Recommendation for a COUNCIL RECOMMENDATION on the 2019 National Reform Programme of Belgium and delivering a Council opinion on the 2019 Stability Programme of Belgium
Date: 2019-06-05
Institutions: European Commission, Secretariat-General
Subjects: Belgium, administrative formalities, economic policy, economic reform, euro area, investment, labour market, public expenditure, stability pact, stability programme

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   EUROPEAN COMMISSION  Brussels, 5.6.2019  COM(2019) 501 final  Recommendation for a COUNCIL RECOMMENDATION on the 2019 National Reform Programme of Belgium and delivering a Council opinion on the 2019 Stability Programme of Belgium    
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2019 National Reform Programme of Belgium and delivering a Council opinion 
on the 2019 Stability Programme of Belgium 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of 
the  surveillance  of  budgetary  positions  and  the  surveillance  and  coordination  of  economic 
policies1, and in particular Article 5(2) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

On 21 November 2018, the Commission adopted the Annual Growth Survey, marking 
the start of the 2019 European Semester for economic policy coordination. It took due 
account  of  the  European  Pillar  of  Social  Rights,  proclaimed  by  the  European 
Parliament, the Council and the Commission on 17 November 2017. The priorities of 
the  Annual  Growth  Survey  were  endorsed  by  the  European  Council  on  21  March 
2019.  On  21  November  2018,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  also  adopted  the  Alert  Mechanism  Report,  in  which  it  did  not  identify 
Belgium as one of the Member States for which an in-depth review would be carried 
out. On the same date, the Commission also adopted a recommendation for a Council 
recommendation on the economic policy of the euro area, which was endorsed by the 
European  Council  on  21  March  2019.  On  9  April  2019,  the  Council  adopted  the 
recommendation  on  the  economic  policy  of  the  euro  area  (‘Recommendation  for  the 
euro area’).  

(2) 

As a Member State whose currency is the euro and in view of the close interlinkages 
between the economies in the economic and monetary union, Belgium should ensure 

1 

OJ L 209, 2.8.1997, p. 1. 

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the  full  and  timely  implementation  of  the  recommendation  for  the  euro  area,  as 
reflected in recommendations (1) to (3) below.  
The 2019 country report for Belgium2 was published on 27 February 2019. It assessed 
Belgium’s  progress  in  addressing  the  country-specific  recommendations  adopted  by 
the Council on 13 July 2018, the follow-up given to the recommendations adopted in 
previous years and Belgium's progress towards its national Europe 2020 targets.  

On  26  April  2019,  Belgium  submitted  its  2019  National  Reform  Programme  and  its 
2019  Stability  Programme.  In  order  to  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time. 

Relevant country-specific recommendations have been addressed in the programming 
of  the  European  Structural  and  Investment  Funds  ('ESI  Funds')  for  the  2014-2020 
period.  As  provided  for  in  Article  23  of  Regulation  (EU)  No  1303/2013  of  the 
European  Parliament  and  of  the  Council3,  where  it  is  necessary  to  support  the 
implementation of relevant Council recommendations, the Commission may request a 
Member  State  to  review  and  propose  amendments  to  its  Partnership  Agreement  and 
relevant programmes. The Commission has provided further details on how it would 
make use of that provision in guidelines on the application of the measures linking the 
effectiveness of the ESI Funds to sound economic governance4.  

Belgium  is  currently  in  the  preventive  arm  of  the  Stability  and  Growth  Pact  and 
subject  to  the  debt  rule.  In  its  2019  Stability  Programme,  the  government  plans  a 
gradual improvement of the headline balance from a deficit of 0.7% of GDP in 2018 to 
0.0% of GDP in 2022. Based on the recalculated structural balance5, the medium-term 
budgetary  objective,  set  at  a  balanced  budgetary  position  in  structural  terms,  is  not 
planned  to  be  achieved  over  the  period  covered  by  the  2019  Stability  Programme. 
After having peaked at almost 107% of GDP in 2014 and decreasing to 102% of GDP 
in 2018, the general government debt-to-GDP ratio is expected to decline to 94% by 
2022  according  to  the  2019  Stability  Programme.  The  macroeconomic  scenario 
underpinning those budgetary projections is plausible. At the same time, the measures 
needed  to  support  the  planned  deficit  targets  from  2020  onwards  have  not  been 
specified, which contributes to the projected deterioration of the structural balance in 
2020 under unchanged policies according to the Commission 2019 spring forecast. 

