Brussels Faces Credit Downgrade Amidst Political Uncertainty
Standard & Poor’s Decision Signals Urgent Need for New Government
Standard & Poor’s has downgraded Brussels’ credit rating, citing a lack of a long-term budget plan and the outcome of the 2024 budget. The decision underscores the urgent need for a functioning government capable of addressing the region’s financial challenges.
Rating Agency Expresses Concerns
The rating agency, Standard & Poor’s, highlighted several issues, including Brussels’ substantial debt, currently exceeding 14 billion euros. The budget shortfall in 2024 reached 1.4 billion euros, with projections indicating further increases through 2025. They also pointed to the structural underfunding of Brussels.
“Only a new full-service government, with a reformed budget and a credible path to balance, can offer a credible future prospect,”
—Sven Gatz
The credit rating could be further reduced if political power isn’t addressed. According to Sven Gatz, the negative outlook emphasizes the immediate need for a new government. The agency views the increase in renovation premiums as a negative signal.
The downgrade reflects a shared responsibility between the government and parliament, according to Gatz. The decision could make it more difficult for Brussels to find financial partners in the credit market, potentially leading to higher interest rates. Additional costs for 2026 are difficult to estimate due to market conditions.
The outgoing government is planning additional measures like a hiring freeze and reduced subsidies to maintain the budget. Brussels faces a significant challenge, as the government must maintain the budget within the multi-year framework, according to Rudi Vervoort, the Brussels Minister-President.
Political Fallout and Future Steps
David Leisterh, Brussels trainer, expressed disappointment that Brussels is unable to be a leading part of Europe. He referenced the attempt by Ahmed Laaouej to form a left-wing government.
This Friday, Vooruit withdrew from discussions with Ahmed Laaouej, effectively ending his initiative. The party called for a PS-MR collaboration in Brussels to form a government. The region’s financial situation is further complicated by the lack of a full-fledged government. The recent failure of the previous coalition efforts has resulted in the current crisis.
A recent report shows that over 30% of Brussels’ population is at risk of poverty or social exclusion. (Eurostat 2023)
Seeking Stability
The outgoing government is focused on preparing a budget for 2025 and continuing reforms. These actions are aimed at ensuring the budget’s long-term management. Rudi Vervoort hopes to establish a fully functioning government as soon as possible.