Belgium has the second worst budget in the eurozone and needs to take urgent measures to get it right says the European Commission, the EU’s executive arm. It predicts the budget deficit will widen further and believes Belgian governments are not making enough progress in reducing it. It is “likely” that the EU will impose measures on Belgium next year.
It’s common knowledge that Belgium’s budget is in bad shape. After the National Bank, the International Monetary Fund (IMF), the European Commission is now also ticking off our federal and regional governments.
Europe holds member states to account: budget deficits must not exceed 3 per cent of gross domestic product. For Belgium, that is currently 4.9 per cent, the Commission says. Next year, the deficit is forecast to remain at the same level.
Due to the corona crisis and the war in Ukraine, Europe temporarily eased budget rules. This less strict stance expires next year: states that do not meet the 3 per cent rule can be placed under stricter European supervision.
Belgium under tightened supervision next year? “Likely”
The European Commission has put Belgium in the category of countries with the worst record. Along with Croatia, Finland and France, Belgium is most at risk of not being in compliance. “Belgium has made only limited progress towards being in line with European recommendations,” it says. The Commission asks Belgian authorities to make faster progress”.
Commission vice-president Valdis Dombrovskis estimates that Belgium is also likely to have measures imposed next year.
A final review of member states’ 2023 budgets will follow in June. Those that are not in order by then will enter the so-called “excessive deficit procedure”. Belgium will then officially be under close scrutiny from the European Union. A tailor-made plan should then help Belgium reduce its deficit. Then, if the requirements are still not met within the agreed period, a fine may follow.
Bertrand points to regions and next government
In a first reaction, federal budget secretary Alexia Bertrand (Flemish liberal/Open VLD) says that further reforms are badly needed. She no longer looks to the present government to solve this issue: “Our government has taken the first steps in the right direction in order to get our public finances back on track. Subsequent governments, at all policy levels, will have to introduce reforms and increase efforts.”
“It is also very important that we get to work as soon as possible after the elections and form a new government”.
The European Commission does not only consider the federal government’s budget. In its calculation, it counts all deficits together, including those of Flanders, Wallonia and Brussels. According to Bertrand, that, in the first place, is where the problem lies: “The federal government, can keep its promises within the stability program that should bring our deficit below 3 per cent in coming years. That is not the case for all policy levels.”
Next June, the European Commission will reassess the member states’ budgets, but with elections approaching in Belgium there is little chance that federal or regional governments will introduce any more major reforms that fundamentally reduce the budget deficit in the short term.
