Belgium is on course to win the unwanted prize of being one of the European Union countries with the highest budget deficits next year, according to data recently released by the European Commission.
Together with Slovakia, Belgium is projected to run a fiscal deficit of 5.8% of annual GDP in 2023, the joint highest in the EU, ahead of third-placed Malta at 5.7%. In 2024, Belgium's deficit is predicted to decrease only slightly to 5.1%, tying it with France as the country with the joint-third largest deficit in the bloc after Poland and Hungary (both on 5.2%).
Perhaps most worryingly for Belgium, the EU's fiscal limit of 3% of GDP — which was enshrined into European law in the late 1990s but temporarily suspended during the Covid-19 pandemic — is scheduled to re-enter into force in 2024, putting Belgium on a potential collision course with the EU authorities in its contravention of EU budgetary law.
The European Commission's economic forecast for Belgium (last updated 11/11/2022)
In its report, the Commission also noted that soaring energy prices, precipitated by Russia's full-scale invasion of Ukraine in February, is "projected to temper the growth of private consumption," and predicted a general "worsening of macroeconomic conditions" for 2023: unemployment is projected to rise from 5.8% to 6.4%, while overall economic growth is set to slow to an anaemic 0.2%.
Dismal though these figures might seem, they are unfortunately commensurate with the Commission's projections for the eurozone as a whole: next year, the eurozone's average unemployment is set to rise from 6.2% to 6.5%, while economic growth is projected to slow to 0.3%.
The European Commission's economic forecast for the eurozone area (last updated 11/11/2022)
A budgetary scandal
The Commission's report comes against the backdrop of a scandal that has engulfed Belgium's political class over the past week, in which the Federal State Secretary for Budget and Consumer Affairs, Eva De Bleeker (Open VLD), was forced to resign after she was alleged to have intentionally presented an over-optimistic assessment of the state of Belgium's finances to the European Commission.
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Last month, Belgian Prime Minister Alexander De Croo issued an impassioned response to criticisms of the growing deficit.
"I hear the criticism of that budgetary impact," De Croo said. "And I share the concern of many. But then my question remains: what should we have done then? Should we have let our companies go over their heads during corona? Should we have refused self-employment benefits? Should we perhaps leave our middle class in the cold? Pull out your plan and see you later?! It is always an option to close your eyes and do nothing. But then the cost to our economy and to our society would be many times greater."
