COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Belgium Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Belgium and delivering a Council opinion on the 2022 Stability Programme of Belgium
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Belgium, economic policy, economic recovery, economic reform, energy policy, fiscal policy, investment, labour market, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 602 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report - Belgium Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Belgium and delivering a Council opinion on the 2022 Stability Programme of Belgium {COM(2022) 602 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

                  Belgium is experiencing a strong 
economic rebound… 

Belgium's  economy  performed  well  prior 
to  the  COVID-19  crisis,  but  was  hit  hard 
by  the  pandemic.  In  the  5  years  before  the 
pandemic,  Belgium's  real  GDP  expanded  by 
1.8% per year on average, a bit below the euro 
area,  leaving  behind  the  slow  pace  of  the 
recovery from the global financial recession. In 
2020, restrictions on economic activities led to 
a  decline  in  Belgium’s  real  GDP  by  5.7%  (see 
Graph  1.1),  with  consumer  spending  declining 
by  as  much  as  8.2%,  slightly  more  than  the 
euro area. 

Graph 1.1: Real GDP growth, public debt and 
headline balance as % of GDP 

Source: European Commission 

Belgium’s  economy  recovered  strongly 
thanks  to  decisive  government  measures 
to  protect  businesses  and  employment. 
Government 
notably 
Belgium’s  short-time  work  scheme (1)  (see 
Annex  3),  have  protected  households’  income, 
while the restrictive measures taken to contain 
the spread of the virus led to a strong increase 

support  measures, 

(1)  Belgium has been granted EUR 8.197 billion of financial 
assistance  under 
for 
temporary  support  to  mitigate  unemployment  risks  in 
an emergency (SURE) following the COVID-19 outbreak. 

the  European 

instrument 

in  the  savings  rate.  Employment  remained 
in  2020  and  employment  growth 
stable 
resumed  vigorously  in  2021,  reaching  pre-
COVID  levels.  As  a  result,  household  spending 
rebounded  strongly  once  restrictions  were 
increased 
eased.  The  unemployment  rate 
slightly to 5.8% in 2020 and 6.3% in 2021. It 
is  forecast  to  improve  to  5.8%  in  2022. 
Business 
kept 
bankruptcies  at  low  levels,  about  30%  below 
pre-crisis  level.  Investment  and  foreign  trade 
also  recovered  quickly,  already  surpassing 
their pre-crisis level at the beginning of 2021. 
Overall,  real  GDP  growth  bounced  back  to 
6.2% in 2021, above the EU average of 5.9%. 

support  measures  have 

Russia’s  invasion  of  Ukraine  is  clouding 
the  2022  outlook.  The  recovery  is  expected 
to continue although at a slower pace with the 
further easing of restrictions in 2022. The high 
level  of  inflation  and  the  drop  in  consumer 
confidence are expected to curb the expansion 
of  private 
consumption  and  household 
investment.  Uncertainty,  high  cost  coming 
from  input  prices  and  wages  and  supply  side 
constraints are expected to weigh on business 
investment.  On  the  other  hand,  the  RRF  and 
the  energy  transition  can  support  gross  fixed 
capital formation. Furthermore, a slowdown of 
import  and  export  growth  is  expected  for 
2022,  following  less  favourable  world  trade 
developments.  Based  on  the  Commission 
Spring 2022 forecast, GDP growth is projected 
at 2% in 2022 and at 1.8% in 2023. 

High  inflation  is  pushing  up  nominal 
wages,  which  have  been  growing 
moderately in the past years. On the back 
of  increasing  energy  prices  and  the  economic 
recovery,  headline  inflation  is  set  to  increase 
substantially in 2022. The Belgian government 
adopted 
to 
mitigate  the 
impact  of  energy  costs  on 
households,  including  the  extension  of  social 
tariff  to  more  beneficiaries,  excises  and  VAT 
the 
reductions,  and  one-off 

temporary  support  measures 

rebates  on 

2 

-20.00.020.040.060.080.0100.0120.0-8-6-4-2024680607080910111213141516171819202122'23'% of GDP%, ppsPublic debt (RHS)Real GDP growthHeadline balance (RHS) 
   
                                                 
 
electricity and heating fuel invoice. In addition, 
the  system  of  automatic  wage  indexation  is 
set  to  help  employees  to  maintain  their 
purchasing  power.  However, 
the  Belgian 
Central  Council  of  the  Economy  estimated  an 
increase  of  1.2%  over  the  period  2020-2022 
for  the  gap  in  the  wage  level  compared  to 
neighbouring countries. 

Labour  shortages  risk  hampering  further 
economic  growth.  The  job  vacancy  rate 
reached a historically high level of 4.7% in the 
fourth  quarter  of  2021,  one  of  the  highest  in 
the EU. Employers report difficulties in finding 
right  skills.  There  are 
people  with 
considerable 
professional, 
technical and scientific occupations as well as 
in  sectors  such  as  healthcare,  construction, 
education  and  training.  In  2021,  Belgium 
recorded  one  of  the  highest  levels  of  skills 
mismatches across the EU (2). 

the 
shortages 

in 

reduces 

lending,  which 

Private  indebtedness  remains  high.  The 
debt  of  Belgian  non-financial  corporations  is 
high but reflects to a large extent cross-border 
intra-group 
risks. 
Household indebtedness, which mainly reflects 
mortgage debt, continued to increase in 2021 
on  the  back  of  a  positive  net  credit  flow. 
Measures  introduced  by  the  National  Bank  of 
Belgium  to  bolster  banks’  resilience  to  risks 
related to real estate markets are expected to 
have mitigated those risks (European Systemic 
Risk Board, 2022) (see Annex 16). 

Surging  house  prices  point  at  increasing 
vulnerabilities  in  the  housing  market. 
House  prices  have  risen  in  recent  years  and 
grew  by  7.1% 
risk  of 
overvaluation  has  increased,  now  amounting 
to  over  20% (3).  This  matters  especially  from 
the perspective of housing affordability. 

in  2021.  The 

 … but government finances have     
worsened… 

to  mitigate 

The large scale support to the economy in 
the  wake  of  the  pandemic  put  additional 
strain  on  government  finances.  The  fall  in 
economic  activity  and  the  measures  taken  by 
the  government 
the  socio-
economic  impact  of  the  pandemic  saw  the 
government  deficit  rise  from  2%  of  GDP  in 
2019 to 9% in 2020. In 2021, the progressive 
phasing-out  of  crisis  measures  and  higher 
revenues  driven  by  the  economic  recovery 
resulted  in  an  improvement  of  the  budget 
deficit  to  5.5%.  Based  on  the  Commission 
Spring 2022 forecast,  the government budget 
deficit  would  remain  at  persistently  high 
levels, at 5% in 2022 and 4.4% in 2023 (see 
Annex  18),  despite  the  withdrawal  of  most 
COVID-19  measures. 
temporary 
government measures adopted in response to 
soaring  energy  prices  in  2022,  the  automatic 
indexation of public wages and social benefits 
in  response  to  inflation,  additional  defence 
spending  and  the  inflow  of  people  fleeing 
Ukraine will weigh further on public finances in 
the short run.  

The 

is  not  only  driven  by 

The  projected  government  deficits 
in 
2022  and  2023  also  reflect  higher  non-
temporary  current  spending.    The  increase 
in  non-temporary  current  expenditure  over 
2022-2023 
the 
automatic  indexation  of  public  sector  wages 
and  social  benefits,  but  also  by  rising  ageing 
costs  and  by  permanent  measures  taken  by 
the  government  during  the  pandemic  (e.g.  an 
increase  in  the  minimum  pension  and  health 
care  sector  wages). 
the  absence  of 
significant compensatory budgetary measures, 
these  structurally  increasing  current  spending 
help  explain  the  projected  deterioration  in 
government  finances  as  compared  to  pre-
pandemic projections. 

In 

(2)  Measured  as  the  relative  dispersion  of  employment 

rates by education level. 

(3)  The  average  house  price  gap  is  the  simple  average  of 
the  price-to-income,  price-to-rent  and  model  valuation 
gaps. The latter is estimated based on Philiponnet and 
Turrini  (2017).  Price-to-income  and  price-to-rent  gaps 
are  measured  in  deviation  to  the  long  term  average 
(from 1995 to the latest available year). 

Belgium’s  high  debt-to-GDP  ratio  is  not 
expected to stabilise in the medium term. 
The  rebound  in  GDP  and  decline  in  the 
government  deficit  cut  the  debt-to-GDP  ratio 
to  around  108%  in  2021  (down  from  around 
113%  of  GDP  in  2020).  According  to  the 

3 

 
 
                                                 
Commission  Spring  2022  forecast,  it  would 
then stabilise at around 107.5% in 2022-2023 
due  to  a  persistent  government  deficit.  At 
unchanged policy, the government debt would 
increase over the next decade, reaching about 
117%  of  GDP  in  2032  (see  annex  19).  The 
recent 
lengthening  of  government  debt 
maturity  will  mitigate  the  impact  of  higher 
interest  rates  in  the  short-term.  However,  the 
degree 
across 
government  entities,  as  these  show  large 
disparities in terms of deficit and debt levels. 

vulnerability 

varies 

of 

levels 

the 
Budgetary  coordination  between 
different  government 
is  not 
effective yet. The cooperation agreement of 
December 2013, which aimed  at ensuring the 
budgetary  coordination  of  all  government 
bodies  (federal  level  and  federated  entities), 
has not been fully implemented in  practice. In 
particular,  the  budgetary  targets  presented  in 
Stability  Programmes  have  tended  not  to  be 
endorsed  by 
regional  and 
community governments, which resulted in the 
absence  of  a  credible  multi-annual  budget 
planning (see also Annex 11). 

federal, 

the 

inequalities,  a  low  level  of  basic  and  digital 
skills among disadvantaged young people, and 
low participation in adult learning (5) constitute 
considerable  challenges  in  Belgium,  also  in 
view  of  the  green  and  digital  transition. 
Unemployment 
regional 
disparities,  peaking  in  the  Brussels  Region  at 
12.4% compared to 6.3% in Belgium overall in 
2021 (see Annex 15). 

shows  marked 

Belgium’s  labour  productivity  is  among 
the  highest  in  the  EU,  but  its  growth  is 
hampered  by  some  weaknesses.  The 
country outperforms neighbouring countries in 
terms  of  labour  productivity  (see  Table  1.1), 
although some country-specific characteristics, 
large  skills  mismatches  (see  below), 
like 
somewhat  inefficient  R&D  support  schemes 
and limited innovation diffusion (see Annex 9) 
hinder  further 
labour  productivity  growth. 
Weak  labour  productivity  growth  affects  the 
non-market services sector. This can be partly 
attributed  to  the  relatively 
level  of 
in  professional  and 
intangible 
science  services,  which  lag  behind  the  EU 
average. 

investment 

low 

                   … and some structural challenges 

have remained unaddressed 

Table 1.1: Average annual growth rate of 
hourly labour productivity in %, 2012-20 

relatively 

labour  market 

is  still 
The  Belgian 
characterised  by  a 
low 
participation  rate  (people  working  or 
looking  for  a  job)  and  lasting  regional 
disparities  in  unemployment.  In  2021,  the 
employment rate continues to be below the EU 
average (70.6% vs 73.1%). Poor labour market 
outcomes,  especially  for vulnerable  groups (4), 
are  linked  to  financial  disincentives  to  work, 
limited  effectiveness  of  activation  measures 
lack  of 
to  help  the 
appropriate  skills,  low  attractiveness  of  some 
low-skilled  professions  in  terms  of  working 
conditions,  discrimination  and  a  low  effective 
pension age. As regards the implementation of 
the European Pillar of Social Rights (see Annex 
12),  skills  mismatches,  high  educational 

jobless  find  work, 

(4)  Low-skilled,  people  with  a  migrant  background  (in 
particular  non-EU  born  women)  and  people  with 
disabilities 

4 

Source: Belgian Productivity Board 

burden 

regulatory 

High 
and 
administrative complexity hamper growth 
in  several  sectors.  Exit  and  entry  rates  of 
firms  are  among  the  lowest  in  the  EU,  in 
particular 
in  services  sectors,  which  are 
affected  by  high  regulatory  burden.  Entry 
restrictions  in  certain  professions  can  create 
unjustified  rents  and  lead  to  shortages.  The 
combination  of  high  regulation,  high  wage 

(5)  The  indicator  on  adult  learning  participation  over  the 
previous four weeks is used in the country report, rather 
than  the  indicator  on  learning  over  the  previous  12 
months,  as  Adult  Education  Survey  (AES)  data  for  the 
12-month  indicator  are  only  available  for  2016  at  the 
moment,  while  the  new  Labour  Force  Survey  (LFS) 
indicator agreed for use in the social scoreboard and as 
2030 headline target on skills will only be  available in 
2023. 

BEDEFRNLTotal Economy10.70.80.1Manufacturing2.40.71.11.5Market Services1.61.20.90.3Non-Market Services-0.3-0.50.5-0.7 
                                                 
 
  
 
                                                 
costs and labour market rigidity weighs on the 
retail  sector's  performance,  with  average 
prices  higher  than  in  neighbouring  countries 
(see Annex 10). 

to 

continue 

Belgium  will 
face 
considerable  challenges  in  making  its 
economy  more  climate-resilient  and 
sustainable.  Significant  efforts  remain  in 
reducing  emissions 
in  the  transport  and 
building  sectors.  A  comparatively  small  share 
of  employees  work  in  the  green  economy 
(0.8%  vs  2.1%  in  the  EU).  Considering  the 
current  level  of  energy  consumption  and  the 
share of renewables in the energy mix, there is 
a significant gap with the current 2030 target 
for  renewables  and  the  projected  needs  to 
meet  the  climate  neutrality  goal  in  2050. 
Additional  transformative 
investments  and 
policy  measures  will  be  needed  to  sustain 
further  improvements  by  2030  in  electricity 
production,  housing  (heating  and  cooling)  and 
transport. The green transition will also require 
the  workforce  to  be  upskilled  and  reskilled  to 
realise the strong potential for creating quality 
jobs (see Annex 6). 

Belgium  performs  relatively  well  on  the 
UN’s  Sustainable  Development  Goals 
(SDGs),  although  more  could  be  done  to 
improve  its  environmental  sustainability. 
The country is still lagging behind in terms of 
life on land (SDG 15), clean water (SDG 6) and 
affordable  and  clean  energy  (SDG  7).  As 
regards  the  digital  transition,  Belgium 
is 
gaining  ground  in  many  areas  (see  Annex  8), 
but  strengthening  digital  skills  remains  a 
challenge (SDG 4) (see Annex 1). 

5 

 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

Belgium’s  recovery  and  resilience  plan 
(RRP)  helps  address  several  of  the 
country’s  challenges.  The  plan 
includes 
reforms  and  investments  to  boost  the  green 
and  digital  transition  (see  Annex  2).  Planned 
measures  cover  pensions,  spending  reviews, 
labour markets, education and skills, as well as 
research  and  innovation.  With  an  estimated 
allocation  of  EUR  5.9  billion  in  grants  (1.29% 
of 2019 GDP), the RRP however only accounts 
for  part  of  the  identified  investment  needs  in 
Belgium.  In  view  of  further  addressing  them, 
complementary  recovery  plans  were  adopted 
at different levels of government. 

