Belgium's budget deficit could rise to 4.7% by 2025, warns European Commission

Belgium's budget deficit will remain at 4.4 per cent in 2024 and, if policies remain unchanged, will reach 4.7 per cent by the end of 2025. This is what the European Commission predicts in its new economic forecasts, presented on Wednesday.

It was already known that Belgium would end 2023 with a deficit of 4.4 per cent. This deficit will remain at the same level in 2024, despite the phasing out of support measures taken in the context of the energy crisis, the Commission writes.

This is due to structurally rising current expenditure (mainly on pensions) and higher interest payments on government debt. As a result, the deficit risks rising to 4.7 per cent of GDP by 2025, at least on a no-policy-change basis, the Commission says.

Government debt to fall slightly

Government debt will fall slightly, from 105.2 per cent in 2023 to 105.0 per cent in 2024. This is largely the result of the issuance of the one-year treasury bond, which gave the government a large influx of cash. However, the rising budget deficit threatens to push Belgium's debt to 106.7 per cent by 2025, according to the Commission.

These figures put Belgium well above the Maastricht standards, which require EU countries to limit their deficit to 3 per cent of GDP and their debt to 60 per cent. After several years of more lenient application of the rules, the Commission wants to start enforcing these standards again.

This could have serious consequences for Belgium, including EU supervision of its budget and even sanctions. The country has until mid-September to come up with a plan to put its finances in order. But the June elections and the ensuing government negotiations could complicate that process.



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