The European Commission wants new budget rules to take effect from next year. For Belgium, this will be a major challenge. Our country faces a savings exercise of almost €5 billion a year, or 0.8 per cent of GDP.
A thorough reform of European budget rules promises to be particularly tough for Belgium. In its proposal, the European Commission demands that member states take more responsibility themselves. A four-year trajectory, in agreement with and tailored to each country, should put and keep public debt on a declining path.
The budget deficit must fall below 3 per cent of gross domestic product (GDP) so that it is no longer considered “excessive”. That path can also be slower, over a seven-year period, but only if that country makes credible investments and reforms.
The obligation to reduce one-twentieth of the debt above 60 per cent of GDP every year will lapse. However, countries with budget deficits above 3 per cent of GDP must cut at least 0.5 per cent of GDP from that balance each year.
*Poor starting position*
Our country has a poor starting position, with a tradition of rising public spending, high debt (107 per cent of GDP) and a large deficit (4.3 per cent of GDP or some €26 billion). To rectify these shortcomings, Belgium is expected to have to make one of the toughest efforts of all member states to reduce the deficit. That effort will be at 0.8% annually rather than 0.5% of GDP, Commission simulations show.
To spread the effort over seven years, Belgium must agree ambitious and detailed reforms and investments that improve growth and debt sustainability. The Belgian government is already failing to approve reforms in exchange for pennies from the European Recovery Fund. If the Commission finds that promises are not being kept, the period could be shortened again, experts warn.
The reform comes as current European budget rules are complex and bureaucratic. Member states that flout them invariably went unpunished, much to Germany’s frustration. The European Commission polled member states for almost a year about a thorough reform.
The average debt of EU countries reached 84 per cent last year, well above the 60 per cent of GDP benchmark set by the European treaties. The public debt of Italy, Greece and Portugal, as well as Belgium, is above 100 per cent of GDP.
The main yardstick for assessing whether debt and deficit are falling will be the evolution of public spending. ‘This is measurable and in the hands of the governments, so no excuses can be sought,’ it says. This is bad news for Belgium, where net spending continues to derail and is counted among the highest in Europe. Our country received another hefty slap from the European Commission in November as Belgian governments’ current spending is rising faster than potential medium- and long-term economic growth.
*Penalty bench*
Until the end of this year, the existing European fiscal rules are still in brackets, meaning that countries cannot be placed under tightened fiscal surveillance. But if the new fiscal rules get approved this year, they will come into force in 2024. Member states that deviate too much from their budget path, such as Belgium, risk ending up on the penalty bench.
Berlin, in particular, remains sceptical. German Finance Minister Christian Lindner had earlier this week demanded a 1 per cent annual reduction from countries with deficits above 3 per cent. This weekend, European finance ministers will discuss the Commission’s plan for the first time.
Het was al lang duidelijk dat dit onder druk van de EU of de markt ging gebeuren. Zonder externe druk kunnen we het blijkbaar niet.
De laatste regering die financieel orde op zaken kon stellen is die van Dehaene in de jaren ’90. (En dat was eigenlijk ook onder EU druk om bij de Eurozone te mogen).
Typisch “We gaan dit schuiven tot na de vakantie” of “Dat gaan we na de verkiezingen aanpakken” in 3.2.1…
Staat er in besparen op loon/pensioen van politiekers en subsidies aan bedrijven of gaan wij het weer mogen bekopen
> Maar als de nieuwe begrotingsregels dit jaar goedgekeurd raken, worden ze in 2024 van kracht.
Wat dus zal betekenen dat ze zullen “praten” over het budget tot bij de verkiezingen en zoals de laatste jaren gewoon blijven uitgeven.
Dat gaat wat geven, met de PS die enkel belastingen wil verhogen en vooral niet snijden.
Sorry aan alles wat links is, maar soms kunt ge gewoon niet ontsnappen aan austeriteit als noodzakelijk kwaad.
Oh en het is hier al zo een pretje qua service! Arm land zijn we.
if capitalism worked then we would have infinite growth thus we would have the budget the next year.
Let me try to understand it… when countries are in a lot of debt, the EU is going to put some economic sanctions so these countries will be in MORE debt?????
Plus. Germany has been exceeding the debt limit for years and years… and no sanction ever.
So, what is this about?
Tax shift strikes again. We could have had a budget in balance in 2019, but then Van Overtveldt lowered tax on profit from 34% to 25%. Smart enough to let the change start in 2019. Result: record dividends for Belgian vompanand a stark rise in budget deficit.
