Belgians 'increasingly pessimistic' over worsening financial situation

Belgians 'increasingly pessimistic' over worsening financial situation
Credit: Belga / James Arthur Gekiere

A new study has detailed the extent to which Belgians' financial situation has deteriorated over the past year, demonstrating that despite the welcome decrease in gas and electricity prices, Belgians' cost of living crisis is far from over.

According to the latest annual edition of the Testachats Index, which measures Belgians' consumption and saving habits, in 2022 more than half of all Belgians (53.3%) reported having some financial difficulties — a 4.3 percentage point increase compared to 2021.

The study also found that almost two-thirds (65.7%) of Belgians claimed that they are unable to save any money at all at the end of each month (up from 58% in 2021), while a mere 14.3% stated that they are able to save money without too much difficulty (down from 21.7% in 2021).

Testachats further noted that Belgians are becoming increasingly pessimistic about their financial predicament: "50.2% of our sample fear a deterioration in their situation in the coming months, 41.6% think it will be the same and only 8.2% that it will be better," Sebastian Stevering, a project manager at Testachats, told Le Soir.

Deepening inequality

The study comes against the backdrop of steep price rises across Belgium and, indeed, much of the rest of Europe over the past year. According to the latest data published by Statbel, Belgium's official statistics office, Belgium's headline inflation rate is 7.4%: almost three-and-a-half times the European Central Bank's (ECB) target rate.

Moreover, despite the fact that headline inflation has fallen since October, core inflation — which strips out the impact of energy and unprocessed food prices — has steadily risen since last March, hitting 8.2% in January: suggesting that rising prices are becoming an increasingly entrenched feature of the Belgian economy.

In its report, Testachats expressed particular concern about the way in which the inflation crisis has exacerbated existing economic inequalities across Belgium, with the countries' poorer citizens suffering the most from the continued price rises.

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"Our barometer shows that the current crisis has further strengthened inequalities: the families most affected by the falling purchasing power are single-parent families, families whose primary worker has lost his or her job and families from Brussels," explained Testachats spokesperson Laura Clays.

Testachats also noted its concern about the likely effects of the proposed tax reform of Finance Minister Vincent Van Peteghem (CD&V), which is expected to cost the average Belgian family an additional €20 a month. Moreover, the organisation called for energy subsidies to be targeted towards the most vulnerable Belgian households, and for the VAT on core food items to be maintained at its current low level.

"We are therefore once again putting our demands on the table: the social energy tariff must be structurally based on income and the VAT rate on basic products such as dairy and bread must remain at 6%," Clays added.

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