On 5 June 2019, the Commission issued a report prepared in accordance with Article 
126(3) of the TFEU due to Belgium's non-compliance with the debt rule in 2018. The 
report concluded, following an assessment of all the relevant factors, that the current 
analysis is not fully conclusive as to whether the debt criterion as defined in the Treaty 
and in Regulation (EC) No 1467/1997 is or is not complied with.  

In  its  2019  Stability  Programme,  Belgium  confirms  the  request  of  its  2019  Draft 
Budgetary  Plan  to  avail  itself  of  the  flexibility  under  the  preventive  arm  pursuant  to 
the “Commonly agreed  position on Flexibility within  the Stability and Growth Pact” 

SWD(2019) 1000 final. 
Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 17 December 2013 
laying  down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social 
Fund,  the  Cohesion  Fund,  the  European  Agricultural  Fund  for  Rural  Development  and  the  European 
Maritime  and  Fisheries  Fund  and  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund,  the  Cohesion  Fund  and  the  European  Maritime  and 
Fisheries Fund and repealing Council Regulation (EC) No 1083/2006 (OJ L 347, 20.12.2013, p. 320). 
COM(2014) 494 final. 
Cyclically-adjusted  balance  net  of  one-off  and  temporary  measures,  recalculated  by  the  Commission 
using the commonly agreed methodology. 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

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(9) 

(10) 

endorsed by the ECOFIN Council in February 2016. Belgium requested a temporary 
deviation  of  0.5%  of  GDP  from  the  adjustment  path  towards  the  medium-term 
budgetary objective in view of the implementation of major structural reforms with a 
positive  impact  on  the  long-term  sustainability  of  public  finances.  The  structural 
reforms refer to a pension reform, a “tax shift”, a reform of corporate income taxation, 
a  labour  market  reform  as  well  as  a  reform  of  the  public  administration.  The 
Commission  2019  spring  forecast  confirms  that  Belgium  respects  the  minimum 
benchmark  in  2019,  providing  a  safety  margin  towards  the  3%  of  GDP  deficit 
threshold. All the measures have now been fully legislated, with the exception of the 
reform of the public administration. Given their nature, and particular the tax shift and 
its  corporate  income  tax  reform,  there  are  still  uncertainties  surrounding  their  short-
term impact, particularly given its non-budgetary neutral nature, which has worsened 
the  budgetary  position.  Nevertheless,  they  have  enhanced  the  economy's  growth 
potential,  lowered  the  unemployment  rate  and  reduced  the  risks  of  macroeconomic 
imbalances, thereby having a positive impact on debt sustainability in the medium to 
long  term.  On  this  basis,  Belgium  can  currently  be  assessed  as  qualifying  for  the 
requested  temporary  deviation  of  0.5%  of  GDP  in  2019,  provided  that  it  adequately 
implements  the  agreed  reforms,  which  will  be  monitored  under  the  European 
Semester. 

On  13  July  2018,  the  Council  recommended  Belgium  to  ensure  that  the  nominal 
growth rate of net primary government expenditure ( ) does not exceed 1.8% in 2019, 
corresponding  to  an  annual  structural  adjustment  of  0.6%  of  GDP.  As  Belgium 
qualifies  for  the  requested  temporary  deviation  of  0.5%  of  GDP  under  the  structural 
reform clause, the required structural adjustment for 2019 can be reduced to 0.1% of 
GDP, corresponding to a nominal growth rate of net primary expenditure that does not 
exceed 2.8% in 2019. Based on the Commission 2019 spring forecast, there is a risk of 
a significant  deviation from  the recommended  adjustment path  towards the medium-
term budgetary objective over 2018 and 2019 taken together.  