10 comments
The European Commission wants new budget rules to take effect from next year. For Belgium, this will be a major challenge. Our country faces a savings exercise of almost €5 billion a year, or 0.8 per cent of GDP.
A thorough reform of European budget rules promises to be particularly tough for Belgium. In its proposal, the European Commission demands that member states take more responsibility themselves. A four-year trajectory, in agreement with and tailored to each country, should put and keep public debt on a declining path.
The budget deficit must fall below 3 per cent of gross domestic product (GDP) so that it is no longer considered “excessive”. That path can also be slower, over a seven-year period, but only if that country makes credible investments and reforms.
The obligation to reduce one-twentieth of the debt above 60 per cent of GDP every year will lapse. However, countries with budget deficits above 3 per cent of GDP must cut at least 0.5 per cent of GDP from that balance each year.
*Poor starting position*
Our country has a poor starting position, with a tradition of rising public spending, high debt (107 per cent of GDP) and a large deficit (4.3 per cent of GDP or some €26 billion). To rectify these shortcomings, Belgium is expected to have to make one of the toughest efforts of all member states to reduce the deficit. That effort will be at 0.8% annually rather than 0.5% of GDP, Commission simulations show.
To spread the effort over seven years, Belgium must agree ambitious and detailed reforms and investments that improve growth and debt sustainability. The Belgian government is already failing to approve reforms in exchange for pennies from the European Recovery Fund. If the Commission finds that promises are not being kept, the period could be shortened again, experts warn.
The reform comes as current European budget rules are complex and bureaucratic. Member states that flout them invariably went unpunished, much to Germany’s frustration. The European Commission polled member states for almost a year about a thorough reform.
The average debt of EU countries reached 84 per cent last year, well above the 60 per cent of GDP benchmark set by the European treaties. The public debt of Italy, Greece and Portugal, as well as Belgium, is above 100 per cent of GDP.
The main yardstick for assessing whether debt and deficit are falling will be the evolution of public spending. ‘This is measurable and in the hands of the governments, so no excuses can be sought,’ it says. This is bad news for Belgium, where net spending continues to derail and is counted among the highest in Europe. Our country received another hefty slap from the European Commission in November as Belgian governments’ current spending is rising faster than potential medium- and long-term economic growth.
*Penalty bench*
Until the end of this year, the existing European fiscal rules are still in brackets, meaning that countries cannot be placed under tightened fiscal surveillance. But if the new fiscal rules get approved this year, they will come into force in 2024. Member states that deviate too much from their budget path, such as Belgium, risk ending up on the penalty bench.
Berlin, in particular, remains sceptical. German Finance Minister Christian Lindner had earlier this week demanded a 1 per cent annual reduction from countries with deficits above 3 per cent. This weekend, European finance ministers will discuss the Commission’s plan for the first time.
Het was al lang duidelijk dat dit onder druk van de EU of de markt ging gebeuren. Zonder externe druk kunnen we het blijkbaar niet.
De laatste regering die financieel orde op zaken kon stellen is die van Dehaene in de jaren ’90. (En dat was eigenlijk ook onder EU druk om bij de Eurozone te mogen).
Typisch “We gaan dit schuiven tot na de vakantie” of “Dat gaan we na de verkiezingen aanpakken” in 3.2.1…
Staat er in besparen op loon/pensioen van politiekers en subsidies aan bedrijven of gaan wij het weer mogen bekopen
> Maar als de nieuwe begrotingsregels dit jaar goedgekeurd raken, worden ze in 2024 van kracht.
Wat dus zal betekenen dat ze zullen “praten” over het budget tot bij de verkiezingen en zoals de laatste jaren gewoon blijven uitgeven.
Dat gaat wat geven, met de PS die enkel belastingen wil verhogen en vooral niet snijden.
Sorry aan alles wat links is, maar soms kunt ge gewoon niet ontsnappen aan austeriteit als noodzakelijk kwaad.
Oh en het is hier al zo een pretje qua service! Arm land zijn we.
if capitalism worked then we would have infinite growth thus we would have the budget the next year.
Let me try to understand it… when countries are in a lot of debt, the EU is going to put some economic sanctions so these countries will be in MORE debt?????
Plus. Germany has been exceeding the debt limit for years and years… and no sanction ever.
So, what is this about?
Tax shift strikes again. We could have had a budget in balance in 2019, but then Van Overtveldt lowered tax on profit from 34% to 25%. Smart enough to let the change start in 2019. Result: record dividends for Belgian vompanand a stark rise in budget deficit.
https://www.demorgen.be/politiek/economen-over-begrotingstekort-taxshift-is-zware-rugzak-die-volgende-regering-met-zich-meesleept~b41ab215/