National Bank of Belgium warns parties of widening budget deficits

The next government faces a severe clean-up of public finances, new estimates by the National Bank of Belgium (NBB) show. The bank calls on the political parties to take the fiscal consolidation seriously and to take action as soon as possible.

The National Bank of Belgium (NBB) expects a budget deficit of 4.8 per cent in 2024, 5.3 per cent in 2025 and 5.5 per cent in 2026 under an unchanged policy scenario. The explanation lies mainly in rising spending on pensions and healthcare and higher interest rates. Public debt would also continue to rise gradually, from over 105 per cent of GDP this year to 110.7 per cent in 2026, the National Bank estimates.

“There seems to be little appetite among political parties to do anything about this,” said NBB Governor Pierre Wunsch in a reaction to the predictions. Indeed, according to an analysis of the party programmes by the Planning Bureau, most political parties do too little to address the problem and some even continue to derail the public finances. The governor further didn’t rule out that “external sanctions” might be needed to finally get Belgium to comply with European budget rules.

Other concerns of the National Bank include the record number of subsidised jobs (more than 35 per cent of all employment) pushing government spending into the red, and an underperforming housing market. Wunsch therefore made a remarkable plea for more housing in Belgium. Indeed, the National Bank does not expect a real recovery in housing investment until 2026, while affordability is coming under increasing pressure.


National Bank (BNB-NBB) Governor Pierre Wunsch © BELGA PHOTO HATIM KAGHAT

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