National Bank of Belgium warns budget path remains unsustainable
Belgium’s budget deficit widened further in 2025, reaching an estimated 5.3 per cent of GDP, while public debt climbed to around 107 per cent of GDP, according to a new report by the National Bank of Belgium (NBB). The bank warns that additional consolidation efforts will be required to restore fiscal balance.
Belgium's budget deficit deteriorated by nearly 1 percentage point compared with 2024, largely due to weaker revenues. According to the latest estimates, only France has a larger budget deficit within the eurozone. Public debt has risen to around 107 per cent of GDP, while in other high-debt countries - with the exception of France - it has fallen.
Public spending, meanwhile, again outpaced economic growth. Total expenditure exceeded 54 per cent of GDP in 2025, the highest level since the pandemic and roughly 5 percentage points above the EU average. The main driver of spending growth was healthcare and long-term sickness benefits, which increased by nearly 3 billion euros, more than any other category.
Current measures are insufficient
The NBB notes that the federal government has adopted far-reaching reform and consolidation measures, including changes to unemployment benefits, long-term sickness schemes and future pensions, aimed at raising employment and strengthening fiscal sustainability.
However, the bank warns that the announced measures are insufficient to restore fiscal sustainability within a reasonable timeframe. On current projections, the deficit would still amount to around 5 per cent of GDP by the end of the decade. "That is obviously not sustainable," the report states.
The federal government is aiming to agree on an additional budgetary effort of 3 to 4 billion euros this year. But even this will not be enough to structurally reduce the debt ratio, according to NBB governor Pierre Wunsch. "The efforts are being undermined by higher interest charges and increased defence spending," he warned. "Further efforts will have to be made, year after year and in a credible manner."
Medium-term pressures are expected to intensify in the coming years. Higher interest rates, ageing-related costs and increased defence spending are set to weigh more heavily on the budget, while the energy transition could both reduce revenues from fossil fuel taxation and require additional public investment in infrastructure.
Belgium's widening deficit since the start of the century has primarily been driven by structurally rising expenditure. Although interest payments declined for many years, this was more than offset by higher primary spending. Government revenues, by contrast, have remained broadly in line with their level in 2000.
National Bank (BNB-NBB) governor Pierre Wunsch. © BELGA PHOTO BENOIT DOPPAGNE
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