In 2020, in view of Belgium's general government debt ratio above 60% of GDP and 
projected  output  gap  of  0.1%,  the  nominal  growth  rate  of  net  primary  government 
expenditure should not exceed 1.6%, in line with the structural adjustment of 0.6% of 
GDP stemming from  the commonly  agreed adjustment matrix of requirements under 
the Stability and Growth Pact. Based on the Commission 2019 spring forecast under 
unchanged policies, there is a risk of a significant deviation from that requirement in 
2020.  Belgium  is  prima  facie  not  forecast  to  comply  with  the  debt  rule  in  2019  and 
2020.  Overall,  the  Council  is  of  the  opinion  that  the  necessary  measures  should  be 
taken as of 2019 to comply with the provisions of the Stability and Growth Pact. The 
use of any windfall gains to further reduce the general government debt ratio would be 
important.The  medium-  and  long-term  sustainability  of  Belgium’s  public  finances 
continues  to  be  at  risk  due  to  the  combination  of  a  high  debt-to-GDP  ratio  and  the 
projected  rise  in  ageing  costs,  in  particular  those  linked  to  pensions  and  long-term 
care.  A  set  of  pension  reforms  was  legislated  in  2015,  leading  to  an  increase  of  the 
statutory  retirement  age  from  65  to  66  years  as  from  2025  and  to  67  as  from  2030. 
Moreover,  age  and  seniority  requirements  to  benefit  from  early  retirement  were  also 
made stricter. Nevertheless public expenditure on pensions would still increase by 2.9 
percentage points of GDP by 2070, mostly during the next two decades. Furthermore, 
early  retirement  conditions  for  several  large  groups  of  civil  servants  remain  more 
favourable  than  the  standard  conditions.  Public  spending  on  long-term  care  is 
projected  to  increase  by  1.7  percentage  points  of  GDP  by  2070,  an  above  average 
increase  starting  from  what  is  already  one  of  the  highest  levels  in  the  EU.  The 

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organisational  fragmentation  of  long-term  care,  with  competences  currently  spread 
across  different  administrative  levels,  challenges  some  dimensions  of  spending 
efficiency, hence the net impact of the recent transfer of responsbilities is not yet clear. 
Strengthening governance would help to achieve the intended efficiency gains. There 
might be room to optimise the care-mix to increase the cost-efficiency of the long-term 
care system. 

(11)  The composition and efficiency of public spending can be improved in order to create 
space for more public investment. In spite of a recent decrease, total expenditure as a 
share of GDP in Belgium remains among the highest in the euro area. The high level 
of  public  expenditure  suggests  that  there  is  scope  for  a  more  spending-based  fiscal 
adjustment.  Given  the  high  level  of  public  expenditure,  the  outcomes  of  certain 
policies  and  the  quality  of  certain  public  services  raises  questions  of  cost  efficiency. 
Spending reviews and policy evaluations can help Belgium prioritise and improve the 
efficiency  of  public  expenditure.  Furthermore,  spending  reviews  could  be  used  to 
assess  the  efficiency  of  the  indirect  public  support  for  business  Research  and 
Development, which is one of the highest in the European Union, as a percentage of 
GDP and continued to increase last year. Federal and regional authorities have recently 
expressed interest in integrating spending review in their budgetary mechanism.  

(12)  Budget  coordination  between  entities  is  currently  not  sufficiently  flexible  to  create 
room  for  public  investment  in  large-scale  projects.  Effective  budget  coordination  is 
essential in a federal Member State like Belgium, where a large part of the spending 
power  has  been  devolved  to  sub-national  governments.  There  is  still  no  formal 
agreement  on  annual  targets  at  all  levels  of  government,  in  spite  of  the  cooperation 
agreement  signed  in  2013,  complicating  budget  coordination.  In  contrast  with  the 
practice  of  previous  Stability  Programmes,  when  the  Concertation  Committee  ‘took 
note’  of  the  fiscal  trajectory,  all  levels  of  government  approved  the  overall  fiscal 
trajectory presented in  the 2018 Stability Programme and supported the achievement 
of the fiscal targets by 2020 for all government levels. Although this approval added 
credibility to the overall trajectory, there was no formal agreement on the annual fiscal 
targets at each level of government. A lack of agreement on the targets at each level of 
government may undermine the viability of the overall trajectory towards the medium-
term  objective.  In  addition,  this  prevents  the  Public  sector  borrowing  requirements 
section of the High Council of Finance from effectively monitoring compliance with 
these  targets.  The  2019  Stability  Programme  contained  only  indicative  overall  and 
intermediary budgetary targets as elections took place at federal level and at the level 
of the Regions and Communities on 26 May 2019. 

