EU Commission expects Belgium to cut costs by at least 0.5 per cent of GDP per year

The European Commission is obliging the next Belgian governments to cut costs by at least 0.5 to 0.72 per cent of GDP annually. Those percentages could be even higher if policies remain unchanged.

Annual savings of at least 0.5 per cent of GDP must be made if Belgium opts for a seven-year savings path. If it does not opt for such an extended trajectory, savings of 0.72 per cent of GDP per year will have to be made over the next four years. The Commission does not take into account a possible deterioration of the figures under unchanged policies.

This means that the next legislature will have to cut 25 billion euros over five years. Since the bulk of Belgium's public deficit is federal, informateur Bart De Wever, who is taking the first steps towards forming a new federal government, must immediately deal with a tough cost-cutting exercise in the government negotiations.

The European Commission announced on Wednesday that it wanted to open an excessive budget deficit procedure against Belgium. The country had a deficit of 4.4 per cent and a debt ratio of 105.2 per cent of GDP at the end of 2023, well above the European ceilings of 3 per cent and 60 per cent respectively. 

In mid-July, the Supreme Finance Council will give its advice on how to divide the effort between the regions. Belgium will then have until 20 September to indicate how it intends to make the necessary cuts, as the European Commission only imposes percentages and leaves the substantive choices to the member states. By 15 October, Europe wants a draft budget for 2025.

^{N-VA leader Bart De Wever meets King Philippe © BELGA PHOTO LAURIE DIEFFEMBACQ}