A few days after the elections, the Federal Planning Bureau has once again put its finger on the wound: without a change in policy, the government deficit will increase significantly in the coming years. Although the Planning Bureau is less pessimistic than the National Bank.
Just before the elections, the National Bank already sounded the alarm: without adjustment, the central bank assumes a budget deficit of 4.8 percent in 2024, 5.3 percent in 2025 and 5.5 percent in 2026. Governor Pierre Wunsch pointed out that the dynamics of the electoral campaign were “not encouraging” in addressing the deficits.
Now another institution has published a slightly less pessimistic forecast. The Federal Planning Bureau estimates a deficit of 4.5 percent of gross domestic product this year, followed by 4.9 percent in 2025 and 5.3 percent in 2026. By 2029 the deficit would amount to 5.8 percent. According to EU rules, member states must limit their deficit to a maximum of 3 percent.
Deficit of 31 to 40 billion euros
The new governments therefore face a difficult task. “Expressed in billions, a deficit of 4.5 percent means approximately 31 billion euros, a deficit of 5.8 percent amounts to 40 billion euros,” said Planning Bureau economist Michel Saintrain during the presentation of the prospects.
He warned that there are still a number of uncertainties surrounding the forecast. For example, the financial terms of the agreement that the government concluded with energy company Engie on the extension of two nuclear power stations were not taken into account.
Economic growth
The Belgian economy will continue to grow stably in the coming years, the Planning Bureau expects. GDP growth would reach 1.4 percent in 2024 and would then continue at virtually the same pace until 2029. Inflation would still average 3.1 percent this year and only fall below the 2 percent target in the course of next year valleys.
According to the Planning Bureau, job creation remains limited this year, with an increase of 27,000 people. From 2025, job creation is expected to increase to an average of 43,000 people per year. The growth is mainly in the companies. The employment rate could increase from 72.1 percent in 2023 to 74.1 percent in 2029.