The  RRP  focuses  heavily  on  measures 
that  contribute  to  the  green  transition. 
With  50%  of  spending  dedicated  to  the 
climate  transition,  the  RRP  is  well  above  the 
mandatory  target  of  37%.  It  includes  key 
improve  the 
investments  and  reforms  to 
energy  efficiency  of  public  buildings  (over  1 
million m² to be renovated) and housing (over 
200 000 m²)  and to incentivise the uptake of 
low carbon heating solutions and investments 
in renewable heat networks. The plan will also 
boost  innovative  energy  technologies  geared 
to  the  decarbonisation  of  industry.  It  contains 
a  series  of  measures  to  adapt  the  regulatory 
framework  in  order  to  develop  the  renewable 
hydrogen  market  and  to  boost  research  and 
development and investments in the hydrogen 
value  chain,  including  its  transport.  Moreover, 
support  measures  are  envisaged  to  boost 
multimodal transport, improve rail and develop 
urban infrastructure, electrify the large fleet of 
company cars and public buses, and accelerate 
the  roll-out  of  more  than  78 000  charging 
stations.  Investments  are  also  planned  to 
increase 
improve  water  management  and 
climate change resilience (including protection 
against 
reforms  and 
investments  to  further  boost  the  circular 
economy. 

floods)  alongside 

progress 

infrastructure 

is  making 

Belgium 
on 
implementing  green  transition  measures 
in  the  RRP.  Initial  measures  have  been 
launched  or  are  in  the  pipeline.  These  include 
the  adoption  of  the 
law  to  reform  the 
company  car tax  scheme, the  adoption  of the 
framework  for  charging 
in 
Flanders  and  the  launch  of  calls  for  interest 
for  research  and  development  in  hydrogen 
in  Flanders  and  Wallonia. 
technologies 
Reforms  of  energy  grant  schemes 
for 
renovating  houses  and  other  buildings  are 
being  adopted  in  the  different  regions  and 
communities.  A  full  assessment  of 
the 
implementation of the RRP measures will take 
place  once  Belgium  will  have  submitted  the 
related payment request. 

to 

or 

accelerate 

The ongoing RRP implementation will help 
accelerating  the  digital  transition.  With 
27%  of  spending  dedicated  to  the  digital 
transition,  the  RRP  exceeds  the  mandatory 
target  of  20%.  Investments  and  reforms  are 
envisaged 
enable 
digitalisation,  including  5G  readiness.  Reforms 
to enable 5G rollout are being put in place. The 
5G  auction  at  federal  level  is  expected  in  the 
first  half  of  2022.  Sizeable  investment  in 
digitalising public administration, including the 
justice  system  is  expected  to  contribute  to  a 
business-friendly  environment  and  thereby 
support the economic recovery (see Annex 11). 
The  plan  will  also  support  digital  education 
and inclusion. 

The RRP is also expected to help address 
some  of  Belgium’s  fiscal  sustainability 
challenges. A landmark initiative in the RRP is 
the systematic integration of spending reviews 
the  budgetary  planning  cycle  of  all 
in 
government  levels.  Spending  reviews  will  help 
improve the quality  and composition of public 
spending.  Belgium  also  committed  to  an 
ambitious  pension  reform  to  improve  the 
social  and  financial  sustainability  of  the 
pension  system,  incentivise  people  to  remain 

6 

 
 
 
increase 

retirement  conditions, 

active  on  the  labour  market  after  meeting 
early 
the 
solidarity  and  insurance  role  of  the  pension 
system  (including  gender  balance),  as  well  as 
ensure  convergence  between  and  within  the 
different  pension  systems  (private  and  public 
sector). 

includes  measures  to 
The  RRP  also 
address  some  labour  market  challenges, 
thereby  helping  implement  the  European 
Pillar  of  Social  Rights.  To  boost  access  to 
the labour market, the RRP contains measures 
to  strengthen  participation  in  adult  learning, 
including the introduction of individual learning 
accounts.  To  improve  the  effectiveness  of 
active labour market policies, the RRP includes 
a  reform  of  the  functioning  of  the  regional 
public employment service in Wallonia as well 
as  measures  to  tackle  discrimination  on  the 
labour  market.  However,  most  investments 
focus  on  upgrading  education  and  training 
infrastructure,  and 
less  on  strengthening 
incentives  to  participate  in  training.  Box  2.1 
highlights  some  key  upcoming  deliverables 
under the RRP. 

Box 2.1:  Key deliverables under the Recovery and Resilience Plan in 2022-23. 

  Adoption of a proposal for a pension reform 

 

 

Integration of spending reviews in the budgetary process 

Revision of the regional legislative framework on 5G radiation standards 

  Award of contracts for hydrogen projects, renewable or waste heat projects 

 

Investments to improve the energy efficiency of public and private buildings 

  Award of contracts for recycling facilities 

 

Start  of  ‘Blue  Deal’  projects  to  increase  water  availability  and  resilience  to  climate 
change 

  Upgrade of railways and works to make stations more accessible 

 

Start of deploying charging stations for electric vehicles 

  Digitisation of the justice system 

 

Equipment of schools with ICT infrastructure and devices 

7 

 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  above,  Belgium  faces 
additional  challenges  not  sufficiently 
covered in the plan. Outstanding challenges 
include  addressing  fiscal  sustainability  issues, 
improving the tax and benefit system to boost 
employment,  addressing  skills  mismatches 
and  taking  resolute  steps  towards  achieving 
climate neutrality. Addressing these challenges 
will  also  help  make  further  progress  on 
achieving 
reduced 
inequalities,  affordable  and  clean  energy  and 
climate  action.  Moreover,  closing  the  gap  in 
regional disparities would stimulate long-term 
sustainable  and inclusive growth  boosting the 
economic potential of Belgium. 

the  SDGs 

related 

to 

retirement  age,  at  61.9  years  in  2018 (7), 
remains  well  below  the  statutory  retirement 
age,  in  particular  in  the  public  sector,  where 
half of the workforce retires by the age of 60 
(see Graph 3.1). In its RRP, Belgium pledged to 
reform the pension system in order to improve 
its financial and social sustainability. 

Graph 3.1: Age distribution of new pensioners 

                  Sustainability of public finances 

Belgium’s  fiscal  sustainability  challenges 
are  significant  and  related  to  the  high 
level  of  government  debt  and  to  the 
projected  increase  in  ageing  cost  (see 
Annex  19  and  2021  Fiscal  Sustainability 
Report).  The  2021  Ageing  Report  projects  an 
increase  of  5.4  pps  of  GDP  by  2070,  mostly 
due  to  pension  and  long-term  care  spending, 
compared to an average increase of 1.7 pps in 
the euro area. 

Public  expenditure  on  pensions 
is 
projected  to  increase  by  almost  3 pps of 
GDP  by  2070,  with  most  of  the  increase 
expected  by  2040 (6).  Over  the  same  time 
span,  pension  spending  in  the  euro  area  is 
projected  to  increase  by  0.1  pp.  on  average 
(European  Commission,  2021).  The  effective 

(6)  These  estimations  do  not  include  the  impact  of  new 
measures  adopted  by  the  government  after  the 
finalisation  of  the  report  that  would  overall  result  in  a 
further increase in pension expenditure. 

Source: SPF Pensions, Annual Report 2019 

Long-term  care  spending  is  expected  to 
increase in the medium and long term.  In 
2019, Belgium was already the fourth highest 
spender  in  the  EU  on  long-term  care  (Ageing 
Report  2021)  and  its  spending  is  expected  to 
further  increase  by  14%  by  2030.  While  the 
long-term  care  system  is  well  developed, 
financial  reasons  can  limit  access  to  it.  There 
is  room  to  improve  the  cost  efficient  use  of 
the different care settings. In 2018, data from 
the  Belgian  Health  Care  Knowledge  Centre 
(Devos  et  al.,  2019) 
that 
institutionalisation  may  be  unnecessary  or  at 
least  premature  for  1  in  4  (25%)  people  in 
residential  care.  Moreover,  there  are  large 
regional  differences (8).  Given  Belgium’s  high 

suggested 

(7)  Based on the administrative data and excluding survivor 

pensions. 

(8)  In Brussels, almost one third (30.7%) of elderly people 
living  in  residential  structures  still  have  at  least  some 
autonomy,  almost  half  of 
totally 
independent. In Flanders, this proportion stands at 20%, 
of which 37% are physically fully independent. 

these  being 

8 

0%13%12%9%7%4%53%3%22%28%19%8%4%3%14%2%0%10%20%30%40%50%60%-6060616263646565+Private sectorPublic sector 
 
                                                 
  
                                                 
 
density  of  residential  beds  for  the  over-65s, 
there  may  be  scope  to  strengthen  the  use  of 
home  care  services  at  least  for  patients  with 
low  levels  of  dependency,  while  increasing 
efficiency. The COVID-19 crisis has stalled the 
implementation 
cost-saving 
measures  (2021  Long-Term  Care  Report). 
While  the  Walloon  Region  has  adopted  a 
deinstitutionalisation  strategy  –  moving  from 
institutional to community-based services - as 
part of the RRP, fiscal sustainability challenges 
remain (see also Annex 14). 

planned 

of 

Total  public  expenditure  as  a  share  of 
GDP  remains  among  the  highest  in  the 
euro area. The level of public investment as a 
share  of  GDP  has  recently  increased  to  2.8% 
of  GDP  in  2021,  but  remains  below  the  euro 
area  average  (3.1%  of  GDP).  By  contrast, 
current  expenditure  is  among  the  highest  in 
the euro area, as was already the case before 
the  crisis.  According  to  a  recent  study  of  the 
National  Bank  of  Belgium  (Godefroid  et  al., 
2021),  the  level  of  public  expenditure  in 
Belgium  was  4.5  percentage  points  of  GDP 
above  the  average  of  the  main  neighbouring 
the 
countries 
(France,  Germany 
spends 
Netherlands) 
comparatively  more  than  the  euro  area 
average  on  public  wages  (12.3%  of  GDP  in 
2019  vs.  euro  area  average  of  9.9%). 
than 
Additionally, 
doubled, as a percentage of GDP, since 2000. 
In  2019;  subsidies  stood  at  3.7%  of  GDP 
compared  to  1.6%  for  the  neighbouring 
countries,  with  half  of  that  share  constituted 
by wage subsidies (9). 

subsidies  have  more 

in  2019.  Belgium 

and 

There  are  concerns  about  the  efficiency 
of public spending, notably to support the 
green  transition.  A  study  of  the  National 
Bank  of  Belgium  (Cornille  et  al.,  2017)  and 
recent  analysis  (e.g.  Court  of  Auditors,  2021, 
Dumont,  2019)  also  raise  questions  in  terms 
of  the  cost  efficiency  and  quality  of  certain 
policies 
social 
exemption 
contribution  for  first  recruitments,  and  R&D 
incentives).  Spending 
reviews  could  help 
unlocking  efficiency  gains  and  reprioritise 
expenditure  towards  the  country’s  economic 

from 

(e.g. 

(9)  This  category 

includes,  for 

tax 
exemptions  (at  the  federal  level)  and  the  system  of 
service vouchers (at regional level). 

instance,  payroll 

and societal goals. Their systematic integration 
into  the  budgetary  process  by  all  entities,  as 
provided for in the RRP, is an important step in 
the  direction  of  improving  the  efficiency  and 
spending.  Moreover, 
quality 
introducing  green  budgetary  practices  would 
help 
the  accountability  and 
transparency  on  the  budget’s  contribution 
country’s  green  objectives 
towards 
(European Commission, 2022). 

increasing 

public 

the 

of 

Tax-benefit system 

High labour taxes discourage more people 
from  working  or  looking  for  a  job.  While 
the  2016  tax  reform  reduced  the  tax  burden 
on  labour  for  the  lowest  income  earners,  the 
tax  wedge  (social  security  contributions  and 
taxation of labour income) remains the highest 
in the EU for those earning the average wage 
(see  Annex  17).  Moreover,  the  tax  brackets  of 
the  personal  income  tax  system  are  rather 
narrow.  As  a  result,  even  average  income 
earners  are  subject  to  the  highest  income  tax 
rates 
limiting  the  real 
progressivity of the system (see Graph 3.2). In 
addition,  high 
taxation  may  also 
discourage participation in lifelong learning. 

(45%  and  50%), 

labour 

Graph 3.2: Personal income tax rates for a 
single person, 2020 

Source: Commission services 

The  complexity  of  the  benefit  systems 
risk  creating  disincentives  to  work.  The 
complex  design  of  unemployment  benefits 
does  not  provide  a  clear  signal  to  jobseekers 
(OECD,  2020).  Unemployment  benefits  are 
unlimited  in  time  and  not  means-tested  for 

9 

0%10%20%30%40%50%60%020,00040,00060,00080,000100,000Marginal tax rateTaxable income (EUR)BelgiumFranceGermany 
                                                 
  
job 

and 

search 

the  long-term  unemployed.  Combined  with 
lenient 
availability 
requirements,  these  design  features  of  the 
Belgian  unemployment  benefit  system  may 
reduce the  effectiveness of  activation  policies 
(OECD,  2018).  For  beneficiaries  of  social 
benefits  with 
potential, 
disincentives  to  take  up  work  also  remain  as 
the options to combine income from work and 
social  benefits  are  limited  and  complex  (Marx 
and  Horemans,  2021).  Non-cash  social 
linked  to  the 
benefits,  where  some  are 
beneficiaries, 
of 
unemployment 
contribute to existing inactivity, unemployment 
and low-wage traps. 

earning 

status 

low 

is  costly 

In  particular, 

The  extensive  use  of  special  schemes 
makes  the  tax-benefit  system  complex 
and creates distortions. To offset the heavy 
tax  burden  on  labour,  wage  subsidies  have 
the 
been  broadly  used. 
withholding  tax  exemption  for  overtime,  R&D 
work  and  night/shift  work 
in 
budgetary  terms  and  leads  to  inefficiencies 
(Schoonackers, 2020).  Various features of the 
corporate  tax  system  (e.g.  tax  shelter  for 
audio-visual  and  film  productions)  do  not 
seem to be the most cost- efficient means of 
supporting  specific  sectors.  Moreover,  some 
personal 
deductions 
disproportionally benefit high- income earners. 
Broadening  tax  bases  and  reducing  tax  rates 
would  make  revenue  collection  easier  and 
reduce  distortions  or  disincentives  to  work, 
invest and consume. 

income 

tax 

and 

lead 

choices 

Some  features  of  the  tax  system  distort 
investment 
to 
overinvestment in certain assets. Taxation 
of immovable property is a case in point, since 
rents (10)  are  undertaxed  and 
interest  on 
housing  loans  for  secondary  residences  are 
tax-deductible. 
In  Wallonia,  homeowners 
continue  to  benefit  from  favourable  tax 
treatment 
their  mortgage  payments 
(‘chèque habitat’). Moreover, some features of 
the tax framework, including the tax  incentive 

for 

rental 

(10)  When immovable property is rented out for professional 
purposes,  actual 
taxed.  When 
immovable property is rented out for housing purposes, 
the  cadastral  value  is  taxed.  The  cadastral  value  is  on 
average  20%  to  25%  of  the  actual  rental  income 
(European Commission 2012). 

