The presentation of a multi-year budget plan in the press. If Belgium does not respect European conditions, the consequences will be costly. Two experts call for a “sense of urgency” policy. “Save 6 billion without impact on the population? Forget!”
A government by the end of January? 50-50, according to federal trainer Bart De Wever (N-VA). According to the Flemish nationalist, Arizona conceals “hundreds of hidden mines” for almost every economic-social question. No immediate white smoke in sight, therefore, while the deadline of the European Commission to present a budget approach just around the corner – April 30. Unless there is a miracle, Belgium will be late. She knows this and has anticipated by requesting a (second) extension from the European Commission, via its new permanent representative to the EU, Peter Moors.
Budget: the final limit is approaching
The circle is vicious, and the pressure is now maximum on the shoulders of the negotiators. Not from a purely political point of view – “we can extend this period until May without our country finding itself in difficulty,” assures De Wever. But the urgency linked to the budget, in particular, could turn into a particle accelerator to force an agreement.
A little context. The new European budgetary framework forces member countries to present not only a budget for this year 2025, but also and above all a budget recovery plan over several years. The latter offers two adaptation periods, 4 years or 7 years. The 7-year period is lighter than the 4-year period, which requires a more concentrated budgetary effort over time. While the 7 year period allows for planning “recovery affairs”.
According to European budgetary law, Belgium should have presented its 2025 plan on October 15. In the absence of government, this deadline was not respected. Accordingly, Belgium has now gone under an exceptional budgetary regimewhich includes the famous provisional twelfths. It was voted on by parliament, which closed, to some extent, the file for the year 2025.
On the other hand, this exceptional regime implied that Belgium presented its adjustment plan in return before 1is January 2025. Condition which was once again not respected. Europe leaves Belgium until April 30 as final deadline to present its multi-year budget plan. But Arizona and its trainer Bart De Wever want an agreement in principle for January 31. Because, by April, the budget and the savings plan must have been approved by Parliament and incorporated into law, which again takes time.
Budget: to be entitled to 7 years, Belgium must prove its commitment to Europe
Belgium is playing big, very big. And also (a little too much) with fire. The equation is as follows: according to calculations by Wim Moesen, professor of public finance (KU Leuven) and budget expert, “a budgetary penalty of 6 billion euros will be felt between a period of 4 years or 7 years.” In other words, if the 7-year period requires budgetary consolidation, it is much less painful than the initial 4-year plan. “Since the end of 2024, this idea has finally spread to the minds of budgetary decision-makers. It’s in the air now: we have to go for it.”he urges.
A budgetary penalty of 6 billion euros exists between the period of 4 years and 7 years.
If Belgium wants to obtain this less restrictive 7-year plan, “it must nevertheless deserve it, and convince Europe to grant it,” says Wim Moesen. To do this, it must ensure the implementation of structural measures in three specific areas: the cost of aging (pensions, medical care, rest homes), the labor market (4% maximum unemployment in the working population), and taxation (the need for profound reform). Without these three conditions included in the Belgian budget, Europe will theoretically not authorize a 7-year plan… and Belgium will pay the price, having to comply with European requirements over 4 years. This would be a great obstacle, especially since the supernotas by Bart De Wever are all built according to this 7-year plan. Without agreement by the end of Januaryeverything would therefore have to be redone, even more complex and costly.
Belgium therefore has every interest in obtaining this longer plan. “Negotiators must regain rationality,” calls Wim Moesen. Blocking an agreement for small measures of principle could ultimately cost 6 billion.” For example: the question of capital gains taxlong a source of blockage in Arizona, would provide the State with an income of less than 200 million euros, the expert calculates. “Compared with a penalty of 6 billion euros, is the political game worth it? Let’s hope that decision-makers understand this message.”
Deficit: Belgium under increased surveillance
For economist Rudy Aernoudt (UGent), the European Commission is forced to take into account the current absence of government. “More than the deadline as such, what is most worrying is that the objectives imposed by Europe are not achievedhe emphasizes. Particularly at the level of deficit.»
If nothing changes, Belgium would in fact have 180% debt to GDP in 2050. “That is, in short, the bankruptcy of the country. It is therefore imperative a reform plan that aims for a balanced budget. In 2028, calculations show that Belgium would have the worst deficit in Europe. We are under increased surveillance.”
“We can no longer turn a blind eye” to Europe’s alarms
Europe is also looking at the Belgian problem from a monetary point of view. “Without the euro, imagine what would happen with the Belgian franc. It would be totally devalued,” remarks Rudy Aernoudt.
The Belgian budgetary challenge is so large that achieving it over 4 years would be almost devastating. “Given the alarming budget situation, negotiators should focus almost exclusively on spending. Every year, the Commission continues to repeat its demands towards Belgium – reform the labor market and taxation –, we can no longer close our eyes.”
The more flexible Europe is on the deadline, the less flexible it will be on the objectives to be achieved.
Europe has in fact placed Belgium on the bench of fiscal sanctions, with an excessive deficit procedure, due to a budgetary hole of 28 billion euros. Completing this recovery plan in 4 years would be almost fatal. “6 billion, on a budget of 150 billion annually, is enormous: we would then be talking about an effort of 4%,” calculates Rudy Aernoudt.
How would we make these savings? “Either we increase taxes again – but they are already the highest in Europe –either we look at the expenditure of pensions, civil servants, social security. These are areas that directly affect people. But saving 6 billion without the population feeling the effects? Forget!”
More time, but stricter goals
In fineyes, the European Commission will understand the Belgian need for time to form a coalition. She doesn’t really have a choice, really. “But the more flexible it will be on the deadlinethe less it will be on the objectives to be achieved, notes Rudy Aerndout. She won’t give any more gifts, which is normal. We can’t have the butter, the money from the butter and the smile from the creammistress. What is missing in Belgium is the sense of urgency. If we are responsible, we don’t bicker over details when we know the country is heading straight towards the wall.”
What is missing in Belgium is a sense of urgency.
According to The Time Peter Moors’ letter does not contain a formal end date, but Belgium could “in the near future” present a plan “based on a strong political commitment of the new federal government.
