the Communists ousted and a democratic government installed with dissident and playwright Václav Havel as President. Differences between the Czechs and Slovaks led to the separation of the two countries ('the Velvet Divorce') on 1 January 1993 and the formation of the Czech Republic. The Czech Republic became a member of NATO in March 1999 and of the European Union on 1 May 2004, after a referendum on 13 and 14 June 2003 (on a turn-out of 55%). The Czech Republic joined the Schengen area at the end of 2007.

Longer Historical Perspective

The Kingdom of Bohemia emerged in the 9th century and its 'Crown Lands' subsequently included Moravia and Silesia. Bohemia was a major medieval and early modern political, cultural and economic state. The power of Bohemia reached its zenith with the reign of Charles IV in the 14th century who was also the Holy Roman Emperor. The religious reform movement (1419-1436) of Jan Hus was a precursor to the Reformation of the 16th century. From 1526 until 1918 Bohemia was part of what was to become the Austro-Hungarian Empire. The Thirty Years War that devastated Central Europe started with a revolt by Bohemian nobles in 1618. Their defeat at the Battle of the White Mountain, on the outskirts of Prague, ushered in a period of Germanic domination until Czech and Slovak nationalist movements gained greater momentum in the nineteenth century.

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INTERNATIONAL RELATIONS

The Czech Republic's Relations with Neighbours

Czechoslovakia was a founder member of the Visegrad Group (V3) with Hungary and Poland. The group, now the V4 containing the Czech Republic and Slovakia, works together to promote their common interests, both within the European Union and in promoting democracy among their neighbours to the east.

The Czech Republic's Relations with the International Community

The Czech Republic has now achieved its prime post-communist foreign policy goal of integration into the Euro-Atlantic mainstream. It joined the Council of Europe in 1990, the OECD in 1995, NATO in 1999 and the EU in 2004.

The Czech Republic has played an active part in international military operations. It contributed to the NATO-led Kosovo Force and to the EU Force in Bosnia. In March 2008, the Czech Republic took responsibility for the provincial reconstruction team in the eastern Afghanistan province of Logar. A contingent of Czech Special Forces was in Afghanistan supporting the US-led Operation Enduring Freedom until October 2009. In November 2010 the Czech Parliament voted to increase the country’s contingent by 200 to 720 troops. Czech troops are expected to leave Afghanistan together with other NATO-led forces by the end of 2014.

The Czech Republic is also active in other international forums. For example, it began a three-year term as a member of the UN Human Rights Committee in 2011.

THE CZECH REPUBLIC'S RELATIONS With the UK

The Czech Republic and the UK continue to enjoy strong and positive relations at all levels including cultural, commercial and popular. Britain and the Czech Republic are both popular destinations for each other's nationals to holiday, study and work. There are around 4,300 British citizens registered in the Czech Republic and 370,000 Britons visited in 2010.

At an inter-governmental level the UK and Czech Republic are close partners across a wide range of multilateral and bilateral issues. Both countries’ centre-right Governments are close allies in the EU, in particular promoting policies to encourage growth and competitiveness, and in seeking measures to complete the single market in goods and services. Additionally, both main Government parties - the Conservative Party and the Czech Civic Democrats - form part of the same group within the European Parliament (European Conservatives and Reformists Group). The British Embassy in Prague works closely with the Czech Government, public authorities, private sector and NGOs on a large range of issues of common interest including economy and growth, transparency, defence, environmental and energy policy and consular services.

British Council Czech Republic (http://www.britishcouncil.org/czechrepublic.htm)

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GEOGRAPHY

A landlocked country, the Czech Republic borders Austria, Germany, Poland and Slovakia. Bohemia, in the west, is comprised of rolling plains and plateaux surrounded by low mountains; Moravia, in the east, is hilly country. 34% of the Czech Republic is covered in forests and woodlands, while about 41% of land is arable.

