Flemish government faces 865 million euro budget gap
The Flemish government still needs to find 865 million euros to balance the region’s budget in 2027, according to new figures presented on Thursday by the Social and Economic Council of Flanders (SERV). The budget deficit for 2026 is estimated at 1.66 billion euros.
When drawing up this year's budget, the government implemented savings of around 1.5 billion euro. According to the cabinet of minister-president Matthias Diependaele, this was the largest interim savings exercise ever at Flemish level. The government’s stated aim is to balance the budget in 2027.
SERV's latest report suggests that this goal will be harder to achieve than initially planned. In its report, the council estimates the deficit at 1.66 billion euro in 2026 and 865 million euro in 2027. Next year's budget is 182 million euro less favourable than forecast in the government’s earlier multi-year budget estimate.
That change is mainly due to technical factors. The EU has postponed the introduction of its second emissions trading system (ETS2) to 2028. The Flemish government had expected the scheme to contribute to higher inflation in 2027, but that effect will now materialise later. Based on current policy plans, SERV therefore concludes that a balanced budget will not be reached in 2027.
Positive inflation news
There was also some positive news. SERV reported that the projected deficit for 2026 has fallen by 81 million euro to 1.66 billion euro. This is due to inflation turning out slightly higher than expected, according to Tuur Verschueren of the SERV research department. "As a result, the subsidy that Flanders receives from the federal level is also increasing, while most of the operating funds distributed by Flanders are currently not indexed," he said.
SERV argues that the most sustainable way to improve public finances is to stimulate economic growth. It therefore calls for measures to strengthen the investment climate and for a closer assessment of subsidy effectiveness through spending reviews.
#FlandersNewsService | © BELGA PHOTO DIRK WAEM
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