The European Commission wants Belgium’s budget deficit to decrease by 0.5 percentage points per annum. If this were to be achieved Belgium’s budget deficit would fall back to bellow 3% of GDP in the medium term. Previously Eurozone countries were required to keep their budget deficit below 3% of GDP and their debt ratio to below 60%. However, the European Commission relaxed these constraints during the coronavirus crisis as countries took exceptional measures in exceptional times.
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European Commission proposes new rules: Belgian budget deficit must decrease by 0.5% every year
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It will be back to business as usual from next year though and Eurozone countries will be required to get their budgetary houses in order.
The European Commission has put forward plans on how this can be best achieved. The 11 countries, including Belgium, that have a budget deficit above 3% will be expected rectify this within 4 years. The European Commission is currently looking at how exactly this will work out for each individual country. What is certain is that the deficit must fall by at least half a percent per annum.
The Planning Bureau predicts deficit to rise rather than fall
The Belgian budget deficit fell from 5.5% in 2021 to 3.9% in 2022. The improvement stems from the strong economic recovery after the pandemic, which boosted the economic growth rate. Meanwhile, financial support measures given to support business and those that had been laid off due to measures brought in to curb the spread of the virus also ceased.
Nevertheless, it is unlikely that Belgium will be able to continue to reduce its budget deficit at this pace in the coming years. At the beginning of March, the Federal Planning Bureau published a report showing that, if current policies remain unchanged, Belgium is heading for a budget deficit of 5.9% a national debt of almost 120% of GDP by 2028.
Not yet finalised
The EU member states will still have to give their consent to the European Commission’s proposals. It won’t be plane sailing as Germany wants Europe to be even stricter and advocates an annual budget deficit decrease of 1 percentage point. France, on the other hand, favours greater flexibility.