According to the conclusion of study by the National Bank of Belgium (NBB), Flanders and Brussels make a positive contribution to the sustainability of the Belgian economy. Meanwhile Wallonia remains a net drain on public finances. The National Bank of Belgium (NBB charted economic flows between Belgium’s three regions over the period 2010–2021.
Flanders and Brussels are Belgium’s economic engines and generating enough revenue to cover their expenditure.
However, Wallonia’s income falls short of its spending needs. Wallonia therefore structurally dependent Flanders and the Brussels-Capital Region the study shows.
Paradox
The Brussels-Capital Region is something of an economic paradox. While it creates a lot of wealth, its population is relatively poor. Brussels is of great added value, notably thanks to the large number of government institutions, its high-value service industries and the financial sector. However, much of the wealth created in the Brussels-Capital region leaves Brussels in the form of wages, dividends, and taxes paid in other regions.
Each year, an estimated 20 billion euro in wages is earned by Flemish and Walloon commuters working in Brussels. Meanwhile, 1.4 billion euros in dividends and 3 billion euros in interregional fiscal transfers taxes and social contributions are paid to or on behalf of people that work in Brussels but live in Flanders or Wallonia. Brussels’ net fiscal contribution is higher than previously estimated.
Flanders a net contributor
Flanders is also a net contributor to the Belgian economy. However, the region does consume slightly more than it produces but this is offset by high inflows of income and wages. On balance, Flanders contributes around 4.2 billion euro annually to interregional solidarity mechanisms.
Fiscal surplus
The National Bank of Belgium also modelled a purely hypothetical scenario in which each region finances its own expenditure independently, without any interregional transfers. In such a scenario, Brussels would record a fiscal surplus, Flanders a modest deficit, while Wallonia’s deficit would grow sharply. The Walloon Region would be unable to cover its own spending through revenues.
The National Bank is keen to stress that no political conclusions should be drawn from its report. The timing of the report, coinciding with the ongoing federal budget talks, is said to be pure coincidence.