(13)  Recent economic growth has resulted in jobs growth and employment is at the highest 
level in the past ten years. Nevertheless, transitions from inactivity or unemployment 
to employment remain low and Belgium is not on track to achieving its Europe 2020 
employment target of 73.2%. Strong regional disparities in the labour market persist. 
Youth  unemployment  is  well  above  the  Union’s  average  in  Brussels.  Labour  market 
participation  is  low  for  the  low-skilled,  people  with  a  migrant  background,  older 
workers and people with disabilities, suggesting that both structural and group-specific 
factors hinder their integration in the labour market, while existing activation measures 
are  not  equally  effective  for  all  population  groups.  The  employment  rate  of  older 
workers  (55-64  years)  remains  below  the  EU  average  and  the  gap  with  the  Union 
average  continues  to  increase  for  those  over  60  years.  People  with  a  migrant 
background, in particular women, continue to experience higher unemployment, lower 
activity  rates,  higher  in-work  poverty  and  over-qualification.  While  some  measures 

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(14) 

have  been  taken  to  support  the  integration  of  newly  arrivals  and  to  tackle 
discrimination, a coordinated approach to address the challenges faced by people with 
migrant  background  is  still  lacking.  To  address  low  labour  market  participation, 
measures have been taken as part of the ‘Jobs Deal’ reform, but their impact remains 
to be assessed. 

Important  financial  disincentives  to  take  up  employment  remain.  Although  the  tax 
shift  reduced  the  labour  tax  wedge,  it  remains  on  average  high  at  all  wage  earners, 
except  for  the  very  low  wage  earners  (fifty  percent  of  the  average  wage).  Belgium 
remains  the  only  Member  State  in  which  unemployment  benefits  are  not  limited  in 
time, though they gradually fall. There are financial disincentives for beneficiaries of 
sickness and disability schemes and second earners to take up full-time employment. 
In particular, single parents (and to a lesser extent couples with children) face limited 
financial incentives  to  take up (full-time) employment due to  a combination of costs 
and  withdrawal  of  benefits.  Moreover,  coordination  problems  may  arise  due  to  the 
split of responsibilities for the social protection between the federal, regional and local 
levels. The social security system does not cover all people in employment and some 
lack social protection coverage. 

(15)  The decline in educational performance and the existence of significant disparities in 
the education system remain a concern. The percentage of young people not mastering 
basic skills can be improved in particular in the French Community where the share is 
above  the  OECD  average.  The  gap  in  educational  outcomes  due  to  socio-economic 
and migration background is high. Teachers need more support to deal with diversity 
and  there  remains  a  need  to  adapt  teachers'  continuous  professional  development. 
Reforms to improve educational outcomes and to tackle disparities need to be stepped 
up  to  boost  knowledge-intensive,  sustainable  and  inclusive  growth  and  social 
inclusiveness.  The  implementation  of  the  ‘Pact  for  Excellence’,  the  French 
Community’s  flagship  school  reform  to  improve  basic  skills,  efficiency,  governance 
and  tackle  inequalities,  is  progressing.  Decrees  on  the  organization  of  work  of 
teachers, on the common core school curriculum, on the status of school directors and 
the reinforcement of the knowledge of French for newcomer pupils have been adopted 
and  will  be  applicable  as  from  September  2020.  The  Flemish  Community  is 
implementing  some  reforms  in  secondary  education  as  of  2019/2020,  but  early 
tracking of pupils remains a concern. The impact of these reforms and measures will 
also depend on their effective implementation and monitoring. The federal Parliament 
has  also  lowered  the  age  of  compulsory  education  from  six  to  five  years.  Given  the 
already high spending levels on education, reforms will need to be implemented with a 
stronger  focus  on  increasing  the  efficiency  and  effectiveness  of  the  system,  and  its 
capacity to deliver future-oriented and labour market relevant competences. 