income 

is 

for  savings  and  the  rigid  design  of  the  tax 
rules  applying  to 
long-term  savings  and 
pension schemes, create obstacles to a better 
allocation  of  capital.  The  tax  on  securities 
accounts  also  acts  as  a  disincentive  to  invest 
in financial instruments (11). 

energy 

taxation 

Belgium’s 
still 
encourages  the  use  of  fossil  fuels.  Excise 
duties on fossil fuels used for heating (e.g. gas 
oil, natural gas) are low, particularly compared 
to  electricity.  This  discourages  the  investment 
in  low  carbon  heating  solutions  and  leads  to 
fossil 
fuel  subsidies.  Flanking  measures 
focused  on  energy  efficiency  may  be  needed 
to  support  the  most  vulnerable  households 
(see  Annex  6).  As  highlighted  by  the  Belgian 
Court  of  Audit  (2022),  the  partial  refund  of 
excise  duties  on  diesel  for  professional  use 
goes  against  environmental  objectives  and 
road 
benefits  an 
transporters, leading  to  growing  traffic  transit 
and  an 
increasing  budgetary  cost.  Other 
environmentally  harmful  subsidies  include  a 
tax  exemption  for  energy  used  in  agriculture 
and fisheries, as well as reduced VAT rates for 
coal and coke. 

increasing  number  of 

The  government  announced  a  broad  tax 
labour  taxes  and 
reform  to  reduce 
in  a  budget-
greening  energy  taxes 
federal  government 
neutral  way.  The 
agreement  pledges  to  reform  labour  taxation 
to  boost  employment  and  greening  energy 
taxes to provide  appropriate price  signals  and 
discourage  the  use  of  fossil  fuels.  While  the 
RRP  refers  to  a  proposal  for  a  broad  tax 
reform, it does not include a firm commitment 
to  adopt  the  tax  reform  over  the  RRF  period. 
Given  Belgium’s  budgetary  challenges,  it  will 
be  particularly  important  to  ensure  that  the 
labour  tax  reduction  is  fully  financed.  Several 
financing 
envisaged 
according  to  a  study  by  the  High  Council  of 
Finance (2020). 

options 

could 

be 

(11)  Annual tax of 0.15% on securities accounts that exceed 

EUR 1 million in average value. 

10 

 
                                                 
                                                 
Skills mismatches and education 

socio-economic 

While Belgium performs well in education 
overall,  inequalities  are  a  concern.  About 
one out of five pupils aged 15 fails to perform 
basic  mathematics,  reading  or  science  tasks 
(OECD  Pisa  Results  2018).  Furthermore,  the 
share  of  young  people  with  at  least  basic 
digital  skills  has  dropped  in  recent  years.  The 
gap in educational outcomes is highly linked to 
and  migrant 
students’ 
background  and  is  among  the  highest  in  the 
EU. Inequalities also exist between schools and 
(see  Graph  3.3). 
educational  programmes 
in 
Besides,  the  share  of  high  achievers 
mathematics and science continues to decline. 
Finally,  more  than  one  out  of  three  young 
adults with disabilities do not finish secondary 
education  and  their  limited  participation  in 
higher  education  is  one  of  the  reasons  for 
their 
Important 
education reforms are underway in the French 
Community but some of them were delayed by 
the COVID-19 crisis (Pact for excellence). Also 
the Flemish Community is taking measures to 
improve  the  quality  of  compulsory  education, 
notably  for  vulnerable  pupils  (Education  and 
Training Monitor, 2021). 

employment 

rate. 

low 

The  education  and  training  systems  may 
not be  delivering  all  the  skills  needed on 
the 
labour  market.  Labour  shortages 
concern  all  skills  levels  and  are  persistent  in 
various  sectors,  including  ICT,  professional, 
technical  and  scientific  occupations,  the  care 
sector, construction, education and training. In 
particular,  Science,  Technology,  Engineering 
and  Mathematics  (STEM)  skills  are  in  high 
demand  on  the  labour  market.  Among  upper 
secondary 
vocational 
programmes, only 33% had a degree in STEM 
in  2019.  Also  the  share  of  STEM  tertiary 
graduates remains well below the EU average 
(14.2  vs  20.8  per  thousand  inhabitants)  and 
has  not  been  increasing  over  time.  The  share 
of  people  with  at  least  basic  digital  skills 
(54%) is at the EU average. 

graduates 

from 

to 

learning 
in  adult 
Low  participation 
contributes 
skills  mismatches. 
Participation  in  adult  learning (10.2%  of  aged 
25-64)  is  slightly  below  the  EU  average 
(10.8%)  but  is  particularly  low  for  the  low-
educated  (4.0%),  for  whom  upskilling  could 
offer 
opportunities. 
employment 
Persons  most  at  risk  of  losing  their  jobs  are 
less involved in adult learning, suggesting that 
continuous  training  does  not  meet  labour 
market  demand  and  is  insufficiently  targeted 
(OECD  PAL  Dashboard).  Besides,  the  share  of 

better 

Graph 3.3: Average PISA score for reading, by Communities, gender, type of programme and socio-
economic and migrant background 

40 PISA points correspond to one year of schooling.   
Source: OECD (2019) PISA results 2018 

11 

BEfl BEfrBEdeBEEU-27GirlsBoysAdvantagedDisadvantagedNative-born pupils with parents born abroadPupils born abroadPupils without a migrant backgroundVocationalGeneralEU-27 boysEU-27 girlsEU-27 disadvantagedEU-27 advantagedRepetitionNon-repetitionAverageGenderSocio-economicbackgroundMigrant backgroundType of programmeGrade repetition400420440460480500520540560AveragePISA score forreading 
 
  
spending  on  active  labour  market  policies 
devoted to training is limited (29% vs. 40% on 
average  in  the  EU).  Despite  the  existing 
incentives,  only  a  small  proportion  of 
jobseekers follow a training related to a job in 
shortage (e.g. 5% of all jobseekers in Wallonia 
in  2019).  Tackling  these  challenges  is  key  for 
Belgium to contribute to reaching the 2030 EU 
headline  targets  on  employment  and  skills. 
regional 
Moreover,  closing 
disparities  would 
long-term 
sustainable  and  inclusive  growth  for  Belgium 
as a whole. 

the  gap 

stimulate 

in 

in 

and 

the  EU 

(VET).  A 

large  share  of 

There  are  concerns  about  the  quality, 
attractiveness 
labour  market 
relevance  of  vocational  education  and 
training 
the 
population  has  a  negative  perception  of 
vocational  secondary  education  (42.5%  vs. 
23.5%  on  average  in  the  EU).  In  2019,  only 
6.2%  of  students  participated  in  work-based 
learning  in  Belgium  compared  to  29%  on 
(Cedefop  database). 
average 
According  to  public  employment  services,  the 
lack  of  jobseekers  with  the  relevant  skills  or 
experience  accentuates  shortages  in  technical 
labour  market 
professions. 
relevance  of  the  VET  systems  is  particularly 
warranted  in  the  French  Community,  where 
only  3  out  of  the  10  most  popular  upper 
secondary VET options prepare for occupations 
with 
the  Flemish 
Community, the reform of work-based training 
has  led  to  an  increase  in  the  number  of  VET 
its 
pupils,  but 
attractiveness  and  inclusiveness,  in  particular 
for  pupils  with  a  disadvantaged  or  migrant 
background.  In  addition,  measures  to  attract 
to 
experienced 
qualified  and 
disadvantaged schools are lacking. 

labour  shortages. 

remain  over 

Increasing 

concerns 

teachers 

In 

A  growing  shortage of qualified teachers 
poses  a  particular  challenge  to  the 
education  system.  Schools  principals  report 
important  shortages  of  qualified  teachers 
(45.5%  vs.  24.6%  in  the  EU),  which  hinder 
schools’ capacity to provide quality instruction 
(see  Annex  13).  The  job  vacancy  rate  in 
education is more than twice as high as in the 
euro  area  (3.2%  in  Q4-2020  vs  1.7%).  The 
number  of  students  in  education  bachelors 
decreased up until 2019. More than one out of 

five  starting  teachers  leaves  the  profession 
within the first five years of teaching. There is 
scope to strengthen the teaching profession by 
evidence-
enhancing 
professionalisation, 
induction,  and 
informed 
continuous 
development, 
including  by  preparing  to  address  educational 
disadvantage  and  to  teach  in  increasingly 
multicultural classes, as well as by developing 
more  flexible  and  attractive  career  paths  and 
frameworks. 

initial  education, 
professional 

Climate neutrality and reducing       
dependence on fossil fuels 

Further efforts are needed to put Belgium 
on  track  to  become  climate  neutral.  With 
existing  measures,  greenhouse  gas  emissions 
in  sectors  not  currently  covered  by  the  EU 
Emissions  Trading  System  (ETS)  are  projected 
to  be  only  13%  below  2005  levels  in  2030. 
This  leaves  a  considerable  gap  to  reach  the 
existing  binding  2030  target  of  a  35% 
reduction  (see  Annex  5).  Provided  efforts  are 
sustained  to  ensure  that  all  existing  and 
additional  measures  included  in  the  2019 
national  energy  and  climate  plan  (NECP)  are 
fully  implemented,  greenhouse  gas  emissions 
are projected to decrease by -36% in the non-
ETS  sectors (12).  The measures  included  in  the 
RRP are expected to help accelerate the green 
transition.  However,  with  the  increased  2030 
EU ambition set by the European Climate Law 
and  the  Fit  for  55  package  of  proposals, 
further 
additional 
reforms 
investments  will  be  needed  in  the  energy 
sector, industry, buildings and in transport (see 
also  Annex  5).  Belgium  has  started  taking 
additional  measures, 
in  the 
energy sector. 

in  particular 

policy 

and 

Whilst  Belgium’s  overall  dependency  on 
fossil  fuels  imports  is  high,  dependency 
on  Russian  gas  is  limited  but  above  the 
EU  average  for  crude  oil.  Around  70%  of 
Belgium’s  gross  inland  energy  consumption  is 
covered by imported fossil fuels. Compared to 

(12)  The projections in the updated NECP, that is expected in 
June 2023, will have to reflect the Belgian government 
declaration of 18 March 2022 on nuclear. 

12 

 
                                                 
is  well 

some other Member States, Belgium’s sources 
of  energy  imports  are  rather  diverse  and  the 
country 
interconnected  with 
neighbouring  countries.  The  liquefied  natural 
gas (LNG) terminal and capacity at Zeebrugge 
contributes  to  the  EU’s  diversification  of  gas 
routes  and  security  of  supply.  Plans  are  also 
advanced to further extend connections to the 
North Sea grid, increasing Belgium’s access to 
offshore wind power. The share of Russian gas 
in  imports  in  2020  was  7%  (EU27  average 
44%),  with  natural  gas  making  up  30%  of 
gross inland consumption in Belgium. However, 
reliance  on  natural  gas  in  the  Belgian  energy 
mix is expected to increase by 2030 following 
the planned partial nuclear phase out by 2025 
(nuclear energy made up 16.4% in the energy 
mix in 2020) and the building of additional gas 
plants (13). 
gas 
decrease 
dependency,  Belgium  could  step  up  efforts  to 
renewable 
boost 
hydrogen, 
energy-efficiency 
improvements  and  fuel  switching  in  buildings. 
The  share  of  Russian  crude  oil  in  imports  in 
2020 was 30% (EU27 average 26%), with oil 
making  up  39%  of  the  Belgian  energy  mix. 
With coal taking up less than 5% in the energy 
mix,  the  importance  of  coal  in  imports  from 
Russia  is  not  very  high  for  Belgium  (39% 
versus EU27 average of 54%) (14). Dependency 
on  Russian  oil  in  2020  was  thus  higher  than 
for  natural  gas.  Transport  accounts  for  a 
significant share of oil consumption in Belgium 
(39% in 2020). 

renewable  energy  and 

accelerating 

natural 

To 

Decarbonising  electricity  production  will 
be  key  to  achieving  climate  targets  and 
reducing  fossil  fuel  dependency.  Belgium 
aims to reach a share of 17.5% of renewable 
energy sources in final energy consumption in 
2030,  which  the  Commission  assessed  as 
unambitious,  since  the  Commission  expected 
Belgium  to  reach  25%  even  before  the 

(13)  Belgian government declaration of 18 March 2022. The 
declaration  proposes  taking  the  necessary  steps  to 
continue  the  exploitation  of  two  of  the  nuclear  power 
plants  until  2035  and  to  maintain  the  building  of 
additional  gas  plants  next  to  an  increase  in  renewable 
deployment. 

(14)  Eurostat  (2020),  share  of  Russian  imports  over  total 
imports of natural gas, crude oil and hard coal. For the 
EU27  average,  the  total  imports  are  based  on  extra-
EU27 imports.  For  Belgium,  total  imports  include intra-
EU trade. Crude oil does not include refined oil products. 

to 

the 

Law (15). 

Climate 

reach  37.4%  of 

challenges,  namely 

Renewable 
European 
electricity  production  in  Belgium  is  currently 
set 
total  electricity 
production by 2030 (see Annex 5). This level of 
ambition  appears  modest  in  light  of  the 
current 
climate 
neutrality objective, the need to further reduce 
dependency  on  fossil  fuels  including  through 
increased  electrification,  and  the  planned 
decrease in the share of nuclear in the energy 
mix.  Due  to  limited  marine  space,  further 
domestic  renewable  capacity  will  mainly  have 
to  come  from  solar  power  and  onshore  wind. 
According  to  the  Belgian  transmission  system 
operator  ‘Elia’,  these  capacities  will  double  by 
2030  as  a  result  of  the  NECP  measures  (see 
Graph 3.4). However, in view of the challenges 
this  ambition  will  need  to  be  stepped  up. 
Nevertheless,  Belgium  is  planning  to  promote 
the  deployment  of  offshore  wind  through  the 
development  of  the  multifunctional  offshore 
energy hub (‘energy island’) in the Belgian part 
of the North Sea and by allowing the capacity 
in  the  North  Sea  to  increase  from  2.2GW  to 
5.8GW  by  2028  (compared  to  4.4GW  in  the 
NECP  and  potentially  up  to  8GW  by  2030 
(including by repowering) (16). 

Graph 3.4: Evolution of installed solar and 
onshore wind capacity under a scenario with 
additional measures, GW, 2010-32 

Source: Elia Adequacy and Flexibility Study for Belgium 
2022 – 2032 

Several  investment  bottlenecks  hinder 
the  deployment  of  onshore  wind  power. 
The  development  of  onshore  wind  energy 
projects  has  been  hampered  by  several 

(15)  Share  calculated  using  the  formula  in  Annex  II  to 
Regulation  (EU)  2018/1999  on  the  Governance  of  the 
Energy Union and Climate Action, for the EU to reach its 
common binding target. 

(16)  Belgian government declaration of 18 March 2022. 

