Belgium records largest budget deficit in eurozone

Belgium records largest budget deficit in eurozone
Credit: Belga.

In the third quarter of 2022, Belgium recorded a budget deficit of 5.1% of gross domestic product (GDP) – the largest recorded during this period among Eurozone countries, data by Eurostat, the European Union’s statistics agency, indicated on Monday. The average for the eurozone area was 3.3% of GDP.

Across the board, budget deficits in the eurozone were larger in the third quarter than in the second, in particular due to measures financed by EU Member States to mitigate the impact of inflation on European households. Some countries, however, managed to achieve a budget surplus, notably the Netherlands (+0.4%), Ireland (+3.1%), and Portugal (+1.3%).

The statistics published by Eurostat suggest that Belgium is racing towards its status as Europe’s biggest spender. In November, the European Commission forecast that Belgium’s budget deficit would be the largest in the Eurozone within the next two years. Q3 results suggest that Belgium is already nearing this milestone.

Increase to 6.1% expected

In 2023, Belgium’s budget deficit is expected to increase even further to 6.1% of annual GDP, which will ensure Belgium’s status as the EU’s biggest overspending nation. Belgium’s deficit is predicted to rise by over €1.7 billion more than previous estimates.

This rapid deterioration of Belgium’s budgetary health is in part due to measures taken to reduce the burden of Russia’s war in Ukraine, and resulting economic shockwaves, on ordinary citizens. This year, the Belgian government temporarily reduced VAT on gas and electricity from 21% to 6% to help alleviate the energy crisis.

Belgium’s structural deficit of 3.4% just exceeds the official EU fiscal limit of 3% of annual GDP.

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In November, the European Commission strongly condemned Belgium’s public spending. Belgium’s draft 2023 budget was not well received by European authorities. In 2023, the Belgian Debt Agency wants Belgium to raise an additional €51.07 billion in 2023 in order to tackle its exorbitant debts.

Last year, the European Recovery Fund (RFF) refused to issue Belgium over €1 billion in funds because the Commission considers De Croo’s pensions reform to be too costly, weighing heavily on both Belgium, and the EU’s, credit rating.

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