Posted on Mar 27, 2020
Belgium’s budget deficit has now reached a staggering €30 billion, or 7% of GDP, according to sources close to the National Bank.
The main reason given is the coronavirus outbreak, which has led not only to a drastic slowdown of economic activity, but has also brought in its wake government spending on compensatory measures.
In a country which already has a bloated and privileged public sector, more than half of the working population of the country is now being paid from government funds as workers made redundant by the lockdown are added to the roll.
Those people come on top of 391,000 unemployed people whose status is not a result of the epidemic, 843,000 civil servants - over 18% of the workforce - and 647,000 people employed in the healthcare sector.
According to a recent study by the OECD, the total cost of employing a senior civil servant in Belgium adds up to €300,000 a year; pension payments to civil servants payments amount to €10.6 billion a year, or 2.6% of Belgium's gross domestic product.
In 2018 the European Commission pointed out that the Belgian budget for 2019 did not comply with EU rules, and asked for an explanation. The then Belgian Minister of Finance Johan Van Overtveldt responding by suggesting that France, Spain, Portugal and Italy were even worse: "These are countries that are flirting with the 3% norm in terms of budget deficit, or sometimes themselves, and all are in a trend of rising government debt, with us falling."
Prior to the outbreak of the epidemic, the deficit for 2020 was on course to be 2% of GDP. The forecast now is 7%.
According to a study published this week by the employers’ organisations FEB and Voka, every week the country remains in lockdown, the country loses 0.5% of economic growth, and that figure could increase as time goes on.
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