Eastern Europeans face difficult fiscal choices

Significance

The other Visegrad Four (V4) countries appear more reluctant to cut their budget deficits, despite increased scrutiny from the European Commission.

Impacts

• Czechia may offer a more stable business environment, potentially becoming an entry point for companies looking to gain a regional foothold.
• Czechia's currency could appreciate relative to currencies in neighbouring V4 countries.
• The risk of capital flight from Hungary and Slovakia will rise as concerns mount about their political and economic stability.