13 

4.8112.54.9024681012141011121314151617181920212223242526272829303132SolarOnshore windGW 
                                                 
  
                                                 
obstacles,  including  repetitive  and  lengthy 
appeal  procedures, causing long delays (up  to 
9 years) for building permits. Reasons for long 
and  repetitive  appeal  procedures  include  the 
insufficient  capacities  of  appeal  bodies  to 
handle  the  appeals,  the  possibility  to  rule  on 
appeals without examining all appeal grounds, 
thus  leaving  unexamined  grounds  of  appeal 
open  for  further  new  appeals  on  the  same 
project  and  the  possibility  to  launch  appeals 
without  the  need  to  demonstrate  a  direct 
interest in challenging the project. The permit-
granting  process  could  be  facilitated  by  the 
introduction  of  spatial  planning  taking  into 
account  the  resource  potential  of  territories, 
the  easing  of  restrictions  in  the  vicinity  of 
airports,  radars  and  military  zones,  and  by 
updating  minimum  distance  requirements  (to 
wind  turbines).  Renewable  installations  and 
grid development projects do not benefit from 
an  overriding  public  interest  status  that  could 
help  streamline  the  permit-granting  process. 
They  often  suffer  from  a 
local 
acceptability. Local opposition to such projects 
insufficient 
can  partially  be 
participation  or  implication  of  municipalities 
and citizens in generation projects but also to 
lack  of  understanding  of  the  climatic 
a 
challenge 
technologies. 
renewable 
Moreover, strategies across government levels 
(federal,  regional,  local)  to  reach  Belgium’s 
renewable  targets  either  do  not  exist  or  are 
scattered and not mutually supportive. Belgian 
authorities  have  started  to  tackle  some  of 
those  issues,  in  particular  Flanders,  which 
increased the staff of the appeal bodies.  

lack  of 

related 

and 

to 

To  accommodate  the  increasing  use  of 
variable  energy  sources  in  the  electricity 
grid,  the  onshore  electricity  network 
would need to be strengthened and made 
smart.  Yet  the  length  of  the  permit-granting 
procedure  for  transmission  lines  undermines 
timely grid reinforcements. The lack of spatial 
planning  tools  supportive  of  the  renewable 
targets  also  prevents  the  anticipation  of 
related  grid  improvements.  The  pace  of  these 
works  will  have  to  factor  in  the  renewable 
deployment to avoid becoming a bottleneck. 

Rooftop  solar  power  has  considerable 
potential,  which  is  still  largely  untapped. 
The  lack  of  a  predictable  or  clear  regulatory 

to 

limited 

framework undermines confidence and creates 
a  barrier 
further  mobilise  private 
investments in new rooftop solar installations, 
be  they  large  or  small.  A  complex  legal 
framework  for  energy  sharing  creates  a 
further  obstacle  to  solar  rooftop  installations 
in  multi-apartment  and  rented  buildings.  Also, 
the 
roll-out  of  smart  metering 
systems (17)  as  well  as  the  absence  of 
‘prosumer’  schemes 
in 
Flanders)  and  of  dynamic  pricing  deter  self-
consumption,  energy  sharing  and  demand  a 
side  response.  Removing  these  barriers  will 
help 
to 
accommodate  a  growing  share  of  variable 
renewables and lower peak load requirements.  

(already  advanced 

stability 

ensure 

power 

grid 

and 

low, 

The share of fossil fuels used in buildings 
is  still  very  high.  Residential  and  service 
sectors  account  for  37%  of 
total  gas 
in  2020.  Despite  proactive 
consumption 
policies, the energy-efficient renovation of the 
building  stock  remains 
in  particular 
deep-renovation. 
through  medium- 
Moreover,  Belgium  does  not  comply  with  the 
target  of  renewables  growth  in  heating  and 
cooling  (1  percentage  point  per  year  until 
2030  on  average).  To  reduce  dependency  on 
fossil  fuels,  further  policy  options  include  a 
ban  on  fossil  fuels  in  new  constructions  and 
making  renovations  of  the 
least  energy-
efficient  buildings  mandatory  following  a 
transfer  of  ownership,  as  recently  introduced 
in  Flanders.  Phasing  out  financial  support  for 
fossil  fuel-based  heating  and  shift  incentives 
towards  low  carbon  heating  solutions  such  as 
heat  pumps  could  further  reduce  fossil  fuel 
dependency. 

Road congestion remains high, generating 
air  pollution  and  economic 
loss.  The 
transport sector is responsible for 35% of non- 
ETS greenhouse gas emissions in Belgium and 
in 
congestion  contributes  to  air  pollution 
particular  around  Brussels  and  Antwerp  (see 
Annex  5).  Growing  commuter  and  freight 
road 
traffic  volumes  have 

resulted 

in 

(17)  The  roll  out  of  smart  meters  has  so  far  remained 
limited  (3.3%  penetration  rate  for  2019-2020),  5th 
worst  EU  performer.  Source:  EC  Report  2019  – 
Benchmarking  smart  metering  deployment  in  the  EU-
28. In the Flanders region, a quarter of end users had a 
digital meter by March 2022. 

14 

 
                                                 
2019). 

Commission, 
is  partly  explained  by 

congestion  returning  to  pre-COVID  levels.  The 
average  number  of  hours  per  year  spent  in 
traffic jams is one of the three highest in the 
EU (18).  Moreover,  congestion  costs  in  Belgium 
were  estimated  around  EUR  9  billion 
Rising 
(European 
congestion 
the 
continuous  increase  in  the  number  of  cars 
since  2007,  incentivised  in  particular  by  toll-
free  roads  and 
tax  subsidies  for 
large 
commuting by car. Policy options such as road 
user  charging  for  private  vehicles  (like  for 
lorries) and the further development of cycling 
and  public  transport  solutions,  in  particular 
improved  sub-urban  and  inter-city  services 
and  infrastructure,  could  be  used  to  reduce 
these  clean 
road  congestion.  Developing 
mobility  alternatives  to  the  use  of  individual 
cars,  including  efficient  public  transport,  will 
also  help  further  decarbonise  the  transport 
sector  and  reduce  Belgium’s  dependence  on 
oil. 

2021 

floods 

summer 

The 
have 
demonstrated  that  Belgium’s  climate 
resilience  raises  concern.  Beyond  the  loss 
of  human  lives,  the  material  damage  of  the 
floods  alone  amounted  to  more  than  EUR  2 
billion  and  government  expenditure  increased 
to  provide  relief  and  for  the  rebuild  of 
uninsured  property  and  infrastructure,  further 
exacerbating  fiscal  sustainability  challenges. 
Including  disaster 
in 
budgetary  planning, 
in  governance  and 
institutional  arrangements  to  address  ex  ante 
climate-related  risks  and  reduce  ex  post 
disaster  consequences  could  help  increase 
climate resilience. 

risk  management 

(18)  European  Commission,  Hours  spent  in  road  congestion 
annually.  In  Belgium  the  average  number  of  hours  per 
year  spent  in  traffic  jams  rose  from  35.8  in  2014  to 
39.1 in 2017. 

15 

 
 
 
                                                 
KEY FINDINGS 
KEY FINDINGS 

Belgium’s  recovery  and  resilience  plan 
includes measures to address a  series of 
structural challenges through: 

  a  reform  to  improve  the  sustainability  of 

the pension system; 

  actions  to 

improve  the  efficiency  and 
quality  of  public  spending,  thanks  to 
spending reviews; 

  investments  in  the  digitalisation  of  public 
administration and education and a reform 
to enable 5G deployment; 

  investments  in  energy-efficient  renovation 
circular 

of  buildings, 
economy, and the hydrogen value chain. 

clean  mobility, 

Beyond  the  reforms  and  investments  in 
the RRP, Belgium would benefit from: 

  improving  the  effectiveness  and  efficiency 
of  its  long-term  care  systems,  including 
fiscal 
the 
contributing 
sustainability; 

country’s 

to 

  reforming  the  tax  and  benefit  systems  to 
reduce  disincentives  to  work,  simplifying 
these  systems,  limiting  the  use  of  tax 
expenditure  and  making  the  tax  system 
more neutral towards investment choices; 

  addressing 

inclusiveness  of 

labour  shortages  and  skills 
improving  the 
mismatches,  notably  by 
the 
performance  and 
by 
education 
strengthening 
labour-
market  relevance  of  vocational  education 
and training, and of teachers’ career paths 
and training; 

the  quality  and 

including 

system, 

  reducing  the  dependency  on  fossil  fuels 
and  increasing  the  share  of  renewables  in 
energy 
facilitating 
planning and easing the granting of permits 

consumption, 

by 

for 

renewable  energy 

installations, 

in 

particular for onshore wind 
projects, facilitating the granting of permits 
for  grid  expansion  needed  to  integrate  a 
renewables  and  by 
higher  share  of 
adopting 
supportive 
framework  conditions  for  solar  energy 
installations;  

predictable 

and 

  phasing-out  subsidies for fossil fuel  use in 
buildings,  introducing  gradual  phasing  out 
of  fossil  fuel  use  in  new  buildings  and 
accelerating energy efficient renovations; 

  addressing  road  congestion,  by  further 
developing  cycling  and  public  transport 
solutions,  as  well  as  implementing  road 
user charging for cars. 

16 

20_AT_CR22_Publication-StandardWord_1 TC LW DONE.docx 
 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan - Implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic stability 

Annex 16: Key financial developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt sustainability analysis 

References 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 

Key elements of the Belgian RRP 
Summary table on 2019, 2020 and 2021 CSRs 
Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index Indicators 

19 

21 

21 

23 

24 

27 

30 

30 

34 

36 

36 

38 

40 

42 

45 

47 

47 

49 

51 

53 

55 

55 

57 

59 

60 

62 

23 
28 
33 
37 
39 

 
 
 
Table A9.1: 
Table A10.1: 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Key research, development and innovation indicators 
Key Single Market and Industry Indicators 
Public administration indicators - Belgium 
Social Scoreboard 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Selected indicators at regional level 
Financial soundness indicators 
Taxation indicators 
Key economic and financial indicators 
Debt sustainability analysis for Belgium 
Heat map of fiscal sustainability risks for Belgium 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Belgium in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

ESIF 2014-2020 total budget by fund (EUR billion, % of total) 

Graph A3.2: 

Cohesion policy contribution to the SDGs (EUR billion) 

Graph A4.1: 

Belgium's progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition: Taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy Share in energy mix (solid, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic - Biodiversity  Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility Share of zero emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Employment and value added in the Circular Economy sectors 

Graph A11.1: 

Open data maturity 

Graph A11.2: 

Performance on the single market public procurement indicator 

Graph A13.1: 

Shortages of qualified teachers as reported by principals 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health-care over 2019-2070 (AWG reference scenario) 

Graph A15.1: 

Unemployment rate, 2020 in Belgium 

Graph A15.2: 

Territories most affected by the climate transition in Belgium 

Graph A15.3: 

CO2 emissions from fossil fuels per head, 2018 in Belgium 

Graph A16.1: 

Credit growth 

Graph A16.2: 

Evolution of house price index 

Graph A17.1: 

Tax wedge indicators (%) 

41 
43 
46 
47 
49 
52 
54 
56 
57 
59 
60 
61 

22 

23 

24 

25 

27 

30 

31 

31 

32 

35 

35 

36 

45 

45 

50 

51 

51 

53 

54 

54 

55 

55 

58 

20 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

(2.43%  of  GDP). 
In  Belgium,  the  share  of 
households  with  Very  High  Capacity  Network 
(VHCN) coverage in 2021 (68.9%) is slightly below 
the  EU  average (70.2%).  Although  the  percentage 
of people with at least basic digital skills is at the 
EU  average  (54%),  strengthening  digital  skills 
remains a challenge. For this reason, a large share 
of  investments  in  the  RRP  focuses  on  increasing 
the  digital 
to 
improve digital skills at all levels of the education 
system. 

infrastructure  and  equipment 

in 

Belgium  performs  very  well  on  SDG 
indicators related to macroeconomic stability 
(SDG  8,  16).  Belgium  performs  well,  and  has 
further  improved  on  the  quality  of its  institutions, 
including  trust 
institutions  (SDG  16).  The 
percentage  of  the  population  with  confidence  in 
the European Central Bank increased from 49% in 
2016 to 69% in 2021 (EU: 47% in 2021). Belgium 
also  outperforms  the  EU  average  on  indicators 
related  to  ‘Decent  work  and  economic  growth’ 
(SDG  8).  The  introduction  of  spending  reviews  at 
all government levels through the RRP is expected 
to further improve macroeconomic stability. 

This  Annex  assesses  Belgium’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  four  dimensions  of  competitive 
sustainability.  The  17  SDGs  and  their  related 
indicators  provide  a  policy  framework  under  the 
UN’s  2030  Agenda  for  Sustainable  Development. 
The  aim  is  to  end  all  forms  of  poverty,  fight 
inequalities  and  tackle  climate  change,  while 
ensuring that no one is left behind. The EU and its 
Member  States  are  committed  to  this  historic 
global  framework  agreement  and  to  playing  an 
active  role  in  maximising  progress  on  the  SDGs. 
Graph  A1.1  is  based  on  the  EU  SDG  indicator  set 
which was developed to monitor progress on SDGs 
in an EU context. 

While  Belgium  performs  very  well  or  is 
improving  on  several  SDG  indicators  related 
to  environmental  sustainability  (SDG  2,  7,  9, 
11,  12,  13),  it  still  needs  to  catch  up  on 
others  (SDG  6,  15).  The  ‘Circular  material  use 
rate’  improved  from  17.7%  in  2015  to  23.0%  in 
2020  and  is  well  above  the  EU  average  (12.8%). 
On ‘Addressing ‘Affordable and clean energy’ (SDG 
7), Belgium has made some progress on the share 
of  renewable  energy  in total  energy  consumption, 
which  increased  from  8.1%  in  2015  to  13%  in 
2020,  but  is  still  lower  than  the  EU  average 
(22.1% 
in  the 
emerging technologies component of the recovery 
and  resilience  plan  (RRP)  aim  to  support  the  shift 
away from fossil fuels. 

in  2020).  Measures 

included 

Belgium  performs  very  well  or  is  improving 
on  most  SDG  indicators  related  to  fairness 
(SDG  1, 2,  3,  4,  5, 8, 10).  Belgium  outperforms 
the  EU  average  in  most  indicators  related  to 
poverty,  inclusive  growth  and  inequality  (SDGs  1, 
8,  10),  which  is  due  to  the  high  redistributive 
impact  of  the  tax  and  benefit  system.  Belgium 
improved  on  various  employment  indicators  like 
‘Long-term  unemployment  rate’  (3.7%  in  2016, 
2.6% in 2021) or ‘Number of young people neither 
in  employment  nor  in  education’  (13.0%  in  2016, 
10.1%  in  2021).  The  RRP  includes  measures  to 
further tackle  unemployment, notably  by boosting 
training and life-long learning. 

