Brussels (Brussels Morning) – The European Commission is pushing the following Belgian governments to make a concerted action of at least 0.5 to 0.72 per cent of GDP annually. Those percentages could be even more heightened if policies remain unchanged.
How much GDP percentage must Belgium commit annually?
The European Commission is setting hefty cost-cutting marks on Belgium. An annual effort of at least 0.5 per cent of gross domestic product (GDP) must be completed in the coming years, in case the country opts for a seven-year savings way. If it does not opt for such an ample trajectory, an action of 0.72 per cent of GDP per year will have to be driven over the next four years. Those percentages could be even more heightened. The European Commission does not take into account a potential deterioration of the figures under whole policies.
Is Belgium mandated to cut its budget deficit?
This indicates that the next legislature will have to make an action of 25 billion euros or, linearly, an annual measure of 5 billion. Since the bulk of Belgium’s public obligation is federal, informateur Bart De Wever (N-VA), who is making the first efforts towards a new federal government, must therefore directly reckon with a tough cost-cutting activity in the government negotiations.
The European Commission reported that it wanted to open an extreme budget deficit procedure against Belgium. The country had a deficiency of 4.4 per cent and a debt ratio of 105.2 per cent of GDP at the end of 2023, well beyond the European ceilings of 3 per cent and 60 per cent respectively.Â
In mid-July, the Supreme Finance Council will provide its advice on how to divide the struggle between the regions. Belgium will then have until 20 September to demonstrate how it intends to make the required cuts, as the European Commission only charges percentages and leaves the substantive options to the member states. By 15 October, Europe desires a draft budget for 2025.
In May, the EU Commission praised Belgium’s economy as “resilient”. This year, inflation is anticipated to bounce back, whilst the already-large public deficit will continue to advance the debt under the present approach.
What growth forecast does Belgium have for 2024-2025?
Belgium’s development should remain broadly steady at 1.3% in 2024, which is 0.5 percentage points more elevated than the eurozone average, before increasing to 1.4% in 2025, equivalent to the eurozone standard. By comparison, Germany and France are anticipated to see growth of 1% and 1.3% respectively. However, there are cautions regarding inflation. The gradual retreat of government measures to limit price gains is expected to drive inflation up to 4% in 2024, before a fall back to 2.3% in 2025, describes the Commission.
A long-standing problem, the public deficit is predicted to stabilise at 4.4% of GDP this year, before increasing to 4.7% in 2025, due to pressure from recurring expenses such as automatic indexing, ageing fees, interest rates, etc. The public debt is anticipated to hold steady at 105% of GDP in 2024, and to grow to 106.6% of GDP in 2025, should policy remain intact. Four nations, namely Spain, France, Italy, and Greece, have noted an even higher debt rate.
