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This article has been translated by Artificial Intelligence (AI). The news agency is not responsible for the content of the translated article. The original was published by Belga.

European Commission warns Belgium of rising government spending

by AI | 15.Nov 2024 | Europe in brief AI

The deficit on the Belgian budget threatens to rise to more than 5 percent of GDP in the coming years, while the national debt would climb to over 105 percent. The European Commission asks to reduce the debt, but to continue stimulating growth.

Belgian Prime Minister Alexander De Croo in the company of Commission President Ursula von der Leyen, here at the start of the Belgian Presidency of the Council. - Photo: Belga

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Brussels – Without changed policies, the deficit on the Belgian budget threatens to rise to 4.9 percent of GDP by 2025. Expenditures on pensions and social benefits continue to increase, as do interest expenses for the (re)financing of national debt, which threatens to climb to over 105 percent next year. The European Commission warned on Friday in its new economic growth outlook. Belgium and other EU countries need to walk the narrow path between reducing their debt ratio and stimulating economic growth, says the Commission.

After a long period of stagnation, the European economy is once again posting more positive growth figures, although they remain quite modest, the Commission’s forecast shows. The average GDP of countries in the eurozone is expected to increase by 0.8 percent in 2024 and continue to grow to 1.3 percent in 2025 and 1.6 percent in 2026.

Belgium will close 2024 with a growth of 1.1 percent, the Commission expects. In line with the trend in the eurozone, growth would amount to 1.2 percent in 2025 and 1.5 percent in 2026.

With a predicted inflation of 4.4 percent (the Belgian statistical office Statbel mentioned 4.3 percent on Thursday), our country records the highest increase in consumer prices in the eurozone this year. Only Croatia (4.0 percent) comes somewhat close, with the average in the eurozone at 2.4 percent.

The reasons for the sharp price increases are the disappearance of energy support and the monthly indexation of variable electricity and gas contracts, which are quickly passed on. But with a predicted inflation rate of 2.9 percent in 2025 and 1.9 percent in 2026, our country would reconnect with the eurozone (2.1 percent, respectively 1.9 percent) in the next two years.

Finally, the Commission warns of a rising budget deficit: 4.6 percent of GDP in 2024, 4.9 percent in 2025, and 5.3 percent in 2026. This is, of course, largely due to the absence of new policies because of the protracted federal government negotiations, but also due to rising expenditures for pensions and social benefits. Moreover, our country is also expected to face higher interest expenses because the debt ratio continues to grow (105.1 percent in 2025) and maturing debts need to be refinanced.

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