Belgium  performs  very  well  on  SDG 
indicators  related  to  productivity  (SDG  4,  8, 
9).  Belgium’s  gross  domestic  expenditure  on  R&D 
is  among  the  highest  (3.48%  of  GDP  in  2020)  in 
EU,  and  it  has  significantly  increased  since  2015 

21 

 
 
 
 
 
Graph A1.1: Progress towards SDGs in Belgium in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/product?code=KS-09-22-019; Extensive country specific data on the short-term progress of Member 
States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu). 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

22 

 
 
 
 
 
 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Belgium  submitted 
its  recovery  and 
resilience  plan  (RRP)  on  30  April  2021.  The 
Commission’s  positive  assessment  on  23  June 
2021 and the Council’s approval on 13 July 2021 
paved  the  way  for  disbursing  EUR  5.9  billion  in 
grants  under  the  RRF  over  2021-2026.  The 
financing agreement was signed on 27 July 2021. 
The key elements of the Belgian RRP are set out in 
Table A2.1. 

Table A2.1: Key elements of the Belgian RRP 

Graph A2.1outlines the share of funds contributing 
to each of the RRF’s six policy pillars. 

by  Belgium 

progress  made 

The 
in 
implementing  its  plan  is  published  in  the 
Recovery  and  Resilience  Scoreboard.  The 
Scoreboard also gives an overview of the progress 
made in implementing the RRF as a whole. 

(1)  See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying Spillovers of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16.   
Source: European Commission 2022 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

(1)  Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on 
this chart amounts to 200% of the estimated cost of the 22 recovery and resilience plans approved in 2021. The bottom part 
represents the amount of the primary pillar, the top part the amount of the secondary pillar. 
Source: RRF Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html 

23 

Total allocation EUR 5.9 billion in grants (1.24% of 2019 GDP)Investments and Reforms 68 investments and 31 reforms Total number of Milestones and Targets210Estimated macroeconomic impact (1) Raise GDP by 0.5%-0.9% by 2026 (0.6% in spillover effects)Pre-financing disbursed EUR 770 million (August 2021)First instalment Belgium did not yet submit a first payment request0%10%20%30%40%50%60%70%Green transitionDigital transformationSmart, sustainableand inclusive growthSocial and territorialcohesionHealth, andeconomic, social andinstitutional resiliencePolicies for the nextgeneration 
 
 
  
 
 
  
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

support 

In  2021-2027,  EU  cohesion  policy  funds (19) 
will 
development 
long-term 
objectives  in  Belgium  by  investing  EUR  2.88 
billion (20).  This  includes  EUR  182.6  million  from 
the  Just  Transition  Fund  directed  to  alleviate  the 
socio-economic  impacts  of  the  green  transition  in 
the  most  vulnerable  regions.  The  2021-2027 
cohesion policy funds partnership agreements and 
programmes  take  into  account  the  2019-2020 
country-specific recommendations and investment 
guidance  provided  as  part  of  the  European 
and 
Semester, 
complementarities  with  other  EU  funding. 
In 
addition, Belgium will benefit from EUR 2.9 billion 
support for the 2023-27 period from the Common 
Agricultural 
social, 
environmental,  and  economic  sustainability  and 
innovation 
rural  areas, 
contributing  to  the  European  Green  Deal,  and 
ensuring long-term food security. 

in  agriculture  and 

Policy,  which 

synergies 

supports 

ensuring 

investment 

In  2014-2020,  the  European  Structural  and 
Investment  Funds  (ESIF)  allocated  EUR  3.20 
billion (21)  from  the  EU  budget  to  Belgium. 
The  total 
including  national 
financing  amounts  to  EUR  6.80  billion  (see 
Graph  A3.1),  representing  around  0.22%  of  GDP 
for 
public 
investment (22). By 31 December 2021, 98% of the 
total  was  allocated  to  specific  projects  and  53% 
was reported as spent, leaving EUR 3.18 billion to 

2014-2020 

6.66% 

and 

of 

(19)  European  Regional  Development  Fund  (ERDF),  European 
Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(20)  Current prices, source: Cohesion Open Data  

(21)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg), 
the  European  Agricultural  Fund  for  Rural  Development 
(EAFRD)  and  European  Maritime  and  Fisheries  Fund  (EMFF). 
According  to  the  ‘N+3  rule’,  the  funds  committed  for  the 
years  2014-2020  must  be  spent  by  2023  at  the  latest  (by 
2025 for EAFRD). Data source:  Cohesion Open Data, cut-off 
date  31.12.2021  for  ERDF,  ESF+,  CF,  Interreg;  cut-off  date 
31.12.2020 for EAFRD and EMFF. 

(22)  Public  investment  is  gross  fixed  capital  formation  plus 

capital transfers, general government. 

24 

be  spent  by  the  end  of  2023 (23).  Among  the  11 
objectives  the  most  relevant  ones  for  cohesion 
policy  funding 
in  Belgium  are  research  and 
innovation,  competitiveness  of  SMEs,  low-carbon 
economy,  sustainable  and  quality  employment, 
social  inclusion,  education  and  vocational  training 
for  skill  and  life-long  learning  (in total  EUR  2.737 
billion).  By  end  2020,  European  Regional 
Development  Fund  (ERDF)  investments  supported 
more than 30 000 businesses, while the European 
Social  Fund  (ESF)  supported  measures  for  almost 
1.5  million  participants,  of  whom  more  than  half 
were  low-skilled  (53%).  Thanks  to  the  Youth 
Employment Initiative (YEI) 150 000 young people 
benefitted 
their 
integration  in  the  labour  market.  The  ERDF  also 
invested  more  than  EUR  162  million  in  energy 
efficiency.  Also  other  EU  programmes,  including 
the  European  Agricultural  Fund 
for  Rural 
Development  (EAFRD)  and  the  European  Maritime 
to 
(EMFF), 
and  Fisheries  Fund 
addressing the investment needs. 

targeted  support 

contribute 

from 

for 

Graph A3.1: ESIF 2014-2020 total budget by fund 
(EUR billion, % of total) 

(1) The data for the EAFRD and REACT-EU refer to the period 
2014-2022 
Source: European Commission, Cohesion Open Data 

Cohesion  policy  funds  already  substantially 
contribute  to  the  Sustainable  Development 
Goals (SDGs) objectives. In Belgium, these funds 
support  10  of  the  17  SDGs  with  up  to  97%  of 
expenditure  contributing  to  the  attainment  of  the 
goals (see Graph A3.2).   

(23)  Including 

REACT-EU. 
https://cohesiondata.ec.europa.eu/countries/BE 

ESIF 

data 

on 

1.8227%0.071%2.4335%2.2934%0.193%EAFRDEMFFERDFESFYEI 
 
                                                 
  
                                                 
 
Graph A3.2: Cohesion policy contribution to the SDGs (EUR billion) 

Source: European Commission 

REACT-EU 

instrument 

The 
(Recovery 
Assistance  for  Cohesion  and  the  Territories 
of Europe) under NextGenerationEU provided 
EUR  225.7  million  of  additional  funding  to 
2014-2020  cohesion  policy  allocations  for 
Belgium  to  ensure  a  balanced  recovery,  boost 
convergence  and  provide  vital  support  to  regions 
following  the  coronavirus  outbreak.  REACT-EU 
provided  support  in  Belgium  to  contribute  to  the 
short-time  work  schemes,  support  small  and 
medium-sized  enterprises 
in 
research  and 
(R&I),  reinforce  the 
innovation 
primary  healthcare,  education,  training  and  skills 
development,  promote  energy  efficiency  and 
reduce  material  deprivation  with  direct  food 
delivery.  REACT-EU  supported  vulnerable  groups 
that  are  hit  hardest  by  the  COVID-19  crisis  by 
providing support and guidance towards work and 
developing  the  necessary  basic  and  professional 
skills in light of the green and digital transitions.  

(SMEs), 

invest 

It 

The  Coronavirus  Response 
Investment 
Initiative (24) provided the first EU emergency 
support to Belgium in relation to the COVID-
introduced  extraordinary 
19  pandemic. 
flexibility,  enabling  Belgium 
re-allocate 
resources for immediate public health needs (EUR 
instance,  Belgium  shifted 
1.1  million).  For 
resources  to  purchase  protective  equipment  and 
healthcare  material,  increase  the  apprenticeship 
premium  for  nursing  students,  boost  healthcare 

to 

(24)  Re-allocating  ESIF  resources  according  to  Regulation  (EU) 
2020/460 of the European Parliament and of the Council of 
30  March  2020,  and  Regulation  (EU)  2020/558  of  the 
European Parliament and of the Council of 23 April 2020. 

25 

staff  numbers  and,  working  capital  for  SMEs,  and 
provided  support  to  digitalise  the  education 
system and public administration.  

for 

risks 

temporary 

unemployment 

support 
in 

Belgium received support under the European 
to 
instrument 
mitigate 
an 
emergency  (SURE)  to  finance  short-time 
work  schemes,  similar  measures  and  as  an 
ancillary,  health-related  measures. 
The 
Council granted financial assistance under SURE to 
Belgium in September 2020 and top-up support in 
April  2021  for  a  maximum  of  EUR  8.197  billion, 
which  was  disbursed  by  25  May  2021.  SURE  is 
estimated  to  have  supported  some  25%  of 
workers and 45% of firms for at least one month 
in 2020 and 10% of workers and 25% of firms in 
2021,  primarily  in  wholesale  and  retail  trade, 
manufacturing,  and  accommodation  and  food 
services.  Belgium  is  estimated  to  have  saved  a 
total of EUR 0.14 billion on interest payments as a 
result of SURE’s lower interest rates.  

via 

the 

provides 

Commission 

tailor-made 
The 
Support 
Technical 
expertise 
Instrument 
to  help  Belgium  design  and 
implement  growth-enhancing  reforms,  including 
for  implementing  its  recovery  and  resilience  plan 
(RRP).  Since  2018,  Belgium  has 
received 
assistance  through  56  technical  support  projects. 
Projects  delivered  in  2021  aimed  for  example  to 
strengthen  the  national  fiscal  framework  and 
policy  evaluation  in  the  budgetary  process,  or 
develop  hydrogen  value  chain  and  open-access 
networks.  The  Commission  also  helped  Belgium 

0.010.010.030.080.120.220.690.710.901.810.00.51.01.52.0SDG 3 Good health and well beingSDG 11 Sustainable cities and communitiesSDG 12 Responsible consumption and productionSDG 15 Life on landSDG 13 Climate actionSDG 7 Affordable and clean energySDG 1 No povertySDG 4 Quality educationSDG 9 Industry, innovation, infrastructureSDG 8 Decent work and economic growth 
                                                 
  
implement  specific  reforms 
in  the  RRP,  for 
instance  for  carrying  out  spending  reviews.  In 
2022,  new  projects  will  start  supporting,  among 
others, the overall RRP monitoring, reporting, audit 
and  control  frameworks  and  assist  with  the 
’Do  no  significant  harm’ 
application  of  the 
principle.   

Belgium  also  benefits  from  other  EU 
programmes,  such  as  the  Connecting  Europe 
Facility, which allocated EU funding of EUR 784.6 
million  to  specific  projects  on  strategic  transport 
networks,  and  Horizon  2020,   which  allocated  EU 
funding of EUR 3 390 million. 

26 

 
 
 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Belgium's progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (25) 
addressed  to  Belgium  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Belgium  to 
date (26),  as  well  as  the  commitments  in  the 
recovery and resilience plan (RRP) (27). At this early 
stage  of  the  RRP  implementation,  overall  80%  of 
the CSRs focusing on structural issues in 2019 and 
2020  have  recorded  at  least  “some  progress”, 
while  20%  recorded  “limited”  (see  Graph  A4.1). 
Considerable  additional  progress  in  addressing 
structural  CSRs  is  expected  in  the  years  to  come 
with the further implementation of the RRP.  

Source: European Commission 

(25)  2021 

CSRs: 

https://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A32021H0729%2801%29&qi
d=1627675454457  
2020  CSRs:  EUR-Lex  -  32020H0826(01)  -  EN  -  EUR-Lex 
(europa.eu) 
2019  CSRs:  EUR-Lex  -  32019H0905(01)  -  EN  -  EUR-Lex 
(europa.eu) 

(26)  Incl.  policy  action 

in 

reported 

the  National  Reform 
Programme,  as  well  as  in  the  RRF  reporting  (bi-annual 
reporting on the progress with implementation of milestones 
and  targets  and  resulting  from  the  payment  request  
assessment). 

relevant 

subset  of 

(27)  Member  States  were  asked  to  effectively  address  all  or  a 
significant 
country-specific 
the 
recommendations issued by the Council in 2019 and 2020 in 
their  RRPs.  The  CSR  assessment  presented  here  takes  into 
account  the  degree  of  implementation  of  the  measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.  Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented  but  considered  as  credibly  announced,  in  line 
with  the  CSR  assessment  methodology,  warrant  “limited 
progress”.  Once  implemented,  these  measures  can  lead  to 
“some/substantial  progress”  or 
implementation”, 
depending on their relevance. 

“full 

27 

Limited Progress20%Some Progress64%Substantial Progress12%Full Implementation4% 
 
                                                 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A4.1: Summary table on 2019, 2020 and 2021 CSRs 

(Continued on the next page) 

28 

BelgiumAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Limited ProgressEnsure 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. Not relevant anymoreNot applicableUsewindfallgainstoacceleratethereductionofthegeneralgovernment debt ratio. Not relevant anymoreNot applicableContinue reforms to ensure the fiscal sustainability of the long-term care  Limited Progressandpensionsystems,includingbylimitingearlyexitpossibilitiesfrom the labour market. Limited ProgressRelevant RRP measures planned as of 2021Improvethecompositionandefficiencyofpublicspending,inparticular through spending reviews, Some ProgressRelevant RRP measures planned as of 2021andthecoordinationoffiscalpoliciesbyalllevelsofgovernmenttocreate room for public investment.Limited Progress2019 CSR 2Limited ProgressRemove 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. Limited ProgressRelevant RRP measures planned as of 2021, 2023, 2024.Improve the performance and inclusiveness of the education and training systems Limited ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026and address skills mismatches.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 20262019 CSR 3Some ProgressFocus investment-related economic policy on sustainable transport, including upgrading rail infrastructure, Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024the low carbon and energy transition Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2026and research and innovation, in particular in digitalisation, taking into account regional disparities. Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025,Tackle the growing mobility challenges, by reinforcing incentives and removing barriers to increase the supply and demand of collective and low emission transport.Some ProgressRelevant RRP measures planned as of 2021,2022, 2023, 2024, 2025, 20262019 CSR4Some ProgressReduce the regulatory and administrative burden to incentivise entrepreneurship Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024andremovebarrierstocompetitioninservices,particularlytelecommunication, retail and professional services.Some Progress2020 CSR1Substantial ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableReinforcetheoverallresilienceofthehealthsystemandensurethesupply of critical medical products.Substantial ProgressRelevant RRP measures planned as of 2022, 20232020 CSR2Some ProgressMitigate the employment and social impact of the COVID-19 crisis, notably by promoting effective active labour market measures Some ProgressRelevant RRP measures planned as of 2023, 2024and fostering skills development.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 20252020 CSR 3Some ProgressEnsure effective implementation of the measures to provide liquidity to assist SMEs and the self-employed Full Implementationand improve the business environment.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024  Front-load mature public investment projects Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026and promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures planned as of 2022Focusinvestmentonthegreenanddigitaltransition,inparticularoninfrastructure for sustainable transport, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026clean and efficient production and use of energy, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024the circular economy, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024digital infrastructure, such as 5G and Gigabit Networks, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2025, 2026and research and innovation.Substantial ProgressRelevant RRP measures planned as of 2022, 2023 
 
 
  
 
Table (continued) 

* See footnote 27 
Source: European Commission 

29 

2021 CSR 1Some ProgressIn2022,usetheRecoveryandResilienceFacilitytofinanceadditionalinvestmentinsupportoftherecoverywhilepursuingaprudent fiscal policy. Preserve nationally financed investment. Full ImplementationNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Some ProgressNot applicableAtthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticularinvestmentsupportingthegreenanddigitaltransition. Limited ProgressNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicable 
 
 
 
 
 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

intends 

The  European  Green  Deal 
to 
transform the  EU  into a  fair and prosperous 
society,  with  a  modern,  resource-efficient 
and competitive economy where there are no 
net  emissions  of  greenhouse  gases  by  2050 
and  where  economic  growth  is  decoupled 
from resource use. This Annex offers a snapshot 
of  the  most  significant  and  economically  relevant 
developments in Belgium in the respective building 
blocks  of 
is 
complemented by Annex 6 on the employment and 
social impact of the green transition and Annex 7 
for circular economy aspects of the Green Deal.  

the  European  Green  Deal. 

