2022, a good year for our portfolio? This economist talks about the economic situation in Belgium
What will remain of the Covid is a debt unprecedented in its scale. This applies to the Belgian state, but more to Wallonia, affected by the floods. In 2026, the country’s debt will be 45 billion Euros, i.e. 2.6 times the region’s annual income. From 2025, Wallonia will receive less from the federal state, due to the revision of the financing law. 60 million less each year, i.e. 600 million less in 2034.
This Sunday in the program C’est pas tous les jours dimanche, Christophe Deborsu received the economist and the governor of the National Bank of Belgium, Pierre Wunsch. From the outset, the presenter asked this question: can Wallonia get by with such a debt, without refinancing from the federal state? The guest did not falter, a priori, Wallonia should get by. “The Walloon government is committed to taking measures in the coming years to the amount of 150 million cumulatively so that the deficit is reduced and the debt is under control”.
The economist specifies that we are for the moment in a relatively low interest rate environment. “But that’s the whole point, we have to start preparing for a potential rise in rates. And therefore in good order, arrange for the debt to be reduced and things to stay under control.”
A Walloon recovery plan that is not unanimous
Wallonia is preparing a recovery plan which will cost 7 billion euros. Critical plan of the FGTB and the Walloon business union. Christophe Deborsu asked his guest if he believes in this recovery plan. “We are living through a difficult economic period. We are coming out of a crisis that was fairly well managed, now with great uncertainty about Omicron. But indeed, we have a high budget deficit. If we do nothing, we take a big risk. ”
During this interview, Pierre Wunsch underlined the lack of activity in the private sector. “It is economic assistance that is not solid. We must develop the private sector in Wallonia. We have a problem with the sustainability of this economic model.”
What is the situation of the federal state?
In the Flemish press, Pierre Wunsch declared that “The Belgian deficit is one of the biggest in Europe. We have no reserves. If we have a new economic crisis and if we do not replenish our reserves, we will experience a Greek scenario in 5 to 10 years.”
On the set of It’s not every day Sunday, the economist has corrected his remarks a little. “I mean that we risked returning to a situation comparable to that of Greece, Portugal and Spain a few years ago, in the sense that we no longer control the moment when we will be able to reduce deficit. If you do nothing, the debt will increase a little each year and everything seems to be under control. And then you have a crisis that comes. At that point, we know that the deficit with Further increase. And there, the markets start to worry, the interest rates go up. You no longer have a choice, you have to clean up when it is socially hardest. “ To be clear, the message from the governor of the National Bank of Belgium is not that Belgium is going to go bankrupt. He will warn that if we do not build up reserves, when the next shock arrives, the country will be badly prepared and the government will have to take measures that are socially bad.
Is the economic crisis really over?
Growth in Belgium even if it has slowed down in recent months. But there are worrying signals. Inflation is on the rise because of the skyrocketing price of energy. Christophe Deborsu asked his guest if inflation worried him? “Wages will increase to compensate for this inflation. Purchasing power will increase because there is a good benefit in terms of employment. But the 4.5% of the increase in wages is mainly for compensate for inflation. It is a shock of competitiveness. In the short term, our companies will lose in competitiveness. “