In an interview with Czech Radio, Singer indicated that some businesses will not survive the energy crisis, which will mean a smaller increase in unemployment. “I think that energy prices are going up for a long time. I have some doubts whether the biggest consumers who will be helped can be helped in the long term. At this point, it’s not going to be possible to keep the biggest consumers alive for long,” Singer said.
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According to him, however, it is not the right way for the state to protect failing businesses at all costs. “We have the lowest unemployment in the entire OECD. That’s my answer,” Singer declared. “Our inflation is extremely high and a debate about why and what it is is certainly not the way out. It does not lead to the fact that we will help employers keep jobs in the economy with the lowest unemployment. I say that with absolute certainty,” added Singer.
According to him, the sum of extraordinary events such as the covid pandemic and the war in Ukraine, but also bad macroeconomic policy, is behind the current inflation and price growth in the world. “The fact that inflation is in double digits, that it is so in many economies and that it is in high single digits elsewhere, is the result of a mistake in macroeconomic policies. Another piece is the shock of what happened in the world – not only after the Russian aggression against Ukraine, but also after the pandemic. After events that fortunately do not happen that often,” the economist is clear.
It is said that the political elite and also the central banks, which started to tighten monetary policy late, are to blame. “Before, the CNB should have reacted as well. Of course, it’s a nice thing to say when looking back in the mirror. It’s also good to say that she was one of the first – against immense criticism – to react. In this sense, I wouldn’t ostracize her like that, but the entire central banking system has failed,” the former CNB governor is convinced.
According to Singer, high inflation, which is currently above seventeen percent, will fall next year, but will remain relatively high due to the government’s decisions. “Nine percent is expected next year, and the seventeen will be history. The way the game is played, the way the center-right government is behaving, inflation will hardly fall anywhere deep. In order for us to experience a comeback, prices would have to fall massively – but that is not imminent,” predicts Singer.
He is said to have expected from the government of Petr Fiala that it would behave more right-wing and, for example, slim down the state. “We had quite a long period of left-of-center government here, which inflated the state for us. Well, I would have expected – well, not now, but I hoped – that the cabinet would stand to blow,” says a disappointed Singer.
According to him, behind this is the prime minister’s effort to keep together a five-coalition government with different political views. “We have a coalition government, for whose leader it is essential to prevent contradictions in the coalition, not to go into conflicts. And then that budget evolves as it evolves. Secondly, and despite what is constantly quoted, we are not a state that is in financial trouble. We have an immediate problem with the budget deficit, but we have no problem with financing the debt, with its issuance and so on,” says Singer, adding that the Czech Republic is not in a bad way compared to the rest of the world.
“The third reason is that we have a demanding society… We feel that pensioners should get more, we have to arm ourselves, we have to win the war in Ukraine, energy prices must not touch anyone. Together, this creates a situation where the budget is essential. And inflation, instead of falling, will require higher rates and so on,” the economist calculates what expenses the government “needs” to make to keep citizens happy.
“We still feel like we can get something without paying for it,” adds Singer, adding that governments promise to give people money, but this only worsens the economic situation.
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