This afternoon, the European Parliament gave the green light to the new, stricter budgetary rules that the European Union (EU) wants to impose on the member states. These mean an extra effort for Belgium, and therefore the next government after the June 9 elections.
There had already been an agreement between the EU member states on the new, stricter budget rules for several months. It was also approved by the European Parliament in Strasbourg on Tuesday.
What do the new budget rules entail?
The upper limits remain the same: a member state’s budget deficit may amount to a maximum of 3 percent of gross domestic product (GDP), and government debt may not exceed 60 percent of GDP. This has been the case for years, but Europe has loosened the reins in recent years due to the Covid and energy crisis and the war in Ukraine. The policy is now becoming stricter again in view of the preparation of the budgets for 2025.
Countries with a debt ratio of more than 90 percent of GDP, such as Belgium, will have to reduce it by an average of 1 percentage point per year. Countries with a debt ratio between 60 and 90 percent are expected to make an annual effort of 0.5 percentage points.
Belgium is waiting for an effort of 27 billion euros
On Monday, Eurostat figures showed that the Belgian budget deficit increased from 3.6 to 4.4 percent of GDP last year. Government debt amounts to 105 percent of GDP. In the eurozone, only four countries have a larger budget deficit than our country, seven in the EU.
In other words, additional savings await our country – read: the next government – in other words. According to estimates, our country would have to make an effort of approximately 27 billion euros in the coming years.
Double purpose
The reform of the budgetary rules serves a dual purpose. The new framework offers Member States some more flexibility and a more tailor-made path to reorganize public finances over a period of four to seven years. As a bargain, stricter action would be taken from now on if Member States continue to flout the rules.
The new rules will come into full effect from 2025.
Does Belgium risk being punished with its large deficit and high national debt? Read previous comments by European Parliament Member Johan Van Overtveldt:
