The Belgian economy is ill-equipped to face major long-term challenges, with soaring public debt and low labour market participation posing a significant threat to the country's future economic health, a recent study has found.
According to a report by BNP Paribas Fortis, Belgium's largest bank, Belgium ranks 17th out of 27 EU Member States in the 'Future Proof' index, which assesses countries' long-term economic resilience.
The study noted that Belgium's transportation network is especially poor compared to other European countries, with Belgium registering a score of just 4 out of 100 in BNP Paribas Fortis' 'mobility index': the worst score in the EU, and well below the Netherlands (93), Germany (50) and France (21).
Belgium's low mobility score coheres with the findings of a report by the Federation of Enterprises in Belgium, which found that traffic jams cost the country up to €4.8 billion in 2022. Brussels was also named the 14th most congested city in the world in the most recent TomTom Index.
Overall, Belgium's economy ranked far below the majority of its neighbours, with the Netherlands in 2nd place and Luxembourg and Germany in 9th and 10th place respectively. France, in contrast, was in 24th place.
'Belgium needs to step up a gear'
Speaking to L'Echo, Koen De Leus, the Chief Economist at BNP Paribas Fortis, suggested that the results show that Belgium "urgently needs to step up a gear".
De Leus noted that the state of Belgium's fiscal health is especially alarming, with the country currently running one of the highest deficits and largest debt-to-GDP ratios in the EU.
"The problem with high public debt is that there is zero room for manoeuvre in the event of unexpected events," De Leus warned. "In recent years, Germany has spent huge amounts to protect citizens and companies from high energy prices. In Belgium, we had no choice but to limit the aid."
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De Leus also pointed to Belgium's low labour market score as another indication of the country's difficulties. Belgium received a grade of 36 out of 100 in the study's labour market index, well below the Netherlands (70) and Germany (58), although slightly above France (29).
De Leus explained that Belgium's relatively poor score reflected the fact that only 75.4% of its working-age population is currently employed – below the EU average of 76.7% and well beneath the Federal Government's official target of 80%.
"What is unique in Europe is that we combine this low employment rate with a much higher than average sickness rate and a much higher degree of disability," De Leus said. He added that addressing the country's low employment rate represents the most promising way for Belgium to improve its economic resilience.
"This handicap could be our best asset. If we could even join the European average, it would be of great benefit to our economic growth."
