Democracy Digest: Central European Leaders See Red over EU Green Deal

Prices are expected to rise further as the cost of carbon permits under the EU emissions trading scheme continues to increase. Plans to extend carbon trading to cover the transport and heating sectors were opposed by numerous countries, including Poland and Slovakia, at a meeting on Wednesday of the bloc's environment ministers to discuss a major package of green proposals, including new taxes on polluting fuels and a 2035 date to halt sales of cars with combustion engines.

With elections just around the corner, Czech Prime Minister Andrej Babis had no choice but to promise that his government would do all it could to ensure energy prices rise no further. However, he offered no details of how costs could be capped. Czech companies have told local media they have no choice but to pass on the higher prices to consumers, warning that they would risk going under if they were to try to absorb the energy price hike themselves.

The rapid rise in the energy costs has exacerbated inflation across Central Europe, driven to its highest levels in over a decade by strong domestic demand, supply chain disruptions and the tight labour market.

Poland has the highest inflation in the EU at the moment. In September, the annual inflation rate rose to 5.8 per cent, the highest in two decades. This week, the country's central bank unexpectedly decided to raise interest rates, after months of resistance to such a move.

Inflation in Czechia rose to 4.1 per cent year on year in August, the highest since 2008. The central bank has responded to the accelerating price rises with a series of hikes to its benchmark interest rate. It surprised late last month with a 0.75 per cent rise, the largest in nearly a quarter of a century.

Unsurprisingly, Babis was...

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