Czechia 2026 Outlook: Coalition fragility and shifting policy priorities

Czechia is likely to enter 2026 without abrupt systemic change, but with a political trajectory that gradually reshapes institutional balances and policy priorities. While external risks – from the war in Ukraine to Russian and increasingly US influence – remain relevant, the main sources of uncertainty will stem from domestic political dynamics and governance choices under the new government.

Coalition stability under pressure

Coalition stability will be the first major test, as the governing bloc holds only a narrow parliamentary majority. Relations between ANO and its partners – SPD and Motoristé – remain pragmatic rather than programmatically aligned, and are further strained by personal animosities, particularly between the leaders of ANO and SPD. A potential shift in Andrej Babiš’s political strategy following any parliamentary vote on lifting his immunity could recalibrate coalition behaviour and escalation risks; however, the coalition is expected to remain united on this issue.

The 2026 municipal elections, together with the regular renewal of one third of the Senate, will constitute the first meaningful domestic political stress test for the new government. The results will serve as an early indicator of voter confidence in the coalition’s trajectory. Local elections traditionally favour opposition-backed candidates; a strong showing by the governing parties would significantly lower political constraints and open the door to more assertive – and potentially more divisive – policy moves in 2027.

Relations between the government and the Castle represent another potential friction point. Disputes over ambassadorial appointments, presidential vetoes, and the president’s limited budget signal a risk of legislative delays and institutional stand-offs, potentially slowing policymaking and weakening executive coherence.

Energy policy challenges

Energy policy will emerge as a central vulnerability. The announced closure of Sev.en coal power plants in 2027 creates an increasingly urgent gap in electricity generation capacity. Without a credible replacement strategy, upward pressure on electricity prices will grow. At the same time, unresolved questions surrounding ČEZ – including potential steps affecting minority shareholders – risk undermining confidence in the Czech capital market and the broader investment environment.

Energy policy will also be politically salient in another respect. The coalition has adopted a confrontational stance toward EU climate initiatives, including the proposed ETS2 and elements of the Green Deal, which were consistently criticised during the campaign and in the government’s early days. This positioning increases the risk of friction with EU institutions and partners.

Regional coordination and EU frictions

A gradual shift toward national-conservative positioning could increasingly be channelled through regional coordination formats such as V3/V4, raising the risk of deeper friction with EU partners. Over time, this could translate into greater trade and diplomatic tensions, stronger resistance to EU initiatives, and – in more adverse scenarios – constraints on EU funding. Domestically, such a trajectory would likely contribute to further societal polarisation. The direction and intensity of regional alignment remain uncertain and will partly depend on political developments in Hungary following its 2026 parliamentary elections, as well as Poland’s parliamentary elections in 2027.

Early warning indicators would include changes in the functioning of public media, the weakening of norms underpinning NGO activity and political transparency, and a more confrontational domestic discourse toward the EU and continued support for Ukraine.

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