Lower rating by S&P is latest in series of bad news about Belgian budget
The rating agency S&P downgraded Belgium's credit rating on Friday. It was lowered from AA to AA- with a stable outlook. Although this is still a good rating of Belgium’s public finances (AA is second best on a scale of ten), it comes on top of several negative messages in recent days.
According to S&P, the downgrade reflects persistent imbalances in Belgian public finances. Belgium emerged from the pandemic and the 2022-2023 energy crisis with significant structural budget deficits, due to one of the highest levels of public spending (just over 54 percent of GDP) in the EU.
According to S&P, the 2025 budget measures were insufficient to offset increased spending related to the aging population, defense, and interest payments, with the deficit widening to approximately 5.2 percent of GDP in 2025, compared to 4.4 percent in 2024. While the government is aiming for greater fiscal consolidation in 2026, "implementation risks remain, as key reforms, particularly in pensions and employment, are still being rolled out," the agency notes.
Debt is expected to reach 109 percent of GDP in 2029, compared to 103 percent in 2025. Interest payments are projected to increase from 2.4 percent of GDP in 2025 to 2.8 percent of GDP in 2029.
From bad to worse
The lower rating doesn’t come as a surprise. Financial markets expected it, as did Belgian politicians. "This was predictable," commented Prime Minister Bart De Wever. "The explanation is always the same: the rating agencies acknowledge the efforts of the new government, but rightly believe that they remain insufficient to make up for lost time.”
Last Friday, rating agency Moody's downgraded Belgium's rating from Aa3 to A1. In the days that followed, Eurostat announced that Belgium had the highest public deficit of the eurozone countries in 2025: 5,2 percent of GDP.
The Belgian government is well aware that this needs urgent and forceful correction. Another report this week shows it’s not evident to raise more taxes to get more income. The OECD report on tax burden confirmed that Belgium has the highest burden on income. Belgium is the only country where more than half of labor income goes to taxes and social contributions.
The federal government of Bart De Wever in recent months decided on several budget cuts. But most of these decisions are not yet implemented or don’t bring in as much money as was hoped for. Budget minister Vincent Van Peteghem reports 3,8 billion euros are still missing.
Notwithstanding these deep red numbers, the federal government this week decided on measures to compensate consumers for high energy prices, for a total of 80 million euros.
| Vice-prime minister and Budget Minister Vincent Van Peteghem (l) and Prime Minister Bart De Wever © BELGA PHOTO ERIC LALMAND
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