Belgium is heading towards a public deficit of 6% of GDP by 2027. The Federal Government's current plans do not suggest a return to the 3% threshold required by the European Commission, said Pierre Wunsch, Governor of the National Bank of Belgium (NBB), on Tuesday.
Speaking before the Finance and Budget Committee, Wunsch noted that Belgium has one of the largest deficits in Europe.
The Governor presented the NBB's annual report, which was released at the end of February, to MPs on Tuesday. He indicated that the NBB forecasts stable but moderate Belgian growth in a world characterised by uncertainty, especially since Donald Trump was elected as President of the United States.
Wunsch emphasised the need to address the budget deficit, which could exceed 6% of GDP by 2027, compared to 4.6% in 2024. "Nothing suggests that current Federal Government plans will meet the 3% target," he added.
During his presentation, Wunsch also stressed the role national authorities must play in certain areas, arguing that Europe is not the solution for everything. "This opinion reflects a certain intellectual laziness," according to him.
"Looking at the European budget, we can find common solutions for areas like defence and climate. However, many issues such as long-term illness and taxation remain outside European competencies and depend on the quality of decisions made in Member States."
Eurosclerosis 2.0
A significant investment plan at the European level remains useful but does not solve all problems, as greater harmonisation also creates tensions around flexibility, he continued. "We must always check whether more Europe is a good solution, as it leads to less flexibility and a greater distance from the population."
The NBB Governor called for an end to "eurosclerosis 2.0," which he likened to the lack of economic dynamism following the oil crisis. "We overcame eurosclerosis at the time by ending European subsidies in unproductive sectors and granting more autonomy in terms of competition," he explained.