It 

Belgium  has  made  progress  in  laying  the 
foundations  for  a  low-carbon  economy,  but 
significant  efforts  are  still  needed  to  reach 
its  EU  greenhouse  gas  (GHG)  reduction 
targets.  Belgium  is  committed  to  accelerate 
climate efforts in line with the EU general climate 
neutrality  target  by  2050.  Between  1990  and 
2020, economy-wide GHG emissions decreased by 
24%,  less  than  the  EU  average.  The  transport 
sector  remains  a  major  source  of  GHG  emissions, 
with  road  users  not  paying  for  the  full  impact  of 
infrastructure  costs, 
externalities  and  variable 
which  increases  traffic  congestion.  Under  current 
land  management  practices,  Belgium  is  projected 
to  see  moderately  increasing  net  removals  by 
2030.  Through  its  national  energy  and  climate 
plan (NECP), Belgium is putting in place additional 
measures  to  achieve  its  2030  target  of  -35%  for 
the  sum  of  sectors  not  covered  by  the  EU 
Emissions Trading System (28). However, this target 
is below the path that would be needed to achieve 
the 2030 EU ambition set by the European Climate 
Law and the Fit for 55 package of proposals, with 
a  gap  of  34  percentage points  (pps)  with  existing 
measures.  The  additional  measures  will  reduce 
this 
to  11  pps.  The  Flemish  and  Federal 
government have recently taken further measures 
to accelerate the climate and energy transition.  

The NECP contains some promising measures, 
including the obligation to renovate within 5 years 
of buying a house in Flanders and a ban on gas as 
a heating system for new buildings as from 2023. 
The Flemish government also intends to introduce 
a  ban  on  the  sale  of  new  diesel  or  petrol-driven 
vehicles as from 2029. Belgium is also investing in 

to 

a second zone of wind turbines off its coast to be 
connected 
the  grid  by  2025-2026.  The 
government  also  agreed  that  from  2026  all  new 
company  cars  will  have  to  be  zero-emission,  and 
rail  infrastructure  will  be  further  developed.  In  its 
recovery  and  resilience  plan,  Belgium  allocates 
50%  of  expenditure  to  climate  objectives  and 
outlines crucial reforms and investments to further 
the  transition  to  a  more  sustainable,  low-carbon 
and climate-resilient economy (29). 

Government  expenditure  on  environmental 
protection  is  among  the  highest  in  the  EU 
(see  Graph  A5.1).  In  2020,  total  government 
in 
expenditure  on  environmental  protection 
Belgium  (1.5%  of  GDP)  included  spending  related 
to waste management, waste water management, 
pollution abatement, protection of biodiversity and 
landscape,  R&D  on  environmental  protection,  as 
well 
protection 
expenditure. The Belgian government has a low to 
medium  exposure  to  uninsured  climate  induced 
damages,  even  though  the  disastrous  2021 
summer floods have demonstrated that budgetary 
exposure to specific dangers can be significant.   

environmental 

other 

as 

Graph A5.1: Fiscal aspects of the green transition: 
Taxation and government expenditure on 
environmental protection 

Source: Eurostat 

Belgium is lagging behind in the transition to 
renewable  energy.  The  share  of  energy  from 
renewable  resources  in  Belgium’s  gross  final 
energy  consumption  reached  13%  in  2020,  but 
only  by  purchasing 
rights  of  1 
percentage  point  from  other  EU  Member  States. 
Belgium aims to reach 17.5% renewable energy in 

renewable 

(28)  Buildings, road and domestic maritime transport, agriculture, 

waste and small industries. 

(29)  The  share  of  financial  allocation  contributing  to  climate 
objectives  has  been  calculated  using  Annex  VI  of  the  RRF 
Regulation. 

30 

0.01.02.03.04.05.06.07.0Environmental taxes (% ofGDP)Environmental taxes (% oftotal taxation)Government expenditure onenvironmental protection (%of total expenditure)BE (2020)EU27 (2020) 
 
 
                                                 
  
                                                 
 
 
2030,  significantly  below  the  25%  that  the 
Commission  expected  Belgium  to  reach  even 
In  2020, 
before  the  European  Climate  Law. 
renewable  electricity  production 
in  Belgium 
amounted  to  25.1%  of  total  electricity  production 
and is currently set to reach 37.4% by 2030. While 
representing  a  significant 
level  of 
ambition  appears  low  in  light  of  the  EU  climate 
neutrality  objective,  the  partial  nuclear  phase-out 
for 
and 
decarbonisation in other sectors such as transport, 
industry and heating.  

increasing  use  of  electricity 

leap,  this 

the 

Graph A5.2: Thematic – Energy 
Share in energy mix (solid, oil, gas, nuclear, 
renewables) 

The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat  

in 

just  under  5% 

In  terms  of  biodiversity  and  ecosystem 
health,  there  is  still  a  lot  of  room  for 
improvement. Conservation measures need to be 
adopted  and/or  further  improved.  With  14.6%  of 
its territory being protected areas and 7.3% of its 
utilised  agricultural  area  under  organic  farming, 
Belgium 
the 
reported  a  deterioration 
conservation  status  of  its  protected  habitats  in 
in  good 
2018,  having  only 
conservation  status,  even  lower  than  in  2012 
(8.6%). The protected species in good conservation 
status  showed  a  promising  increase  from  19%  in 
2012  to  25%  in  2018.  On  birds,  56%  of  the 
breeding  species  showed short-term  increasing  or 
stable  population  trends  (compared  to  66%  over 
2007-2012).  For  wintering  species  requiring  the 
designation  of  Special  Protection  Areas,  the 
corresponding  figure  is  7.6%,  but  there  is  a  large 
proportion  (69%)  of  unknown  short-term  trends. 
Biodiversity  measures  taken  by  Flanders  and 
Wallonia  include  the  creation  of  national  parks, 
works for ecosystem restoration (defragmentation, 
remeandering  of  rivers),  and  targeted  schemes 
such  as  for  the  protection  of  farmland  birds 

(Flanders)  and  hedge  planting  (Wallonia).  On 
measures  applicable  in  marine  sites,  discussions 
remain complex under the common fisheries policy 
since  Belgium  needs  to  agree  on  measures  with 
other Member States. 

Graph A5.3: Thematic - Biodiversity  
Terrestrial protected areas and organic farming 

For terrestrial protected areas data for 2018, and data for the 
EU average (2016, 2017) is lacking. 
Source: European Environment Agency (terrestrial protected 
areas) and Eurostat (organic farming). 

In  terms  of  pollution,  air  quality  in  Belgium 
continues  to  give  cause  for  serious  concern. 
The  latest  available  annual  estimates  by  the 
European  Environment  Agency (30)  point  to  some 
6,500  premature  deaths  attributable  to  fine 
particulate  matter  concentrations,  270  to  ozone 
concentration  and  750  to  nitrogen  dioxide  (NO2) 
concentration.  Flanders  still  fails  to  ensure  in  one 
main  urban  zone,  Antwerp,  compliance  with  the 
limit  values 
for  NO2  set  under  Directive 
2008/50/EC, due to road traffic congestion around 
the  city.  As  regards  air  quality,  among  the 
different  sources  of  air  pollutants,  agriculture  is 
the  main  source  of  ammonia  emissions  (93  %). 
Belgium  has  an  average  risk  of  non-compliance 
with its national  ammonia reduction commitment, 
both  for  2020-2029  and  for  2030  and  beyond. 
Intensive  agriculture 
increasing 
transport notably to/from the Port of Antwerp, and 
relatively  high  population  density  in  Flanders  and 
Brussels  exert  significant  pressure  on  ecosystems 
and  biodiversity.  Water  pollution 
to 
agriculture) in the Flemish region in particular also 
requires close attention.  

in  Flanders, 

(linked 

the 

Since 
remains  a 
transport  sector 
particularly  important  source  of  greenhouse 

(30)  European Environment Agency. Air Quality in Europe  – 2021 
Report.  Please  see  details  in  this  report  on  the  underlying 
methodology, p.106. 

31 

0102030405060708090100200520102015201820192020Solid fossil fuels, peat and oil shaleOilGasNuclearRenewables0510152025302016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic) 
  
  
                                                 
gas  emissions  in  Belgium,  there  is  room  to 
enhance  the  use  of  sustainable  mobility. 
Although increasing fast in recent years, the share 
of  electric  vehicles  and  the  density  of  public 
charging  points  in  Belgium  is  still  below  the  EU 
average.  On  the  other  hand,  Belgium  has  one  of 
the highest shares of electrified railway kilometres 
in the EU. Congestion level remains high and more 
than 10 percentage points above the EU average. 

Graph A5.4: Thematic – Mobility 
Share of zero emission vehicles (% of new 
registrations) 

Zero emission vehicles (passenger cars) include battery and 
fuel cell electric vehicles (BEV, FCEV). 
Source: European Alternative Fuels Observatory.  

32 

0.01.02.03.04.05.06.07.08.09.010.0201620172018201920202021% of new registrationsBEEU27 
  
 
 
 
 
 
 
Table A5.1: Indicators underpinning the progress on EU Green Deal from macroeconomic perspective 

(1) The 2030 non-ETS GHG target is based on the Effort Sharing Regulation. The FF55 targets are based on the COM proposal to 
increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under the 
Governance Regulation (Regulation (EU) 2018/1999).  
(2) Distance to target is the gap between Member States’ 2030 target under the Effort Sharing Regulation and projected 
emissions, with existing measures (WEM) and with additional measures (WAM) respectively, as a percentage of 2005 base year 
emissions.  
(3) Percentage of total revenues from taxes and social contributions (excluding imputed social contributions). Revenues from the 
ETS are included in environmental tax revenues (in 2017 they amounted to 1.5% of total environmental tax revenues at the EU 
level).  
(4) Covers expenditure on gross fixed capital formation to be used for the production of environmental protection services (i.e. 
abatement and prevention of pollution) covering all sectors, i.e. government, industry and specialised providers.  
(5) The climate protection gap indicator is part of the European adaptation strategy (February 2021), and is defined as the share 
of non-insured economic losses caused by climate-related disasters.  
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP).  
(7) Transportation and storage (NACE Section H).  
(8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 
(9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'.  
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO 

33 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)81.6-10%-17%-35%-221-47%-34-11200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%2%9%9%9%10%13%18%Energy efficiency: primary energy consumption (1)Mtoe51.648.548.546.548.443.942.7Energy efficiency: final energy consumption (1)Mtoe36.836.436.136.435.833.335.2201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP2.62.72.72.72.62.52.42.42.2Environmental taxes (% of total taxation)% of taxation (3)5.76.06.06.06.15.86.05.95.6Government expenditure on environmental protection% of total exp.2.352.212.412.462.532.481.661.701.61Investment in environmental protection% of GDP (4) 0.500.480.550.62--0.420.380.41Fossil fuel subsidiesEUR2020bn2.882.973.293.423.47-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100808082838276797669GHG emissions intensity of the economykg/EUR'100.310.310.300.290.290.280.320.310.30Energy intensity of the economykgoe/EUR'100.140.140.140.130.130.130.120.110.11Final energy consumption (FEC)2015=100100.0101.3100.4101.299.592.6103.5102.994.6FEC in residential building sector2015=100100.0100.498.997.995.496.3101.9101.3101.3FEC in services building sector2015=100100.0100.6100.6100.999.796.8102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)0.570.540.510.480.46-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.691670715728605-863762-Years of life lost due to air pollution by NO2per 100.000 inh.14414514512069-12099-Nitrate in ground watermg NO3/litre27.930.329.428.628.3-21.720.7-Terrestrial protected areas% of total-21.524.9-14.514.6-25.725.7Marine protected areas% of total-36.8--36.8--10.7-Organic farming% of total utilised agricultural area5.25.86.36.66.97.38.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'100.630.620.570.540.560.570.890.870.83Share of zero emission vehicles (8)% in new registrations0.30.40.50.71.63.51.01.95.4712191611158812Share of electrified railways%85.686.086.086.186.4-55.656.0-36.139.039.440.141.0-28.928.8-YearBEEUShare of smart meters in total metering points (9) - electricity% of total20180.035.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202155.665.9Number of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver)Progress to policy targetsNational contribution to 2030 EU targetDigitalFiscal and financialindicators1.7 out of 4 (increase from historical level of 1). This is a low/medium risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-20188.910.78.3MobilityBELGIUMEU'Fit for 55'DistanceDistance 
 
  
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension.  While  measures  in  this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the transition.  

In  synergy  with  the  Recovery  and  Resilience 
Facility, the European Social Fund Plus (ESF+) 
will help unlock the potential for ‘green jobs’ 
in Belgium. The Just Transition Fund will help 
mitigate  the  social  impact  of  the  transition 
in  Wallonia  (see  Annex  3).  The  Belgian  national 
energy  and  climate  plan  (NECP)  referred  to  the 
need to up- and reskill the workforce and develop 
new training offerings for those that are already in 
employment and for young people. It also set out 
measures  to  reduce  energy  poverty  and  ensure 
that the population at risk is protected, but did not 
include  a  quantitative  objective  for  reducing 
energy poverty. 

sectors 

energy-intensive 

Key 
remain 
sizeable, there is potential to further expand 
the  green  economy,  which  provides  strong 
jobs.  The 
potential  for  creating  quality 
greenhouse  gas  (GHG)  emissions  intensity  of  the 
Belgian  economy  decreased  between  2015  and 
2020  (in terms  of  gross value  added)  and is  now 
about  10%  below  the  EU  average,  while  the 
average  carbon  footprint  per  worker,  at  17.94 
tonnes  of  GHG  emissions,  is  higher  than  the  EU 
average (13.61 tonnes in the EU; see Graph A6.1). 
Fossil  fuel-based  energy  production  has  been 
identified  as  a  declining  sector  where  job  losses 
are to be expected (31). Belgium's energy-intensive 
including  the  chemical  and  cement 
industry, 
sectors (32),  provides  jobs  for  2.6%  of  the  total 
workforce, 
reskilling 
for  whom  up-  and 
opportunities  will  be  particularly  important  (see 
Annex  15).  The  environmental  goods  and  services 
sector  provides  jobs  to  a  comparatively  small 
share of the employed population (1% vs 2.2% in 
the EU) (33), yet wind and solar energy potential as 

well  as  energy  efficiency  improvements  offer 
further opportunities for green jobs (34).  