(16)  Skills mismatches and low job mobility hamper job and productivity growth. Despite 
several  regional  and  federal  measures  taken  to  address  skills  shortages  and  increase 
activation, including as part of the Jobs Deal, labour shortages are observed in several 
sectors, in particular in information and communication technologies, construction and 
health. The growth of the construction sector is held back by lack of skills and labour 
shortages. There are important needs in terms of re-skilling and upskilling the labour 
force in  some sectors. Adult participation in  education and training  and job mobility 
are  also  low.  Poor  linguistic  skills  are  an  important  issue,  in  particular  in  Brussels, 
where  around  50%  of  job  offers  require  the  knowledge  of  both  French  and  Dutch, 
according to  the National  Reform  Programme. Tertiary education attainment  is  high, 
but  there are too  few  graduates in  science, technology, engineering and  mathematics 

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(STEM).  In  2016,  Belgium  ranked  26th  in  the  EU  for  tertiary  graduates  in  STEM 
education  with  a  low  rate  of  new  entrants  to  related  tertiary  education  fields,  in 
particular  for  women.  The  overall  implementation  of  the  “STEM  Action  Plan  2012-
2020”  in  Flanders  shows  progress,but  the  number  of  STEM  secondary  graduates  in 
technical and vocational paths has stagnated since 2010. The French Community has 
no STEM policy strategy and still needs to implement its recently adopted “Strategy 
for  Digital  Education”  plan  for  schools.  Shortages  of  professionals  with  an 
entrepreneurship  knowledge  in  science,  technology,  engineering  and  mathematics 
holds back the development of start-ups. The overall level of digital skills is good, but 
not  improving.  The  National  Reform  Programme  highlights  the  agreement  between 
Flanders and Wallonia to improve inter-regional labour mobility.  

(17)  Research and development is concentrated in a few industries and there is insufficient 
diffusion  of  innovation  to  the  rest  of  the  economy,  ultimately  weighting  on 
productivity  growth.  Public  research  appears  to  be  below  the  Union  average  in  the 
Regions  and  Communities  other  than  Flanders.  In  terms  of  Research,  Development 
and Innovation, there are also regional and sub-regional disparities. The National Pact 
for  Strategic  Investment  identifies  the  reinforcement  of  digitisation  as  a  promising 
avenue  to  boost  productivity  and  the  innovation  capacity  of  Belgium.  Doing  so 
requires  investments  in  digital  infrastructure,  including  taking  effective  steps  for  the 
successful  roll  out  of  5G,  and  human  capital  and  entrepreneurial  spirit  as  well  as  an 
accelerated take-up of digital  technology, in  particular by those  firms  that have been 
lagging behind so far. 

