Czech voters have repudiated their centre-right government’s austerity policies, handing the left, including a resurgent Communist party, a striking victory in local elections that threatens the administration of Petr Necas, prime minister.
Mr Necas's Civic Democrats (ODS) won only 12.3 per cent of the vote in elections which ended on Saturday, about half the vote they took in regional elections four years ago – a sign of increasing voter dissatisfaction with policies of tax rises and spending cuts aimed at driving the deficit to 2.9 per cent of gross domestic product by 2013.
Both the ODS and the leading opposition party, the centre-left Social Democrats, were also hurt by a series of corruption scandals. The Social Democrats took 24 per cent, far below the 36 per cent they received in 2008.
The largely unreformed communists, heirs of the totalitarian party that ruled Czechoslovakia for more than 40 years, won more than 20 per cent of the vote.
The two left parties were also on the verge of winning a constitutional majority in the Czech senate, as the 81-member upper house held votes for 27 seats. A second round vote is due later this week.
The opposition called on Mr Necas to resign, but he insisted over the weekend that his coalition government would continue to push through its budget proposals ahead of a vote of confidence scheduled later this month.
Karel Schwarzenberg, the foreign minister and head of TOP09, a member of the ruling coalition, told Czech television: “We should not confuse regional elections with parliamentary elections. We weren't very successful, but that doesn’t mean we should back away from what we promised voters.”
The coalition has only a fragile and uncertain majority in the 200-seat parliament, and Mr Necas is faced with a rebellion by six ODS members who baulked at a proposal to increase taxes to reduce the deficit.
The government has also been hurt by Václav Klaus, the mercurial president and ODS founder who has become an enemy of Mr Necas and recently vetoed a pension reform plan.
Fiscal targets have become more difficult to reach because the Czech Republic has sunk into a recession this year – the central bank expects a downturn of 0.9 per cent – making additional tax increases necessary to make up for shrinking revenues. The deficit this year is expected to come to 3.2 per cent of GDP.
Mr Necas and his finance minister, Miroslav Kalousek, are sticking with austerity despite the rising political costs. Mr Kalousek is worried that any backsliding could affect financial markets, pointing out that Czech debt has hit record-low yields in recent weeks thanks to the government's fiscal credibility.Sample the FT’s top stories for a week
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