3Things: Brno’s Automotodrom, Q2 wages and bank reserves

The owner of Automotodrom Brno Karel Abraham has requested a change to the master plan of Brno to allow him to replace the racing facility with an entirely new residential district for 18,000 people. The race course was known primarily for hosting a race on the Motorcycle Grand Prix circuit but even before the pandemic there were doubts about its future. Hospodářské noviny writes that Abraham (whose own son has raced on the MotoGP circuit) is hoping to change the facility’s zoning to “a mixed zone for residential and business”. Along with new flats, the new neighborhood would include an elementary school, shops, offices, health facilities and playgrounds. It remains to be seen if the idea gets the green light. Deputy Mayor Petr Hladik says the area is zoned for sports and that it will stay way. “There used to be woods there so if Mr. Abraham wants woods, we’d be glad to accommodate him,” he told HN.

Czech economists are estimating wage growth of between 7.5% and 13% for the second quarter of 2021. But according to the Czech News Agency, they say it’s a one-off driven mostly by healthcare worker bonuses and by a low bar set the previous quarter. They also note that taking inflation into account, the jump would mean just 4.5% more in real terms. As of the end of Q1, the average monthly salary had risen 3.2% in 2021 to CZK 35,285. CTK points out that two-thirds of all employees earn less than the national average.

Along with raising interest rates incrementally every chance it gets, the Czech National Bank is tightening the financial screws in other ways. Most recently, it raised the bank reserve rate by 50 bps to 1.5%. That increases the volume of cash commercial banks have to set aside to ensure they have sufficient funds to cover bad loans. CNB’s spokeswoman said the move was made in view of the receding pandemic, improving economic expectations and the high volume of residential loans. She made no mention of the recent spike in inflation which has spooked the construction sector.

 

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