Compared to the second quarter, significantly larger deficits were recorded in the eurozone. Member states spent more as they took measures to mitigate the impact of high energy prices. In addition, policy measures to deal with the coronavirus pandemic had already impacted national budgets across Europe, albeit to a lesser extent than during previous quarters.
Most eurozone countries than usual recorded budget deficits in the third quarter, but Belgium is the worst performer, with a deficit of 5.1 per cent of GDP. Some countries, such as the Netherlands (+0.4 per cent), Ireland (+3.1 per cent) or Portugal (+1.3 per cent), managed to post budget surpluses in the third quarter.
On Monday morning, Flemish newspaper De Standaard wrote that a report by Belgium's Central Economic Council (CEC) calls the country's budgetary situation 'clearly untenable'. The report has yet to be published, but according to De Standaard, the CEC's assessment of Belgium's public finances is "alarming". 'Without new measures, this budgetary situation is "clearly untenable", the CEC states.
European indicators, as well, have shown that Belgium needs to make heavy adjustments to stabilise its finances. Not only is the country heading for the most significant budget deficit in the eurozone this year and next, but according to forecasts, the national debt will remain higher than that of neighbouring countries (except for France). Furthermore, the level of public investments remains on the low side. However, the same report shows that the Flemish regional government did manage to keep its finances under control - making it the only one in Belgium to do so. The document argues that Wallonia, the French-language Community, Brussels and the federal government must make efforts to reduce their deficits. Otherwise, only Flanders' budgetary situation will be sustainable in the long run, financial newspaper De Tijd reports. Furthermore, Wallonia's situation could significantly worsen, as a study shows that by 2039, the region will receive as much as €1.7 billion less per year from the federal government. Flanders will have to make do with 250 million less.