(18)  The quality of road infrastructure is deteriorating after years of low public investment. 
At the same time, the maintenance of a large and dense network does not seem cost-
effective for the regions and local authorities. Roads in Belgium are among the most 
congested  in  the  Union.  The  rail  infrastructure  is  dense  and  of  good  quality,  but 
completing  and  upgrading  it  remains  a  challenge  and  there  is  congestion  especially 
around  Brussels  and  in  access  to  the  ports  of  Antwerp  and  Zeebrugge.  Significant 
investments  are  planned  in  suburban  rail  infrastructure  and  signalling,  but  are  being 
held back notably by budgetary allocation rules across regions. Additionally, distortive 
incentives  and  barriers  to  competition  and  investment  in  domestic  passenger  railway 
services  and  intercity  coach  services  constrain  the  supply  and  demand  of  alternative 
collective  and  low-carbon  transport  services.  The  increasing  congestion  is  partly 
explained by the continuous increase of passenger cars, incentivised by toll-free roads, 
the company car deduction and low environmental taxation. High transaction taxes on 
immovable  property  and  the  company  car  scheme  adversely  affect  mobility.  The 
quality of rail services  has decreased  and the supply of urban  and urban-rural  public 
transport  has  room  for  improvement,  notably  in  Wallonia,  where  access  to 
employment  is  a  major  constraint  to  job  seekers.  According  to  the  National  Reform 
Programme, important investments and reforms are underway in all regions, while at 
federal  level,  and in  cooperation with  the Regions,  the completion  of the network of 
suburban  railways  around  Brussels  is  progressing.  Belgium  adopted  the  law  to  open 
domestic railway services, but the share of passenger transport provided under public 
service  obligations  with  a  directly  awarded  contract  remains  very  high  in  Belgium. 
Private  bus  operators  are  not  allowed  to  operate  intercity  coach  services.  Taxi 
regulations vary among local authorities. Although regions have developed their own 
mobility plans, complex coordination prevents a consistent vision for mobility within 
Belgium, and possibly with border cities and regions. The Rail Regulator has room to 
develop the scope of its regulating activities. 

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(19)  There are substantial investment needs to support the energy transition. Renovation of 
the old building stock, which predates the introduction of energy norms, will help to 
meet the 2020 and 2030 emission reduction targets. The roll-out of alternative fuel is 
rather  low.  There  is  a  need  for  major  investment  in  power  generation,  as  well  as 
interconnection capacity, smart grids storage and energy efficiency. 

(20) 

In  spite  of  government  efforts,  the  regulatory  and  administrative  burden  on  firms 
remains heavy and weighs on entrepreneurship. Taxation has been alleviated for start-
ups and small companies, but remains complex for financial investments. Belgium has 
reformed  its  company  law  code,  reducing  the  number  of  legal  forms  for  companies, 
facilitating  legal  electronic  communication,  reducing  minimum  capital  requirements 
and,  according  to  the  National  reform  Programme,  reforming  the  insolvency  law  to 
include  notably  liberal  professions.  However,  in  spite  these  efforts,  there  are  long 
delays  for  building  permits,  costly  property  registration  and  lengthy  judicial 
proceedings.  Administrative  justice  is  experiencing  challenges  due  to  a  lack  of 
resources and lengthy proceedings, causing important delays, in particular for buidling 
permits,  but  also  for  procurement  procedures.  Moreover,  coordination  in  climate, 
energy, digital and transport policy is complex and not always effective. Cooperation 
between  customs  authorities  and  market  surveillance  authorities  is  sub-optimal 
increasing the risk that non-compliant goods enter the EU through the Belgian borders. 
Impact assessment could be better integrated in the policy-making process. The quality 
of digital public services for businesses is low. The lack of digitalisation of the justice 
system  remains  a  serious  challenge,  notably  for  data  collection.  Completing  the 
digitalisation  of  justice  is  an  important  condition  for  further  improvements  of  the 
quality  of  the  justice  system,  such  as  updating  business  processes  and  better 
management of human and financial resources at courts.  

(21)  Barriers  to  competition  and  investment  in  several  business  services  hamper  growth 
and productivity. Entry rates of new service providers are significantly below the EU-
average, while profit rates are above the EU-average. The Commission restrictiveness 
indicator shows that the  Belgian  regulatory  framework for accountants,  tax advisors, 
architects and real estate agents is considerably more restrictive than the EU average. 
A  recently  adopted  law  has  introduced  stricter  requirements  for  patent  agents.  The 
Federal  Planning  Bureau  estimates  that  an  ambitious  reduction  of  the  regulatory 
burden  in  legal,  accounting  and  architectural  services  would  increase  labour 
productivity. The regulated fees of notaries for real estate transactions are significant, 
adding to the high registration taxes. Regions have unevenly reformed the crafts and 
trade  professions.  The  retail  sector  still  faces  operational  restrictions  that  hinder  its 
productivity  and  discourage  investment.  The  supermarket  sector  displays  a  sub-
optimal level of competition, mainly due to high concentration and low entry and exit 
dynamics. According to the Retail Restrictiveness Indicator, Belgium is the sixth most 
restrictive  Member  State  as  regards  the  operational  environment  for  retailers.  The 
National  Reform  Programme  highlights  recent  Brussels  reforms  to  facilitate  retail 
establishment.  The telecoms  market  is  characterised by a high level  of concentration 
(further accentuated by recent takeovers) and weak competition. This is also illustrated 
by  relatively  high  prices  for  fixed  services  compared  to  peer  countries.  In  fixed 
networks, the retail market is characterised by geographically defined duopolies of the 
incumbent and cable network operators. This may create obstacles to the provision of 
fixed-mobile  convergent  bundled  services  by  some  operators.  The  National  Reform 
Programme  highlights  that  the  reform  of  economic  law  to  improve  compliance  of 
competition law and the functioning of the Belgian Competition Authority by making 
procedures more efficient and reduce the risk of further disputes before the Cour des 

