Czech government drafts 2026 budget: record wage growth and a 360-billion-crown deficit

The Czech coalition government of ANO, SPD and the Motorists has entered the final stretch of drafting the 2026 state budget. According to Finance Minister Alena Schillerová, spending at many ministries has risen compared with the initial draft presented in June, although most departments also proposed areas where savings could be made.

"I couldn't satisfy every request, and some of my colleagues are probably disappointed. That's understandable — demands are always high," Schillerová admitted after negotiations with her coalition partners.

Wages and pensions set to rise

Public sector employees could see "one of the biggest" pay rises in years come January, according to Labour Minister Aleš Juchelka. The government is also considering boosting pensions beyond the already-planned indexation: instead of the confirmed 300-crown increase, pensions could rise by an average of 590 crowns, costing the budget an extra 7.7 billion crowns.

Funding for school education will grow to roughly 300 billion crowns. The Health Ministry will receive one to two billion crowns more than originally planned, mainly for hospital investment.

Energy, defence and roads

Next year the state will again cover part of the cost households and businesses pay to support renewable energy sources — a bill that came to around 41 billion crowns this year. "We expect this to pay off through economic growth, tax revenue and contributions," said Industry Minister Karel Havlíček.

The defence budget will rise substantially, to 191 billion crowns. This will allow the Czech Republic to meet its NATO commitment to spend at least 2% of GDP on defence for the first time — this year's military budget fell 36 billion crowns short of that target. Transport spending will also increase compared with this year, with completing the core motorway network remaining the priority.

Deficit could reach 360 billion

The government's budget plans have drawn criticism from both the opposition and some economists. Patria Finance analyst Dominik Rusinek argues that the spending side of the budget is under pressure because "the government's priority is effectively everything." He estimates the deficit will grow from the current 310 billion crowns to around 360 billion — a trend he considers problematic given the current economic growth and rising budget revenues.

Source: novinky.cz