The budget deficit is set to reach 1.7% of GDP this year (€7.7 billion), according to calculations carried out by the Federal Planning Bureau, reported on Friday in De Tijd. It was already clear that the budget deficit was going to increase in 2019. Initial estimates had stated a total exceeding €7 billion. Last year ended with a deficit of 0.8% of GDP.
The deficit increase may be explained, according to the economist Étienne de Callataÿ, who recently spoke in the L’Echo daily newspaper, by a decrease in corporate tax receipts, after a strong increase in 2017 and 2018. “The reason is that this increase occurred after the government increased the penalty (upon companies) for the shortfall in early payments.” In addition the current growth prospects are lower than expected.
In the De Ochtend broadcast on Radio 1, the Deputy Prime Minister, Kris Peeters (Flemish Chrisrian Democrats), confirmed the need for the next government to conduct a major stabilization exercise. He mentioned that the government would have been able to conduct a comprehensive budgetary control exercise, were it not for its being one of simply “current affairs”, which has been restricted to dealing with day-to-day business, and thus would have rectified the position.
“With a fully operational government, we might have been able to slightly redress the balance, although not the full €7.7 billion,” acknowledged Mr Peeters.
He disputes the suggestion that the government has not delivered budgetary inputs. At the beginning of the parliament, there was still a deficit of 3.1% of GDP. Taking Sweden as a comparison, the Swedish coalition were aiming for a balanced budget for the end of the parliament, but had to abandon the plan. “We had sought a balance between the economic and the social,” for example by instigating a tax-shift which is not simply beneficial to companies.