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Marchés/Marktenhof  has  been  adopted.  The  Belgian  Competition  Authority  has 
limited  resources  compared  to  the  resources  of  Competition  Authorities  of  other 
Member States. 

(22)  The programming of EU funds for the period 2021-2027 could help address some of 
the  gaps  identified  in  the  recommendations,  in  particular  in  the  areas  covered  by 
Annex  D  to  the  country  report6.  This  would  allow  Belgium  to  make  the  best  use  of 
those funds in respect of the identified sectors, taking into account regional disparities. 

(23) 

In  the  context  of  the  2019  European  Semester,  the  Commission  has  carried  out  a 
comprehensive  analysis  of  Belgium’s  economic  policy  and  published  it  in  the  2019 
country  report.  It  has  also  assessed  the  2019  Stability  Programme  and  the  2019 
National  Reform  Programme  and  the  follow-up  given  to  the  recommendations 
addressed  to  Belgium  in  previous  years.  It  has  taken  into  account  not  only  their 
relevance  for  sustainable  fiscal  and  socioeconomic  policy  in  Belgium,  but  also  their 
compliance with Union rules and guidance, given the need to strengthen the Union’s 
overall  economic  governance  by  providing  Union-level  input  into  future  national 
decisions.  

(24) 

In  the  light  of  this  assessment,  the  Council  has  examined  the  2019  Stability 
Programme and its opinion7 is reflected in particular in recommendation (1) below. 

HEREBY RECOMMENDS that Belgium take action in 2019 and 2020 to: 

1. 

2. 

3. 

4. 

Ensure that the nominal growth rate of net primary government expenditure does not 
exceed  1.6%  in  2020,  corresponding  to  an  annual  structural  adjustment  of  0.6%  of 
GDP. Use windfall gains to accelerate the reduction of the general government debt 
ratio.  Continue reforms  to  ensure the fiscal  sustainability of the long-term care  and 
pension systems, including by limiting early exit possibilities from the labour market. 
Improve  the  composition  and  efficiency  of  public  spending,  notably  through 
spending reviews, and the coordination of fiscal policies by all levels of government 
to create room for public investment.  

Remove  disincentives  to  work  and  strengthen  the  effectiveness  of  active  labour 
market  policies,  in  particular  for  the  low  skilled,  older  workers  and  people  with  a 
migrant  background.  Improve  the  performance  and  inclusiveness  of  the  education 
and training systems and address skills mismatches. 

Focus  investment-related  economic  policy  on  sustainable  transport,  including 
upgrading rail infrastructure, the low carbon and energy transition and research and 
innovation,  in  particular  in  digitalisation,  taking  into  account  regional  disparities. 
Tackle  the  growing  mobility  challenges,  by  reinforcing  incentives  and  removing 
barriers to increase the supply and demand of collective and low emission transport.  

Reduce the regulatory and administrative burden to incentivise entrepreneurship and 
remove barriers to competition in services, particularly telecommunication, retail and 
professional services.  

6 

7 

SWD(2019) 1000 final. 
Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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Done at Brussels, 

For the Council 
The President 

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