EU rules require Belgium cuts budget by €2.7 billion, unions warn of 'return to austerity'

EU rules require Belgium cuts budget by €2.7 billion, unions warn of 'return to austerity'
Credit: Belga / Laurie Dieffembacq

New fiscal rules proposed by the European Commission will require that Member States cut their budgets by a total of €45 billion next year. For Belgium this will mean budget reductions of €2.7 billion, an analysis by Europe's major union organisation shows.

In a press release published on Wednesday, the European Trade Union Confederation (ETUC) claimed that the cuts would necessitate "a return to austerity" and offer "a gift to the far-right". It also noted that the funds could instead be used to finance the salaries of approximately 1 million nurses or 1.5 million teachers across the EU, including 37,888 nurses or 82,500 teachers in Belgium.

"A return to austerity next year would mean more poverty, fewer jobs, lower wages and underfunded public services, affecting people's access to healthcare and education," said ETUC General Secretary Esther Lynch.

"It would mean the majority of Member States would have to make cuts at the very time the EU is asking them to increase investment in the fight against climate change. It would be a gift to the far-right on the eve of the European elections."

A necessary reform?

Under the bloc's current rules, Member States are required to maintain budget deficits under 3% of annual GDP – a limit written into European law as part of the Stability and Growth Pact in the late 1990s. However this was temporarily suspended during the Covid-19 pandemic. Its suspension was later extended until 2024 following Russia's full-scale invasion of Ukraine.

Under new rules proposed last month by the European Commission, nations that fail to adhere to the fiscal limits would face more severe repercussions than previously. In particular, from 2024 Member States running deficits greater than 3% of GDP will be forced to trim their budgets by 0.5% per year until they fall within the 3% threshold.

When announcing the new scheme last month, Executive Vice-President Valdis Dombrovskis praised the proposal's "simplicity" and emphasised that the Commission would not permit any "heel-dragging [or] backloading" by Member States.

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Last year, eleven EU countries ran deficits higher than 3% of GDP, including Belgium (3.9%). Belgium's deficit is highly unlikely to fall within the EU's budgetary limits by the time the new scheme is introduced in 2024. A report published earlier this year by the Federal Planning Bureau in fact showed that the country's budget deficit is moving in the wrong direction: the FPB forecasts a deficit of 5.7% for 2023, before falling to 5.4% in 2024.

Repeating comments made last month, Lynch stressed that a reform of the EU's fiscal rules "is long overdue: "Today, I'm calling on people across Europe to put pressure on their governments to oppose austerity 2.0 and support economic rules which put the interests of people and planet first."

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