Wallonia and Brussels to receive reduced Federal Government funding

Wallonia and Brussels to receive reduced Federal Government funding
Credit: Belga / Bruno Fahy

Wallonia and Brussels are expected to receive significantly reduced Federal Government funding over the next decade-and-a-half, De Tijd and Belga News Agency have reported.

A recent study has found that funding for Belgium's regions and communities will fall to 11.07% of GDP by 2039, down from 11.54% today: a decline of approximately €2.36 billion in today's money.

The conclusion was reached after researchers at the Economic Council of Flanders (SERV) looked into the provisions of Belgium's Special Finance Act (BFW) — the law which regulates the financing of Belgium's various regions. Notably, it requires a reduction in government expenditure (as a proportion of GDP) for 2039.

The study forecast that the reduction is going to affect Belgium's different regions and communities differently. In particular, it found that funding for Flanders will remain more-or-less the same up until 2039.

Wallonia, however, can expect a 12% reduction in funding as a proportion of GDP, while the French Community as a whole can expect a decline of 7%.

Converted into today's money, Wallonia is predicted to suffer a €700 million annual drop in funding by 2039, while the French Community (which includes both Walloons and the majority of Brussels-dwellers) is forecast to lose almost €1 billion. This could potentially lead to cuts to (among other things) French-language cultural events and French-language education programmes in Belgium's capital.

'Only responsibility leads to prosperity'

According to Flemish Finance Minister Matthias Diependaele, the SERV report demonstrates that "only responsibility leads to prosperity".

"Flanders has pursued a different policy [to Brussels and Wallonia] and will now reap the benefits," Diependaele said. "It's not always sexy to have a stricter fiscal policy, and you don't always feel the effects of it right away. But pursuing a budgetary policy like in Brussels or Wallonia always comes with a price, sooner or later."

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The news that the Federal Government is set to implement deep cuts to public spending over the coming years is likely to further distress — and could potentially even anger — Belgians across the country, many of whom are currently struggling with a soaring cost of living crisis catalysed by Russia's invasion of Ukraine in February last year.

According to recent studies, more than three in four independent Belgian retailers fear bankruptcy over the coming months, while many households have resorted to desperate measures to stay warm, such as burning household items.

The SERV report will also do little to assuage economists and investors who are deeply concerned about the health of Belgium's public finances. Belgium's debt-to-GDP ratio and budget deficit are already amongst the highest in the EU, a fact which has led the EU and the IMF to openly criticise the country's fiscal profligacy in recent months.

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