The US President Donald Trump seems to have been somewhat recalculated. And back. Puts them off. Reassesses. However, even if it was to pay for US imports from the European Union in «full fire», as it presented them at the beginning of April during the so -called day of liberation, they will mean up to four times lower for the Czech economy than the EU Green Deal. Indeed, while the clients are paying considerable attention, the decarbonization efforts will be made by the Czech Republic several times more expensive. For several weeks of intensive media debate, he exposes serious asymmetry: incomparably more space now in the domestic public debate is getting something, namely Trump and duties that are not definitive and what is mainly in its worst variant – the worst in terms of Czech economy – still far less costly than Green Deal. The Green Deal is no longer discussed. In essence, it is taken forever. However, for example, it reveals that it deserves the same intense and critical debate that Trump's CLUs exposed in the Czech Republic.
At first, however, to compare the costs of customs and Green Deal. At first glance, it may seem that it is a comparison of apples with pears. Both customs and Green Deal, however, represent a cargo for domestic companies and businesses, with which they will have to deal somehow. They will be forced to find the necessary money, including subsidies, and will have to redirect some intended investments or abandon the planned investments.
At the beginning of April, the Czech Ministry of Finance said the Trump duties would reduce this year's growth of the Czech economy by 0.6 to 0.7 percentage points. In its January forecast, the resort still counted on this year's real growth of the economy of 2.3 percent. According to the same forecast, the nominal gross domestic product of the Czech Republic would increase from last year's 8,007 to this year's 8,431 billion crowns. However, if our economic growth is now to be 1.7 percent due to 2.3 percent under otherwise the same conditions, with three percent of the price level this year's expected growth, ie a nominal increase in the domestic economy by 4.7 percent instead of 5.3 percent. Growth from the level of 8 007 billion crowns by 4.7 percent would marry this year's level of nominal GDP of approximately CZK 8,383 billion. This is 48 billion less than the Ministry of Finance assumes in its January forecast, ie than the aforementioned figure of 8,431 billion. By the end of this year, there are about three quarters left, so according to the Ministry of Finance, the Czech Republic will cost an average of 16 billion crowns for quarter. So by 64 billion crowns for the whole year. At the same time, the current government plan, which also works with the National Budget Council, expects that the decarbonization objectives, ie Green Deal, will require a total of CZK 1.3 trillion in the Czech Republic by 2030. This is at the annual budget, including this year, an average of 217 billion crowns per year. The annual costs of Green Deal are therefore still approximately 3.4 times higher than the costs of Trump. Thus, if the Green Deal managed to alleviate a third in terms of related expenditure, the savings created could completely cover the costs incurred by trumps. Therefore, it would not be necessary to leave the decarbonization efforts completely, only by a third reduce its ambitiousness, which is unparalleled in its current parameters anyway. Relief or revision of the Green Deal is desirable for the next reason. In some areas, it does not meet its key goals, which is mainly to achieve carbon neutrality by 2050. It even goes against them. An example is the mentioned railway freight transport in the Czech Republic. And certainly not only in the Czech Republic, but also in other EU countries. Between 2018 and 2023, the costs of electric traction of railways in the Czech Republic increased from two to 3.50 crowns per kilowatt -hour, ie by 75 percent. A liter of diesel for the same time increased from 25.70 to 28.40 crowns. So some eleven percent. The road freight transport is therefore even more cost -effective than at the end of the last decade compared to the electrified rail transport. The main reason is the existence of gradually increasing emission allowances, which increase the price of electricity, respectively. Costs on railway electric traction. The permissions, the «flagship» of the Green Deal, play a crucial role in the fact that the share of rail freight transport in total freight transport in the Czech Republic between 2019 and 2023 fell from almost 30 per slightly above 15 percent. At the same time, rail transport is much more environmentally friendly than the road freight not only in electrified, but also in the «combustion» variant. However, the growth in the area of electrified railroad reduces the competitiveness of the freight rail as a whole. Indeed, even endless columns of trucks on the main highway moves of the Czech Republic as well as often almost permanently thickened highway lane are a manifestation of freight transport from tracks to roads. And for a change, it is a manifestation of faster rising electricity and emission allowances, whose existence and rising price itself is a manifestation of Green Deal. That is why it deserves revision and alleviation. Just because of the situation in domestic freight transport. Lukáš Kovanda, Ph.D.
Chief economist, Trinity Bank
Trinity Bank Trinity Bank has been operating on the financial market for 25 years and has been created by the transformation of the Moravian Monetary Institute – a savings cooperative. It has more than 92,000 clients and its balance sheet exceeds CZK 65 billion. Trinity Bank specializes in private and corporate banking, and for natural persons it focuses primarily on deposit and savings products offering above -standard evaluation of savings. More information at: www.trinitybank.cz