November 26, 2024 Today at 5:01 PM
The European Commission no longer has much patience for the struggling finances and increasing government expenditure in Belgium. We need a budget plan this year, is the message to the parties negotiating the Arizona coalition.
The European Commission is increasing the pressure on formateur Bart De Wever (N-VA) to quickly form a government, contrary to expectations. Belgium is one of eight Member States that were exposed to an excessive deficit procedure last summer. Our budget deficit, which is already rising to 4.6 percent of gross domestic product (GDP) this year according to the European Commission’s autumn forecasts, will rise to 4.9 percent in 2025 and to 5.3 percent in 2026.
The eight EU countries that were included in the so-called Excessive Deficit Procedure (EDP) this summer must reduce the excessive deficit of more than 3 percent of GDP as quickly as possible. This can be done in a period of seven years instead of four years, due to the recent adjustment of the European budget rules. Member states can also make reforms and investments on this broader path, instead of just restructuring.
Belgium is being imposed a strict and inflexible path of four years to reduce the budget deficit. France and Italy, the great budget sinners of the past, will be given seven years.
But Belgium cannot benefit from these adjustments, due to the lack of a government and a draft budget for 2025. A total of 20 countries submitted a ‘credible budget path’ to the European Commission. France and Italy, the great budget sinners of the past, were able to get a seven-year plan approved.
Government for Christmas?
The patience of the European Commission is gradually running out: we need a budget plan this year, is the urgent message. This timing is in line with rumors in his own country that De Wever wants to start forming a government before Christmas. In European circles, the end of April is considered the final deadline for the 2025 budget path: that date will be the last chance to make a credible transition to a more manageable seven-year path.
In the meantime, EU Finance Commissioner Valdis Dombrovskis has also been in contact with the Belgian authorities. After all, the Commission itself will intervene in the Belgian budgetary process. In concrete terms, Belgium is imposed a strict and inflexible path of four years, with an annual decline in the structural primary balance of 0.72 percent of GDP in the period 2025-2028.
2,4%
Growth standard expenditure
The European Commission also imposes a strict path for Belgium to limit the growth of government expenditure to 2.4 percent in 2025, 1.9 percent in 2026 and 2 percent in 2027.
Countries with a seven-year budget path are also imposed an expenditure standard: a figure that determines how high government expenditure may increase in the following year. The European Commission is therefore now imposing a strict path for Belgium to limit the growth of government expenditure to 2.4 percent in 2025, 1.9 percent in 2026 and 2.0 percent in 2027.
This limit on government spending will be more closely monitored than has been the case so far. For example, the Commission also demanded a reduction in public expenditure by 2024. The expectation is that in reality they will be about twice as high. The European evaluation of this restriction of the growth of government expenditure in Belgium will not be completed until the spring of next year.
(Deep breath) Alright, folks, gather ’round. We’ve got a right old mess on our hands. Belgium, the land of waffles, chocolate, and apparently, a complete and utter disregard for fiscal responsibility. (chuckles)
So, the European Commission has had enough of Belgium’s financial shenanigans and is cracking the whip. They’re demanding a budget plan by the end of the year, which is roughly the same time frame as ” Government for Christmas?” (air quotes) Oh, what a lovely gift. A functioning government, just in time for the holidays.
Now, let’s talk about the numbers. Belgium’s budget deficit is looking a bit like a Dutch Master’s painting – a mess of colors and shapes that don’t quite add up. It’s rising to 4.6 percent of GDP this year, and it’s expected to keep on climbing to 4.9 percent in 2025 and 5.3 percent in 2026. That’s like me trying to balance my own checkbook after a night out at the pub. (laughs)
But here’s the thing, folks. The European Commission is offering a bit of a carrot and stick situation. Eight member states, including Belgium, were placed under the Excessive Deficit Procedure (EDP) this summer. And, as a special treat, they get to reduce their deficit over a period of seven years instead of four. Ah, but there’s a catch! Belgium can’t benefit from this lovely offer because, well, they don’t have a government or a draft budget for 2025. (shrugs) Who needs a government when you’ve got waffles and chocolate, right?
France and Italy, those great budget sinners of the past, have managed to wriggle their way into a seven-year plan. (smirks) Ah, those sneaky Europeans. Meanwhile, Belgium is stuck with a strict and inflexible four-year plan. It’s like they’re being sent to budgetary detention. “You must reduce your structural primary balance by 0.72 percent of GDP each year, and don’t even think about asking for a cookie.”
And, just to rub it in, the European Commission is imposing a growth standard on Belgium. They can only increase government expenditure by 2.4 percent in 2025, 1.9 percent in 2026, and 2 percent in 2027. That’s like telling a teenager they can only spend their allowance on sensible things like books and vegetables. (chuckles) Good luck with that.
Now, I know what you’re thinking. “Jimmy, what about the expenditure standard?” (in a silly voice) Oh, don’t worry, folks, the Commission’s got that covered too. They’re monitoring the growth of government expenditure more closely than a hawk eyeing a plump pigeon. And, just to make sure Belgium doesn’t get any funny ideas, they’re demanding a reduction in public expenditure by 2024. (smirks) Ah, those Europeans and their love of spreadsheets.
In conclusion, folks, Belgium’s got some ‘splainin’ to do. They need to get their financial house in order, and fast. Or, you know, they could just stick with the waffles and chocolate. (winks) After all, who needs a functioning government when you’ve got delicious treats? (laughs)
(Insert cheeky grin)
November 26, 2024 Today at 5:01 PM
The European Commission has lost patience with Belgium’s struggling finances and escalating government expenditure, urging the parties negotiating the Arizona coalition to submit a budget plan this year, as the country’s deficit continues to balloon. With a projected budget deficit of 4.6 percent of GDP this year, rising to 4.9 percent in 2025 and 5.3 percent in 2026, Belgium is under intense pressure to get its finances in order.
As one of eight EU member states facing an Excessive Deficit Procedure (EDP), Belgium is required to reduce its deficit to below 3 percent of GDP as quickly as possible. However, unlike other countries, Belgium is being forced to follow a strict and inflexible four-year path, whereas countries like France and Italy, notorious for their budgetary transgressions, have been granted a more lenient seven-year timeline.
Belgium’s budgetary woes have earned it a reputation as a problem child in the EU, with the European Commission imposing a strict and inflexible path of four years to reduce the budget deficit, in contrast to France and Italy, which have been given seven years to get their finances in order.
The European Commission’s patience is wearing thin, with EU Finance Commissioner Valdis Dombrovskis in close contact with Belgian authorities, warning that the Commission will intervene in the Belgian budgetary process if necessary. The Commission has imposed a strict path for Belgium, requiring an annual decline in the structural primary balance of 0.72 percent of GDP between 2025 and 2028.
Furthermore, the European Commission has set a strict limit on government expenditure growth in Belgium, capping it at 2.4 percent in 2025, 1.9 percent in 2026, and 2.0 percent in 2027. This limit will be closely monitored, with the Commission demanding a reduction in public expenditure by 2024, although the actual figures are expected to be roughly twice as high. The European evaluation of this restriction on government expenditure growth in Belgium will not be completed until the spring of next year.
Government for Christmas?
Rumors suggest that formateur Bart De Wever (N-VA) aims to form a government before Christmas, which would be in line with the European Commission’s urgent call for a budget plan this year. However, with the end of April considered the final deadline for the 2025 budget path, De Wever’s timeline may be overly ambitious, and the Belgian government may be forced to adopt a more realistic seven-year plan to avoid further EU intervention.