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TRADE AND INVESTMENT

Trade and Investment with the UK

In 2011, UK exports of goods to the Czech Republic were £1.85 billion, making the Czech Republic Britain’s 28th largest export market for goods. No single sector dominates. Czech exports of goods to the UK were £4.2 billion in 2011, dominated by Skoda cars and manufactured goods. Two-way trade in goods is, therefore, worth some £6 billion. 2011 figures for trade in services will not be available until later in the year. However, in 2010, UK exports of services to the Czech Republic were worth some £452 million and imports of services from the Czech Republic £434 million. This puts total bilateral trade in the region of £7 billion. Britain’s trade with the Czech Republic has more than trebled over the past 10 years from a figure of £2 billion in 2000.

The UK is responsible for approximately 4% of Foreign Direct Investment in the Czech Republic. Principal UK investors include HSBC, RBS, LogicaCMG, Vodafone, Tesco, Rolls Royce, Provident Financial, G4S, GSK, Astra Zeneca, Allen & Overy LLP, FKI Brush, JJS Electronics and Shell. British high-street names can now be seen in Prague and other cities including Next, Marks & Spencer, Mothercare and Debenhams. Further information about the Czech Republic's economy can be found at:

UK Trade & Investment Country Profile: Czech Republic (https://www.uktradeinvest.gov.uk/ukti/appmanager/ukti/countries?_nfls=false&_nfpb=true&_pageLabel=CountryType1&navigationPageId=/czech_republic) .

Cultural Relations with the UK

The British Council seeks to advance UK-Czech cultural relations and offers a wide range of activities including English teaching, examinations, as well as a programme of events focusing on themes such as intercultural dialogue, knowledge and creative societies and climate change. The British Council is located in the centre of Prague, near Wenceslas Square. It also works very closely in the regions through 10 partner libraries which house a wide selection of contemporary literature, register candidates for examinations, and provide information on the UK. More information available at British Council Czech Republic (http://www.britishcouncil.org/czechrepublic.htm)

Recent Visits

Inward

-- Karel Schwarzenberg, Foreign Minister, October 2011

-- Tomas Chalupa, Environment Minister, October 2011

Petr Necas, Prime Minister, February 2012

Outward

-- Rt Hon David Lidington MP, Minister of State at the Foreign & Commonwealth Office, December 2010

-- Rt Hon William Hague MP, First Secretary of State, Secretary of State for Foreign and Commonwealth Affairs, December 2010

-- Rt Hon David Cameron MP, Prime Minister, June and December 2011

-- Jim Paice MP, Minister of State for Agriculture and Food, January 2012

-- Lord Green, Minister of State for Trade and Investment, March 2012

TRAVEL

Travel advice: Czech Republic (http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/europe/czech-republic/)

Useful Links

Embassy of the Czech Republic in the UK: www.mzv.cz/london (www.mzv.cz/london)

Official website of the Czech Republic: http://www.czech.cz/en/ (http://www.czech.cz/en/)

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POLITICS

Recent Political Developments

A new centre-right Czech coalition Government was formed following elections in May 2010. It replaced the technocratic Government of Prime Minister Jan Fischer. It is led by Prime Minister Petr Necas and has 15 members. The coalition is formed by the Civic Democrats (ODS), Public Affairs (VV) and the newly formed TOP 09. The top priorities of the Government are budget cuts, pension and health reforms and fighting corruption.

President Vaclav Klaus, a former ODS Prime Minister, was first elected by Parliament on 28 February 2003 and re-elected for a second and final five year term on 15 February 2008. He is due to step down from the Presidency in early 2013, when he will be replaced by the Czech Republic’s first directly elected President.

Elections

The Senate and local elections in which opposition Social Democrats gained a majority in the Senate were held in October 2010. Further Senate and regional elections will be held in 2012. The next Presidential election is scheduled for early 2013, while a general election is not due until 2014.

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Last Updated: March 2012

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