With parliamentary elections set for October, the political landscape is shifting toward a possible return to power of Andrej Babiš’s ANO (Action of Dissatisfied Citizens). Polls suggest ANO could secure a majority, forming a government that prioritizes growth over austerity—a clear departure from the fiscal discipline of the current SPOLU-led coalition. This shift carries major implications for the Czech economy, investor sentiment, and EU relations.
From Austerity to Growth
ANO’s program seeks to reverse the fiscal conservatism of Petr Fiala’s government, which cut the deficit to 2.2% of GDP. Critics argue austerity has stifled growth and undermined public trust. ANO’s 2025 agenda emphasizes infrastructure, childcare, and defense investment, as well as reorienting funding for public media—moves echoing populist policies in Hungary and Slovakia.
EU and Fiscal Rules
The Czech Fiscal-Structural Plan (2025–2028) aims for a budget surplus of 0.4% of GDP by 2028 under EU rules. ANO’s higher spending could strain these targets. While the risk of an excessive deficit procedure is low in the short term, deficits above 3% of GDP could spark friction with Brussels.
Sector Implications
Infrastructure & Construction: Beneficiaries of highway, rail, and housing projects.
Defense & Security: Opportunities from F-35 and CV90 procurement, plus cybersecurity.
Public Media & Technology: Firms adapting to state funding and digitalization initiatives.
Energy: Renewables face regulatory uncertainty; traditional providers may gain short-term.
Investor Sentiment & the Euro Debate
ANO’s Euroscepticism and continued opposition to Euro adoption (72% of Czechs oppose) may unsettle investors. A delay in Euro adoption could weigh on export-oriented industries, though koruna stability remains key for multinationals.
Risks and Opportunities
Opportunities: Infrastructure, defense, tech, and firms aligned with public investment.
Risks: Renewable energy exposure, regulatory inconsistency, and potential fiscal slippage.
Hedging: Koruna-based assets or derivatives could mitigate currency risk.
Conclusion
The 2025 elections mark a pivotal moment for the Czech economy. An ANO victory would shift policy from austerity toward growth, with upside for investment-heavy sectors but risks of fiscal overreach and EU friction. Investors closely monitoring fiscal reports, EU assessments, and post-election policy announcements will be best positioned to capture opportunities while managing volatility.