De Croo faces a deficit of 18.3 billion

October 07, 2020

14:40

18.3 billion. A new report from the monitoring committee makes it clear for the first time how big the structural budget deficit is that the De Croo government is facing. The aging population is a bigger factor in this than corona.

The team of top civil servants that monitors the budget already delivered an interim report in September at the request of preformers Egbert Lachaert (Open VLD) and Conner Rousseau (sp.a). That formed the basis for the government negotiations, which were brought to a successful conclusion last week. Taking into account a faster economic recovery after the first corona wave, the monitoring committee then wrote a report that looked a lot less dramatic than previous estimates.


The monitoring committee emphasizes that the uncertainty about economic growth due to corona remains very high.

In a more detailed report, the monitoring committee confirms this trend. What is new is that the structural balance has been determined for the first time since the corona outbreak. One-off measures and the effects of growth are clarified in this. This means that the numbers are independent of the impact of the corona crisis.

For 2020, the monitoring committee sets the structural deficit at EUR 13.28 billion or 3 percent of gross domestic product (GDP) and for 2021 at EUR 18.35 billion, or 3.8 percent of GDP. This increase is striking: it is not due to corona or to the coalition agreement. The newly planned policy of the De Croo government has not yet been included in this.

Aging

The relatively large increase in the structural deficit (+0.8 percentage point of GDP) is probably the result of the acceleration of aging – which will peak between 2020 and 2035 – and of the new social expenditure generated by volatile majorities in the past year. were approved in the Chamber. In recent years, the structural deterioration has been limited to 0.1 percent of GDP.

The new policy of the De Croo government has yet to be added to those figures. There is no problem for investments: they are one-off and do not impede the structural result. This is the case for the structural increase in pensions and the health care budget, the increase in the budgets for the security departments and the reduction in the burden for recruiting a first employee. At cruising speed, these together cost 3.2 billion euros. The government is countering this with 4 billion in new income and savings, but those eyes have not yet worked out. The ambition to reach 1 billion euros from the fight against fraud by 2024 alone raises eyebrows.

The monitoring committee points out that the estimates cannot be set in stone. Due to the flare-ups of the corona virus, there is a lot of uncertainty about economic growth.

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