Analysts: Left-wing dominated Senate may slow down reforms

Prague, Oct 20 (CTK) - The success of left-wing parties in the second round of the Czech Senate elections that ended Sunday will further complicate the passing of government-sponsored austerity reforms, analysts have told CTK.

They said, however, the success will not have a direct unfavourable impact on the Czech economy because foreign investors are much more sensitive about the results of the Chamber of Deputies elections.

The left-wing parties in the upper house of parliament, Social Democrats (CSSD) and Communists (KSCM), have strengthened their position and won a constitutional majority in the elections.

"The left's win in the Senate will further polarise parliament. The right-wing government will be proposing many often unpopular reform steps and the opposition left will be scoring political points vetoing them," Patria Finance chief economist David Marek said.

Marketa Sichtarova, from Next Finance, said she does not expect the strengthening of the left in the Senate to produce any change.

She said the government has had already now problems pushing through bills and it has had to override the Senate on fundamental things.

The passing of bills will now take longer, but it will not influence the overall heading of the country, Sichtarova said.

UniCredit Bank analyst Pavel Sobisek said the left's constitutional majority would start to be important if the same result were also attained in the Chamber of Deputies. But this seems relatively little probable, he said.

Sobisek said the results of the elections to the lower house of parliament are usually tighter, which hampers attaining such distinct results.

He said he does not expect the impact of the left's success in the Senate on the domestic economy to be important because real politics is done in the Chamber of Deputies, not in the Senate. The Senate can only correct it, he added.

Sichtarova said the financial market may have reacted to the strengthening position of the left two years ago. Now, the Czech Republic lies outside the interest of speculators, therefore there is no one to react to the election results.

Marek, however, said the Senate elections result will have a slight influence. It is true that markets rather overlook the Czech Senate elections, but foreign analysts, who will give instructions to businesspeople in the future, will keep the election result in their memory.

If it were repeated in the Chamber of Deputies elections, it could bring about an outflow of investments, Marek said.

He said the reason is that the economic parts of the two left wing parties point to a faster pace of growth in public debts and an unfavourable change in the structure of taxes that might discourage foreign investors.