The economic crisis sweeping Central and Eastern Europe has claimed a third victim in a month after the Czech government lost a vote of no confidence last night in a drama that risks setting off a fresh round of investor flight from the region.

Latvia’s government fell last month following violent street protests. Hungary’s premier Ferenc Gyurcsany resigned last week after struggling to impose austerity measures required under the terms of a $25bn (£17bn) bail-out from the International Monetary Fund.

But the Czech crisis has unnerved investors even more because the country has been seen as a rock of stability. It kept a tight rein on credit and avoided the stampede into euro and Swiss franc mortgages that occurred in other parts of Eastern Europe.

Financial Times