After a year marked by spiralling inflation and a heavily reduced purchasing power for ordinary Belgian households, the Federal Planning Bureau (FPB), as well as regional statistics bureaus from across the country, now believes that household purchasing power will rise again next year.
According to the planning bureau’s 2022-2027 regional economic outlook report, real per capita income – which measures the average income earned per person in a given area in a specified year – should start to rise across the country sometime next year.
The bureau believes that wage indexations and high social allowances should help stimulate this growth, especially if social allowances outstrip inflation.
In 2020-2021, households once enjoyed several government financial support programmes to help bolster recovery during the Covid-19 pandemic. This includes direct subsidies, furlough programmes, increased social support, and other direct forms of government support.
As these measures were removed, and the subsequent war in Ukraine sent energy prices skyrocketing, Belgium was suddenly plunged into a difficult situation in regard to the cost of living. In 2021, Belgians lost an estimated €22 billion in purchasing power.
High inflation significantly has significantly lowered purchasing power across the country. More than half of Brussels residents struggle to make ends meet, one in seven Belgians go hungry due to financial issues, and record numbers of Belgians are working multiple jobs to make ends meet.
A survey conducted by Belgian publications Le Vif and Knack in June revealed that declining purchasing power was the number one concern for Belgians, even higher than global warming or the threat of a new world war.
The Federal Planning Bureau is now hoping that greater indexation, as well as high employment, should reverse these negative inflationary trends by next year.
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From 2024 until 2027, the bureau predicts, the growth of purchasing power across all of Belgians regions should follow trends similar to the levels of growth seen before the Covid-19 pandemic (2015-2019). In Brussels, there are expectations that purchasing power should grow by 1.4% per year, 1.2% in Wallonia, and 1.1% in Flanders.
The bureau says that income growth will be driven by employment in the capital region, where record numbers of Belgians are finding jobs. Until 2027, employment is forecasted to increase by around 0.5% per year in Brussels, 0.7% in Wallonia, and 0.9% in Flanders. The planning bureau credits greater mobility between Brussels and other regions of the country for job growth.
“Household purchasing power should improve from 2023,” a press release by the Federal Planning Bureau states. “In the medium term, the unemployment rate should fall in each of the regions.”
