The Annual Progress Report is drawn up following the amendment to the Stability and Growth Pact. Its content is broadly governed by Regulation (EU) No 2024/1263 of the European Parliament and of the Council on effective coordination of economic policies and multilateral fiscal surveillance. Its aim is to assess the implementation of the Fiscal-Structural Plan on an annual basis. The plan currently under review was prepared for the period 2025 to 2028; the Government approved it on 16 October 2024, and the Council of the EU adopted a recommendation on it on 21 January 2025. On the basis of the Fiscal-Structural Plan and the European Commission’s recommendation, the Council of the EU set a net expenditure path for the Czech Republic. This refers to the growth in total public expenditure net of interest expenditure, expenditure on European Union projects, national funding for projects co-financed by the European Union, discretionary measures on the revenue side and one-offs. The Fiscal Structural Plan was prepared in such a way as to be fully consistent with national legislation in the form of the Fiscal Responsibility Rules Act.

 In the Fiscal Structural Plan, the general government deficit for 2025 was set at 2.5% of GDP, and at 2.3% of GDP after adjusting for the effects of the economic cycle and one-off measures. According to data from the Czech Statistical Office, the deficit reached 2.1% of GDP, or 2.2% of GDP in structural terms. We estimate the growth in net expenditure for 2025 at 4.8%.

This report summarises the current measures and planned activities of the Czech Republic in the areas defined by the Fiscal-Structural Plan in response to specific recommendations from the Council of the EU. In 2025, the energy sector transformation in the Czech Republic continued, focusing on strengthening energy security, modernising infrastructure and meeting climate targets, particularly through the development of low-emission sources, system flexibility and reducing dependence on fossil fuels. Achieving energy independence from Russia in the areas of oil and gas through the diversification of supplies and the development of infrastructure was crucial. In the regulatory sphere, instruments for decentralised and digital energy were introduced (the RES III Act, the Electricity Data Centre, rates adjustments) and legislative changes were adopted to accelerate the development of renewable energy sources and energy infrastructure (the RES III Act, the Gas Act). Decarbonisation was supported by significant financial resources from European and national funds, including investments in clean mobility, battery projects and strategic industrial sectors. At the same time, research, innovation and consultancy services in the energy sector were being developed.

In the area of social systems, no further changes were made to the pension system in 2025 and an evaluation of previously adopted reforms is underway, whilst significant adjustments were made to social benefits to support labour market participation and the reconciliation of family and working life, in particular an increase and adjustment of the parental allowance alongside changes to the conditions for childcare. A key step was the reform of social benefits, which merged the four existing benefits into a single comprehensive benefit comprising four components (living costs, housing, child bonus and work bonus), simplified the system, removed motivational barriers and strengthened the link between support and work participation and childcare.

In the healthcare sector, efficiency continued to be improved through the implementation of the CZ-DRG system and the restructuring of inpatient care towards follow-up and long-term care, supported by the introduction of social-health inpatient care and services linking the health and social sectors. At the same time, the resilience and quality of the system were strengthened through digitalisation and new tools, including cancer screening systems, training for healthcare professionals and the development of simulation centres, which contributes to improving staff expertise as well as the availability and quality of care.
In the areas of education, the labour market and housing, the implementation of measures aimed at improving the quality and accessibility of education, equal opportunities and better prospects on the labour market continued in 2025, including the strengthening of pre-school education and the systematic monitoring of its quality. A key step was the implementation of the Czech Republic’s Education Policy Strategy 2030+, in particular the revision of framework educational programmes and the adoption of a new curriculum for pre-school and primary education. In higher education, there was an increase in funding and targeted support for regions and shortage occupations, whilst in regional education the modernisation of secondary education continued, along with the strengthening of cooperation with employers and the development of elements of the dual system.

In the labour market, measures focused on supporting parents, particularly through the development of pre-school children’s groups, including the introduction of neighbourhood groups and the promotion of work-life balance, as well as on the development of lifelong learning, retraining and digital skills. At the same time, new active labour market policy tools were introduced, along with support for social entrepreneurship and measures to increase labour market flexibility and unemployment benefits. In the housing sector, the Housing Support Act was adopted, introducing housing contact points, and support for affordable and social housing was strengthened through both national and European funding. 

In the area of modern public administration and digitalisation, measures were prepared to increase efficiency, transparency and a client-focused approach, including the introduction of a Unified Data Collection Information System and the development of cooperation between local governments through municipal associations. The transparency of decision-making processes was also strengthened through the introduction of lobbying regulations and a register of lobbyists. In the area of digitalisation, the expansion of high-speed networks and 5G infrastructure continued. In research and innovation, a new law was adopted which, from 2027, will enhance the flexibility of support and knowledge transfer.