European Commission sets new budget deadline for Belgium

The experts of the European Commission have released their latest economic forecasts for member states. As could be expected the forecasts do not prove pleasant reading. The Commission predicts that the Belgian economy will not grow in excess of 0.9% next year.

If no cuts are made Belgium's budget deficit will top 4.6%. The European Commission(EC) is also introducing a new budgetary deadline for Belgium. Measures must be in place by mid-December it now says. The six government parties currently negotiating a new Federal Government are currently examining the 2012 budget.

Economic growth of 0.9% is lower than anticipated only a couple of months ago, but the formation negotiators are already taking account of a 0.8% figure. The six parties are aiming at a 2012 budget with a budget deficit of only 2.8%. The European Commission has now issued a clear warning: if no action is taken Belgium's deficit will rise to 4.6%.

The EC is not only concerned about lack of progress on the budget. It warns that by 2013 the state debt could rise above 100% of national output once again and adds that the Belgian economy is losing its competitive edge because of excessive wage increases. The Commission says that there is a danger that the markets could lose confidence.

Wider forecasts speak of the entire Union heading for a recession if no thorough action is soon taken.

The Commission is now forecasting 0.5% growth for the Eurozone next year and 0.6% for the EU as a whole. Belgium‘s growth prediction remains above these figures.

In a reaction to the Commission's report Belgian Premier Yves Leterme (Flemish Christian democrat) has again called on the six parties negotiating the formation of a new Federal Government to reach an accord on next year's budget and social economic reforms as soon as possible.