Belgium is heading for the largest budget deficit of any Eurozone country new economic forecasts presented by the European Commission, the embryonic EU government, suggest. Belgium’s 5-way federal government is currently working on a new multi-year budget to bring the figures down, but finding agreement is proving very difficult.
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'Belgium heading for the largest budget deficit in the Eurozone', European Commission predicts
Colin Clapson
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If policy remains unchanged, the budget deficit for next year will be 5.5 per cent of national output or GDP, the Commission predicts. This makes Belgium the worst performer among Eurozone countries. In 2027, the deficit is expected to rise further to 5.9 per cent.
The forecasts are yet another signal to encourage the federal government to work on a budget agreement. The EU is asking member states to limit their budget deficits to 3 per cent of GDP, the total (monetary) value of our economy. Belgium has until 2029 to reach this target.
In order to limit the budget deficit in the coming years, the federal government is currently seeking an agreement on a 10 billion euro restructuring plan. However, this is proving particularly difficult. Earlier this month, Prime Minister Bart De Wever (Flemish nationalist N-VA) requested an additional 50 days to broker an accord.
This new deadline is now around Christmas. As there is no budget for next year yet, during the first few months the government will certainly have to work with ‘provisional twelfths’, a kind of provisional working budget with every month a budget available equal to the same amount of the same month this year.
Across the European Union as a whole, the budget deficit is expected to rise from 3.1 per cent in 2024 to 3.4 per cent in 2027. This is mainly due to agreed additional investments in defence.
Economic growth in line with the neighbours
The Commission expects the Belgian economy to grow by 1 per cent this year and 1.1 per cent next year. These figures are comparable to those of neighbouring countries France, Germany and the Netherlands.
Growth of 1.4 per cent is expected for the EU as a whole in 2025 and 2026. The growth figures are better than expected, says the European Commission, despite pressure from US import tariffs.
Belgium’s unemployment rate is expected to rise slightly: to 6 per cent in 2025 and 6.2 per cent in 2026. Inflation is expected to fall from 2.8 per cent this year to 1.8 per cent next year.