The  rapid  rising  energy  prices  may  pose  an 
important  social  challenge,  in  particular  for 
the 
vulnerable  households.  The  share  of 
population  being  unable  to  keep  their  homes 
adequately warm decreased from 5.2% in 2015 to 
4.1%  in  2020,  which  is  below  the  EU  average 
(8.2%).  Lower-income  groups  are  affected  most 
(see  Graph  A6.2).  However,  these  figures  do  not 
take into the recent increase in energy prices, nor 
the flanking measures taken by the government to 
mitigate the impact on consumers. A recent study 
suggests  that  the  impact  of  flanking  measures 
depends  on  the  position  of  the  household  in  the 
income  distribution  and  the  specificities  of  the 
energy 
al.,  2022). 
(Capéau 
Consumption  patterns  vary  across  the  population: 
the  average  carbon  footprint  of  the  top  10%  of 
emitters is about 5.5 times higher than that of the 
bottom  50%  of  the  population  (against  5.3  times 
in the EU). 

contract 

et 

climate 

towards 

Tax  systems  are  key  to  ensuring  a  fair 
transition 
neutrality. 
Revenues  from  environmental  taxes  are  close  to 
the  EU  average  (2.5%  vs.  2.2%  in  EU  in  2020). 
While recent reforms have reduced the labour tax 
wedge  for  very  low-income  earners,  it  remains 
among the highest in the EU for most wage levels 
(see  Annex  17).  Flanking  measures  accompanying 
higher energy costs have the potential to mitigate 
the  impact  on  the  disposable  income  of  lower 
income  households  by  using 
revenue 
generated  from  higher  environmental  taxes  to 
support  disadvantaged  groups.  However,  flanking 
measures  in  Belgium  so  far  were  not  enough 
directed to housing energy efficiency works, which 
could  offer  a  more  permanent  and  sustainable 
solution to higher energy costs. 

the 

(31)  SWD(2021) 275 final. 

(32)  2020 European Semester: Overview of Investment Guidance 
on  the  Just  Transition  Fund  2021-2027  per  Member  State 
(Annex D). 

(33)  There  is  currently  no  common  EU-wide  definition  of  green 
jobs.  The  environmental  goods  and  services  sector  (EGSS) 
accounts  only  report  on  an  economic  sector  that  generates 

(34)

environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

https://publications.jrc.ec.europa.eu/repository/handle/J

RC126047 

34 

 
 
                                                 
                                                                              
 
 
Graph A6.1: Fair green transition challenges 

(1) Numbers are the normalised indicator performance, 
signifying factors relative to the EU27 Average. 
Carbon inequality: average emissions per capita to 10% vs 
bottom 50% (2019).  
Source: Eurostat and World Inequality Database 

Graph A6.2: Energy poverty by income decile 

(1) HH050 :Inability to keep home adequately warm; 
     HY020 : Total disposable household income 
Source: Eurostat EU-SILC survey (2020,2019 for IT) 

35 

0.000.501.001.502.00GHG tonnes per Euroof gross added value(MS/EU)GHG tonnes perworker (MS/EU)Employment share inenergy-intensiveindustries (MS/EU)Share of population inrural areas at risk ofpoverty (MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)BelgiumEU 2020Belgium 20150%5%10%15%20%25%12345678910Unable to keep home adequately warm (per income decile)IncomedecileBelgiumEuropean Union 
  
 
  
 
 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy,  while  minimising  environmental 
impact.  The  green  transition  presents  a  major 
opportunity  for  European  industry  by  creating 
markets for clean technologies and products. It will 
have  an  impact  across  the  entire  value  chain  in 
sectors such as energy and transport, construction 
and  renovation,  food  and  electronics,  helping 
create sustainable, local and well-paid jobs across 
Europe. 

“Belgium  Builds  Back  Circular” 

Belgium  holds  second  place  among  the  EU 
countries  in  circular  secondary  material  use, 
with a 17.6% use rate in 2016 and 23% in 2020, 
way  above  the  EU  average  of  12.8%.  Significant 
investments are included in the RRP, as the federal 
initiative 
(10 
circular projects  and  sensitisation  actions towards 
SMEs),  the  “Recycling  Hub”  of  the  Flemish  Region 
(6 investments in new recycling facilities) and the 
“Deployment  of  Circular  Economy”  in  Wallonia 
(reuse,  upscaling  and  recycling  of  metals  and 
construction materials, promoting eco-design, eco-
innovation and also the selective collection/sorting 
of  material  flows).  The  RRP  also  includes  the 
Brussels  “Strategy  for  the  Economic  Transition” 
that  aims  at 
regional  economic 
instruments towards the circular economy. Overall, 
Belgium  has  made  progress  in  strengthening  its 
circular  economy  policy  framework.  However,  it 
lags  behind  other  EU  countries  on  socioeconomic 
outcomes  (e.g.  exports  of  products  from  eco-

reorienting 

industries or employment in the circular economy). 

Resource  productivity  is  well  above  the  EU 
average.  Resource  productivity  expresses  how 
efficiently the economy uses material resources to 
produce  wealth.  Improving  resource  productivity 
can  help  minimise  the  negative  impacts  on  the 
environment  and  reduce  dependency  on  volatile 
raw  material  markets.  Resource  productivity  in 
Belgium  was  2.7  purchasing  power  standards 
(PPS)  generated  per  kg  of  material  consumed  in 
2020, while the EU average is 2.2 PPS per kg. The 
"material  intensity"  variable  shows  how  many 
additional  kg  of  material  consumption  would  be 
associated with an increase in GDP, at the current 
resource productivity rates. Belgium performs well, 
at the same level as the EU average. 

is  not  yet 
Belgium’s  economic  growth 
decoupled from the generation of waste. After 
a  downward  trend,  waste  generation  has  started 
to  increase  in  recent  years  (5 917  kg/capita  in 
in  2016), 
2018,  whereas  5 573  kg/capita 
remaining  above  the  EU  average  of  5 234 
kg/capita  annually.  Belgium’s  municipal  waste 
recycling  rate  is  around  54%,  well  above  the  EU 
average  of  around  48%,  and  above  the  2020  EU 
targets of 50% and close to the 2025 EU target of   
55%. This comparatively high value illustrates the 
advanced level of waste management in Belgium. 
Overall,  Belgium  performs  well  on  waste 
generation  and  management,  taking  into  account 
the indicator for the recycling and circular material 

Graph A7.1: Employment and value added in the Circular Economy sectors 

Source: Eurostat 

36 

1.16%1.11%1.10%1.13%0.68%0.68%0.68%0.66%1.72%1.73%1.75%1.71%0.94%0.94%0.96%0.97%0.0%0.2%0.4%0.6%0.8%1.0%1.2%1.4%1.6%1.8%2.0%2015201620172018Persons employed in the circular economy, BE (% of total employment)Value added at factor cost, BE (% of GDP )Persons employed in the circular economy, EU27 (% of total employment)Value added at factor cost, EU27 (% of GDP ) 
 
 
 
 
  
Table A7.1: Selected resource efficiency indicators 

Source: Eurostat 

use combined with a lower (than the EU average) 
production of municipal waste per capita in two of 
the  three  regions  (Wallonia  and  Flanders).  Waste 
prevention  and  reuse  are  the  most  preferred 
options and top the waste hierarchy. 

industrial 

solutions, 

leading  position 

Further measures can help Belgium maintain 
its 
in  environmental 
technology.  This  includes  sustainable  product 
design,  resource-efficient  production  processes, 
digital 
symbiosis, 
remanufacturing  in  key  value  chains,  alternatives 
to  the  unsustainable  extraction  of  raw  materials, 
and  new  circular  business  models.  There  is  also 
scope to shift reusable and recyclable waste away 
from  incineration  (43%  since  2017),  including 
through  economic  instruments,  to  ensure that  the 
post-2020  recycling  targets, 
in  particular  on 
plastics,  are  met.  Nevertheless,  Belgium  is  the 
highest  recycler  of  packaging  in  Europe  (84.2%), 
way above the EU average in 2019 (64.8%). 

37 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)2.52.52.52.72.72.72.22020Material Intensity (kg/EUR)0.40.40.40.40.40.40.42020Circular Material Use Rate (%)17.717.618.519.923.523.012.82020Material footprint (Tones/capita)14.013.112.612.411.9-14.62019Waste Waste generation (kg/capita, total waste)-5573-5917--52342018Landfilling (% of total waste treated)-6.4-7.8--38.52018Recycling rate (% of municipal waste)53.553.553.954.454.754.247.82020Hazardous waste (% of municipal waste)-6.0-5.2--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)1.11.11.11.11.1-2.32019Private investment in circular economy (% of GDP)0.20.20.20.2--0.12018Latest year EU 27 
 
  
 
interfederal strategy on Women in Digital. (39)  The 
proportion  of  people  with  at  least  basic  digital 
skills  is  at  EU  average.  For  young  people,  in 
particular the low-qualified, this share is declining. 
Furthermore, the low share of ICT graduates risks 
prolonging this situation. 

Belgium achieves its most solid performance 
in  the  integration  of  digital  technology.  It 
scores  above  the  EU  average  in  all  the  indicators 
of  this  dimension.  Belgium  fares  particularly  well 
on  SMEs  with  at  least  basic  digital  intensity  and 
the  share  of  businesses  using  big data  and  cloud 
(10,  9  and  13  percentage  points  above  the  EU 
average respectively). 

Belgium’s performance is moderate in digital 
public  services,  both  in  public  services  for 
businesses and for citizens. However, the large 
share  of  digital  investments  dedicated  to  this 
dimension  in  the  Belgian  RRP  represents  a  good 
opportunity to improve these results.  

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

integration  of  digital 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
technologies  by 
the 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points (35).  This 
Annex  describes  Belgium’s  DESI  performance.  The 
Belgian 
(RRP) 
dedicates  27%  of  its  total  budget  to  digital 
measures,  well  above  the  20%  target.  It  focuses 
mostly  on  human  capital  and  eGovernment. 
Belgium  still  faces 
important  challenges  on 
connectivity, be it on fibre or 5G rollout. (36) 

resilience  plan 

recovery  and 

Belgium  presents  mixed  results  in  terms  of 
connectivity.  It scores almost at the EU average 
in  terms  of  Very  High  Capacity  Network  (VHCN) 
coverage  (69%  of  households  were  covered  in 
2021  compared  to  the  EU  average  of  70%), 
thanks to its extensive and modern cable network. 
However,  it  still  lags  behind  in  terms  of  fibre 
deployment  (9.7%  of  households  were  covered 
in  2021 
with  fibre  to  the  premises 
the  EU  average  of  50% (37)). 
compared 
Belgium’s  performance  is  also  below  the  EU 
average  when  it  comes  to  5G  deployment,  even 
though  this  could  improve  as  the  5G  spectrum 
auction is expected to take place in the first half of 
2022. 

(FTTP) 

to 

overall 

displays 

Belgium 
a  mixed 
performance  in  human  capital,  with  some 
important  challenges  remaining.  Although  the 
share of individuals employed as ICT specialists is 
above the EU average, demand for ICT specialists 
remains  high  as  reflected  by  the  vacancy  rate  in 
the  ICT  sector,  which  was  at  a  record  high  of 
8.9% (38) in the fourth quarter of 2021. Moreover, 
although  scoring  slightly  above  the  EU  average, 
increasing  the  share  of  women  among 
ICT 
specialists  remains  a  challenge  for  Belgium.  To 
address  this  challenge,  Belgium  has  set  up  an 

(35)  2030  Digital  Compass:  the  European  Way  for  the  Digital 

Decade Communication, COM (2021) 118 final 

(36)  The  share  of  financial  allocation  contributing  to  digital 
objectives  has  been  calculated  using  Annex  VII  of  the  RRF 
Regulation. 

(37)  Broadband  coverage  in  Europe  studies,  data  available  at: 

https://digital-agenda-
data.eu/datasets/digital_agenda_scoreboard_key_indicators/
visualizations 

(38)  Eurostat  

(39)  ‘Women  in  Digital  National  and  Intersectorial  Strategy’  for 
2020-2025  https://news.belgium.be/fr/plan-interfederal-et-
intersectoriel-women-digital 

38 

 
 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

(*) 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type of 
device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage of 
populated areas as reported by operators and national regulatory authorities. 
Source: Digital Economy and Society Index 

39 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA54%54%79%% individuals202120212021ICT specialists5.0%5.0%5.6%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists17%17%20%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage66%68%69%70%100%% households201920202021202120215G coverage (*)NA4%4%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA65%55%86%% SMEs202120212021Big data20%23%23%14%31%% enterprises20182020202020202020CloudNANA47%34%69%% enterprises202120212021Artificial IntelligenceNANA10%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA7275100Score (0 to 100)202120212021Digital public services for businessesNANA8182100Score (0 to 100)202120212021Belgium 
 
  
 
and 

persist (43), 

of  intangible investment  intensity in  Europe  (ratio 
of investment in intangible assets over gross value 
added),  these  investments  are  lagging  behind  in 
the professional and science services, where more 
investment  in  software  and  R&D  could  help 
innovate  and increase  productivity (42).  In  addition, 
differences  across  regions  in  terms  of  innovation 
performance 
coordination 
mechanisms  between  the  federal  and  regional 
governments  should  be  strengthened.  This  also 
applies  to  the  regions.  To  address  some  of  the 
persistent  challenges,  the  recovery  and  resilience 
plan  contains  wide-ranging  measures  focused  on 
developing  digital  skills,  large  R&D  investments 
and  innovation  measures  in  digital  and  emerging 
technologies  such  as  energy  and  the  circular 
economy  and  the  development  of  alternative 
production processes for nuclear medicine to treat 
cancer. 

ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

The  Annex  provides  a  general  overview  of 
the  performance  of  Belgium’s  research  and 
innovation  system. Belgium  is  among  Europe’s 
innovation  leaders  according  to  the  2021  edition 
of  the  European  Innovation  Scoreboard (40).  Its 
performance  has  steadily  improved  over  time 
relative  to  the  EU.  Total  R&D  intensity  reached 
3.5% of GDP in 2020.   

