The European Commission released its evaluation of mid-term plans and draft budgets of EU Member States on Tuesday.
Belgium’s assessment has been postponed due to the ongoing government formation process, resulting in a new deadline of 31 December for submitting the required documents. Despite the delay, the Commission outlined a provisional budget route for Belgium.
Belgium is not alone; Austria, Bulgaria, and Lithuania also have not yet submitted their mid-term policy plans due to their own government formation issues. Germany is facing similar delays due to upcoming parliamentary elections in February.
The Commission placed Belgium under an ‘excessive deficit procedure’, which means the Commission has proposed a stringent budget correction path for the country. Given the lack of a mid-term plan, the Commission is operating under the assumption of unchanged policies.
The Commission aims to limit annual net expenditure growth for Belgium to 2.4% in 2025, 1.9% in 2026, and 2.0% in 2027. The objective is to reduce the budget deficit to less than 3% of GDP, which is stricter than the targets proposed in June. Recent economic forecasts for Belgium have worsened. For comparison, Italy and France, also under the same procedure, are not expected to meet the Maastricht criteria until 2026 and 2029, respectively.
Seven-year adjustment
Belgium has also not yet submitted a budget for 2025. Austria and Spain are in similar positions. The Commission has extended Belgium’s deadline to the end of December for both the budget and the multi-year plan. By 30 April, Belgium must demonstrate progress in implementing budget reform measures. The Commission declined to speculate on what might happen if the December deadline is missed.
The political coalition aiming to form a new Federal Government in Belgium intends to submit a seven-year mid-term plan to spread the required budget adjustments over the longest possible period. The Commission has indicated this is feasible, provided it includes credible investments and reforms.
It is noteworthy that of the twenty Member States submitting credible multi-year plans to the Commission (to ensure structurally sound public finances), only five aim for a seven-year adjustment period.
Caretaker Minister of Finance Vincent Van Peteghem (CD&V) responded by emphasising the need for impactful reforms in Belgium’s multi-year plan, specifically in taxation, the labour market, and pensions.
"We must seize the opportunity to present a thoroughly considered plan for a seven-year period," he said. "We still hold the cards today, but maintaining this will require courage and leadership from the coalition parties in the coming weeks. Courage to implement impactful reforms and communicate an honest, realistic message to the public. Failing to do so now will lead to much harsher messages in the future."
