“The European economy is doing better than we predicted last autumn,” said European Commissioner for Economy Paolo Gentiloni at the presentation of the spring forecasts. “We have avoided a winter recession and are on track for moderate growth this year and next.”
What a contrast to last year’s autumn, when we still seemed to be heading for a recession after the Russian invasion of Ukraine and the sharp rise in energy prices. But Europe has shown that it has been able to turn around very quickly and to reduce its dependence on Russian gas.
As a result, the European Commission sees a rather rosy future. The gross domestic product of the euro countries is expected to grow by 1.1 percent this year. In the winter, the Commission still assumed growth of only 0.9 percent. Ireland (5.5 percent), Malta (3.9 percent) and Greece (2.4 percent) lead the pack.
The outlook for Belgium has been adjusted from 0.8 to 1.2 percent, a significant improvement. Next year, the Belgian economy should even grow by 1.4 percent. The Commission assumes that automatic wage indexation and social benefits will help to maintain purchasing power, but also points out that wage increases and tighter financial conditions are weighing on the business climate.
“We are quite stable in that respect within the eurozone, as expected,” says economist Geert Noels (Econopolis). “But that is at the expense of exports and investments. That’s one trade-off which the Commission emphasizes for one of the first times.”
It is also striking that nowhere in the eurozone will real wages rise more this year than in Belgium, by 5.3 percent. Luxembourg comes closest with 3.8 percent. Due to automatic indexation, our wages follow inflation. Real wages will fall slightly this year in Germany and France. Inflation in the eurozone is expected to amount to 5.8 percent this year, Belgium is also doing much better here at only 3.4 percent.
The mountain of debt is growing again
But the sore point for our country remains the budget deficit. The Commission estimates that this will increase from 3.9 percent last year to 5 percent this year due to increasing expenditure, partly due to the indexation of civil servants’ wages, social benefits and higher interest costs. In the eurozone, only Slovakia and Malta fare worse. The Belgian government debt would therefore increase from 105.1 percent to 106 percent this year.
Only in Greece, Italy, Spain, France and Portugal is the mountain of debt even greater. But in those countries the debt would decrease to a greater or lesser extent next year, while the Belgian debt will increase further to 107.3 percent. Noels: “We underestimate that budgetary problem. And it is unlikely to be resolved any time soon with the upcoming elections.”
2023-05-15 17:39:21
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