Hard Brexit could drag the Czech economy growth down to under 2%, reducing growth of domestic economy by 0.7 to 1.4 percentage points, according to the Czech National Bank (CNB) member Board member Tomas Holub, who spoke at a conference on Brexit on February 26. The main reason is to be a drop in demand for Czech exports in the Eurozone.

“This scenario can be perceived as an argument for higher interest rates, but it's a kind of uncertainty when it's better to wait and see how the things develop, and then consider a monetary policy response,” Holub said, adding that in the case of a no-deal, a drop in export volumes and cooling of economic growth would be anti-inflationary. Inflation rate increase would then be affected by weaker koruna, introduction of tariffs and closing of some global production chains.

Czech economic growth could slow down by 1 percentage point (pp) this year in case of no-deal Brexit, said the vice-president of the CNB Tomas Nidetzky for Reuters earlier in February. In 2020, this would lead to a decrease of 0.5-0.75pp of GDP.

According to the Finance Ministry´s macroeconomic prognosis, the Czech economy would have risen by less than 2% in case of no deal, reducing performance of the economy by 0.6 to 0.8pp.

V4 countries´ parliamentary foreign affairs committees urge the European Commission, United Kingdom and other EU member states to look for solutions for controlled Brexit, according to the Foreign Affairs Committee chair Katarina Csefalvayova (Most-Hid) daily online Hlavne.sk reported.

“According to lawmakers of V4 countries, the deal hammered out by EU and British Prime Minister Theresa May is the best possible under the circumstances, although they respect the fact it was turned down by the British Parliament. They also appreciate the fact that Great Britain also rejected hard Brexit. Despite this, however, governments of V4 countries continue to prepare also for this possibility,” Csefalvayova added.