A report by European Commission says that Belgium has the second worst budget in the eurozone and that measures must be taken urgently to put the country’s budgetary house in order. The European Commission also predicts the budget deficit will continue to increase and believes that Belgium’s federal, regional and language community governments are not making enough progress to address the deficit issue.
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European Commission reprimands Belgium about the state of the country’s budget
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The report follows previous reprimands from the National Bank of Belgium and the IMF. The European Commission stipulates that Eurozone countries' budget deficits must not exceed 3% of GDP. However, Belgium’s budget deficit currently stands at 4.9% of GDP and this is forecast to increase still further.
Due to the coronavirus crisis and the war in Ukraine, Europe temporarily relaxed the budget rules. This is due to end next year and any country that fails to abide by the 3% rule risks being placed under tighter constraint by the European Commission.
The European Commission report places Belgium among the countries that are in the worst budgetary shape. Together with Hungary, Finland and France, Belgium runs the greatest risk of not being able to meet the 3% of GDP budget deficit target. The report says that "Belgium has made only limited progress towards complying with the European recommendations. The Commission asks the Belgian authorities to make faster progress in this area”.
Only Slovakia is doing worse
Much improvement cannot be expected for the time being. The European Commission predicts that the combined budget deficit of all Belgium’s governments will increase to 5 percent in 2025.
This makes Belgium an exceptional case as budget deficits in most European countries will decrease in the coming years. It also puts us among the countries that are bottom of the class. Next year, only Slovakia will do even worse than Belgium with a deficit of 6.5% of GDP.