In  the  last  decade  Belgium's  innovation 
performance  has  continued  to  improve.  The 
highly  skilled  workforce,  a  solid  science  base, 
world-class  universities  and  good  public-private 
partnerships  are  strong  assets.  The  share  of  the 
country’s  scientific  publications  among  the  top 
10%  most  cited  scientific  publications  worldwide 
has  gradually  increased  since  2010,  reaching 
12.4%  in  2018  (above  the  EU  average  of  9.9%). 
The  share  of  joint  public-private  publications  has 
significantly 
last  decade 
increased  over  the 
(11.8% in 2019 compared to 10.4% in 2010) and 
Belgium continues to score above the EU average 
in  terms  of  public  R&D  financed  by  businesses 
(with  a  2.9%  increase  between  2010-  2019). 
Business enterprise R&D expenditure (BERD) is the 
highest in the EU (2.53% in 2020, well  above the 
EU  average  of  1.53%),  rising  faster  than  public 
spending.  The  share  of  graduates  in  science  and 
engineering remains largely unchanged and is well 
below the EU average despite high demand on the 
labour market for these profiles. 

to 

continues 

innovation 

Despite the many strengths of the innovation 
system, 
be 
concentrated  in  a  few  industries.  Business 
dynamism  measured  by  employment  in  fast-
growing companies in 50% of the most innovative 
sectors  has  not  taken  off  and  remains  below  the 
EU average. The proportion of high-growth firms is 
below  the  EU-27  average  for  the  main  economic 
sectors  except 
for  electricity,  gas  and  air 
conditioning,  administrative  and  support  service 
activities.  This  points  to  some  weaknesses  in  the 
economy  in  generating  new  growing  businesses 
that  can  accelerate  the  business  renewal  of  its 
economy  towards  new  growth  areas,  such  as 
green  sectors,  as  reflected  by  below  EU  average 
environmental-related (41) 
Although 
Belgium  is  among  the  leading  countries  in  terms 

patents. 

(40)  2021 European Innovation Scoreboard, Country profile: 

(42)  JRC  Country  Factsheet  on  Productivity  –  Belgium,  European 

Belgium 2021  
https://ec.europa.eu/docsroom/documents/45905 

(41)  OECD Environmental Performance Reviews: Belgium 2021 | 

en | OECD 

Commission, internal communication, 2022. 

(43)  2021  Regional 

Innovation  Scoreboard,  Country  profile: 

Belgium 
2021.https://ec.europa.eu/docsroom/documents/45905 

40 

 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
 
Table A9.1: Key research, development and innovation indicators 

Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit 
Data: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

41 

CompoundEUannual growthaverage2010-2020R&D Intensity (GERD as % of GDP)2.062.432.863.163.485.42.32Public expenditure on R&D as % of GDP0.660.720.790.810.923.40.78Business enterprise expenditure on R&D (BERD) as % of GDP1.381.72.052.332.536.21.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 1313.712.4::-0.69.9PCT patent applications per billion GDP (in PPS) 3.53.3  3.2 : :-1.2  3.5Public-private scientific co-publications as % of total publications10.411.411.911.811.20.89.05Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0610.0770.0760.080:2.90.054New graduates in science & engineering per thousand pop. aged 25-3411.912.111.811.9:0.416.3Total public sector support for BERD as % of GDP0.2270.263:0.335:4.40.196R&D tax incentives: foregone revenues as % of GDP0.1090.1430.17840.209:7.40.100Share of environment-related patents in total patent applications filed under PCT (%) 1311.5  11.1 : :-1.9 12.8 Venture Capital (market statistics) as % of GDP0.0350.0280.0480.0610.0747.80.054Employment in fast-growing enterprises in 50% most innovative sectors2.42.71.72.2:-1.05.52020Belgium2010201520182019Finance for innovation and Economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
ANNEX 10: INDUSTRY AND SINGLE MARKET 
ANNEX 10: INDUSTRY AND SINGLE MARKET 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business-friendly  environment 
are  ensured, 
in  which  small  and  medium 
enterprises  (SMEs)  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation.  

Belgium’s  labour  productivity  is  among  the 
highest  in  the  EU,  but  productivity  growth 
rates  have  not  yet  returned  to  pre-2008 
levels. Belgium is one of the best performing EU 
countries in terms of labour productivity, just after 
Luxembourg and Ireland (see Annex 18). However, 
productivity growth rates have not yet returned to 
pre-2008 levels. One of the hardest hit sectors by 
the  COVID-19  pandemic  was  hospitality,  with 
value  added  dropping  by  59%.  The  regions,  the 
federal  level  and  the  EU  have  provided  various 
support schemes to SMEs (44). 

different  financing  resources  such  as  bank  loans, 
equity, trade credit and overdrafts is above the EU 
average (Benedetti-Fasil  et  al,  2021).  However, 
Belgium is average on public procurement, and the 
level  of  involvement  of  SMEs  in  bids  (54%)  and 
public  contracts  (30%)  is  below  the  EU  average 
(60%  and  45%  respectively).  Rising  energy  prices 
weigh upon businesses, which fear an ‘energy gap’ 
(supply crunch) during the green transition. 

Although  the  economy  is  well-integrated  in 
the  single  market,  barriers  remain.  The 
regulatory  burden  in  some  professions  (lawyers, 
architects,  accountants,  real  estate  agents,  tourist 
guides 
their 
in  Wallonia)  may  weigh  on 
competitiveness. Belgium shows a moderate delay 
in incorporating 6 of the 17 single market-related 
directives 
It  faces  more 
infringements procedures than the EU average, but 
takes  less  time  to  comply  with  court  rulings  than 
before,  even  though  this  is  still  above  the  18-
month threshold.  

into  national 

law. 

by 

the 

explained 

The  Belgian  economy  has  been  less affected 
by  materials  shortages,  but  staff  shortages 
and  skills  mismatches  are  above  the  EU 
average.  The  Belgian  economy  is  less  dependent 
on key raw materials than the EU average. This is 
partly 
of 
manufacturing in its economy. However, there was 
a shortage of materials in the construction sector. 
The  RRP  proposes  measures  to  address  staff 
shortages,  skills  mismatches  and  decreasing 
includes  measures  to  support 
productivity. 
technological 
innovation  such  as  developing 
interconnectivity,  digitalising  SMEs  and  public 
training 
accompanying 
and 
administration 
measures (see section on employment).   

share 

low 

It 

The Belgian economy is a very open economy, 
and  the  business  environment  is  considered 
supportive  to  SMEs.  More  than  80%  of  the 
goods  produced  in  Belgium  are exported.  Belgium 
ranks  first  in  trading  across  borders.  It  performs 
better  than  the  EU  average  on  access  to  finance. 
firms  using 
The  proportion  of  high-growth 

(44)  2021 SME Country fact sheet 

42 

 
 
                                                 
 
 
 
 
 
 
 
 
 
Table A10.1: Key Single Market and Industry Indicators 

(Continued on the next page) 

43 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]58.8362.6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]2319.7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]18.217.6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]163.4116.4127.5124.5109.149.8%127.3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]191210111173%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]161315141323%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]7.8%5.4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0.170.160.180.210.22-23%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]32.9029.7027.0024.4035%47.8%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]3.354.54.4-25.0%2.6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]0.40.40.40.2100%0.4%Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1.721.691.671.671.626%1.59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])5   425%3.37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]1945%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]On averageAboveOn averageOn averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]Below averageOn averageOn averageBelow averageHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependenciesInvestment dynamicsSINGLE MARKETCompliance - cooperation EC and MS 
 
 
  
 
Table (continued) 

(*) latest available 
Source:  See above in the table the respective source for each indicator in the column “Description”. 

44 

Investment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]0.5556%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]71.2107100.7101.4-29.8%70.1Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]124.1124.5120.51130.098105.6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]42.44243.8n.a.n.a.-3%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.650.780.790.616.2%0.56EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0.30.140.220.2517.9%0.18% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]8.710.64.52723.7%12.4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]3032241687.5%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]5458543080%70.8%Business demographyAccess to financePublic procurement BUSINESS ENVIRONMENT - SMEs 
 
  
 
ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress,  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.   

public 

administration 
Belgium’s 
effectiveness 
is  ranked  around  the  EU 
average. (45)  The  key  challenge  is  related  to  the 
levels  of 
complex  coordination  between  the 
impact  on  the 
government,  which  have  an 
effectiveness and efficiency of public policies and 
services.  Several  measures 
in  the  Belgium’s 
recovery  and  resilience  plan  aim  to  push  forward 
digitalisation  and  administrative  simplification, 
with  an  emphasis  on  investments  in  the  public 
administration  and  the  justice  system.  This  is 
expected to reduce the administrative burden and 
help create a more business-friendly environment. 

Belgium  scores  well  as  to  the  provision  of 
digital  public  services  for  businesses  and 
citizens. COVID-19, teleworking and the launch of 
more  digital  public  services  have  boosted  usage.  
The  e-government  benchmark  indicator  stood  at 
74.1 in 2021 (EU average of 70.9). In 2021, 74% 
of  internet  users  in  Belgium  interacted  digitally 
with the Belgian authorities.  

Belgium  scores  below  the  average  on 
government transparency. The open data index 
stood at 54.5 in 2021 significantly lower than the 
EU  average 
(see  Graph  A11.1).  The 
publication  of  open  data  at  federal  and  regional 
level  is  diverse  and  there  is  room  to  improve 
coordination between government levels.   

(81.1) 

administration 

workplace 
Public 
attractiveness  and  gender  balance  in  senior 
government  positions  are  a  challenge.  The 
Belgian  government  promotes  flexibility  and 
competence-based Human Resource management 
in  the  civil  service  in  order  to  increase  the 
attractiveness  of  governmental  positions  and  to 
address  the  ageing  of  its  workforce.  Gender 
equality  for  senior  management  positions  is  also 
an  issue.  The  government  also  aims  to  develop 
more  training  and  development  opportunities  for 
staff and more staff mobility.   

(45)  Worldwide Governance Indicators, 2020 

45 

Graph A11.1: Open data maturity 

Source: Open Data Maturity | data.europa.eu 

Graph A11.2: Performance on the single market 
public procurement indicator 

The competition and transparency indicators are triple-
weighted, whereas the efficiency and quality indicators have 
unitary weights. All others receive a 1/3 weighting in the SMS 
composite indicator.  
Source: Single market scoreboard 2020 data 

on 

ranking 

selected 

Belgium’s 
fiscal 
framework´s  indicators  is  below  the  EU 
average.  This  applies  to  the  national  medium-
term  budgetary  framework  and  strength  of  fiscal 
rules indices. In addition, the single market’s public 
procurement  indicator  shows  that  there  is  room 
transparency, 
for 
competition,  access  to  SMEs  and  quality  of 
information in procurement (see Graph A11.2).    

improvement 

terms  of 

in 

A  persistent  lack  of  data  prevents  having  a 
full overview of the efficiency of the justice 
system.  Stakeholders  report  lengthy  delays  in 
certain  courts  and  the  judicial  branch  of  the 

00.10.20.30.40.50.60.70.80.9BEEU27 averageOpen Data PolicyOpen Data QualityOpen Data PortalOpen Data Impact 
 
                                                 
  
 
 
 
Table A11.1: Public administration indicators - Belgium 

(1)  High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions.  
Source:  ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Fiscal Governance 
Database (# 4, 9, 10); Labour Force Survey, Eurostat (# 5, 6, 8), European Institute for Gender Equality (# 7), Single Market 
Scoreboard public procurement composite indicator (# 11); OECD Indicators of Regulatory Policy and Governance (# 12). 

Council  of  State  faces  backlogs  due  to  a  lack  of 
resources. The overall quality of the justice system 
faces  challenges,  in  particular  on  digitalisation, 
which the RRP aims to address. As regards judicial 
independence, no systemic deficiencies have been 
reported. (46) 

(46)  For more detailed analysis of the performance of the justice 
system  in  Belgium,  see  the  2022  EU  Justice  Scoreboard 
(forthcoming)  and  the  country  chapter  for  Belgium  in  the 
Commission’s 2022 Rule of Law Report (forthcoming). 

46 

BE20172018201920202021EU27162.063.064.066.074.070.72nananana74.170.93nananana54.581.1460.060.060.060.0na56.8545.445.346.648.053.055.3610.09.98.68.011.618.670.80.80.70.70.70.3821.020.921.821.621.021.390.680.680.680.68na0.72101.31.31.31.3na1.5114.31.31.3-1.7na-0.7121.93nana1.82na1.7E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3)Index of regulatory policy and governance practices  in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Educational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3) 
 
 
                                                 
 
 
 
 
 
 
 
 
  
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

Table A12.1: Social Scoreboard 

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in  the  EU.  The  implementation  of  its  twenty 
principles on equal opportunities and access to the 
labour  market,  fair  working  conditions,  social 
protection  and  inclusion,  supported  by  the  2030 
EU  headline  targets  on  employment,  skills  and 
poverty reduction, will strengthen the Union’s drive 
towards  a  digital,  green  and  fair  transition.  This 
Annex provides an overview of Belgium’s progress 
in achieving the goals under the European Pillar of 
Social Rights. 

the 

trend, 

slowly 

increasing 

labour  market 

The  poor 
integration  of 
vulnerable  groups,  which  has  worsened 
during  the  COVID-19  crisis,  contributes  to 
poor  social  outcomes  for  these  groups. 
Despite 
the 
employment  rate  (71.6%  in  Q4-2021)  remains 
below  the  EU  average  (74.1%).  Moreover,  there 
are  large  disparities  in  labour  market  outcomes 
between regions and population groups (see Annex 
15  for  regional  disparities  in  the  unemployment 
rate).  The  low-skilled  and  people  with  a  migrant 
background  have  seen  a  further  deterioration  of 
their  position  on  the  labour  market.  In  particular, 
the gap in employment between non-EU born and 
native born women is among the highest in the EU, 
at  27.0  percentage  points  in  2021  (versus  an  EU 
average  of  15.2  percentage  points).  The  disability 
employment  gap  has  increased,  reaching  36.3 
percentage  points,  which  is  well  above  the  EU 
average  of  24.3  percentage  points.  At  the  same 
time, increasing labour demand is reflected in the 
currently record high vacancy rate. Disincentives to 
work stemming from the tax and benefit systems, 
and  low  effectiveness  of  activation  measures,  in 
particular  for  vulnerable  groups,  hold  back  labour 
market  participation.  To  enhance  labour  market 
integration,  the  recovery  and  resilience  plan  (RRP) 
foresees  an  increased  provision  of  personalised 
support  to  vulnerable  jobseekers  in  Wallonia  and 
further  digitalisation  of  the  public  employment 
services  in  Brussels  and  Flanders.  The  European 
Social  Fund  Plus 
(ESF+)  complements  these 
reforms  with  investment  in  active  social  inclusion 
measures that targets people far from the labour 
market. 

47 

(1) Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
Source: European Commission 

and 

high 

adult 

educational 
Skills  mismatches, 
learning 
low 
inequalities 
participation  pose  important  challenges  to 
Belgium,  also  in  view  of  accompanying  the 
fair  green  and  digital  transitions.  Labour 
shortages  are  observed  in  several  low-  and  high-
skilled  professions.  There  are 
considerable 
shortages  in  professional,  technical  and  scientific 
occupations due to the low number of graduates in 
science, technology, engineering and mathematics 
(STEM)  and  concerns  over  the  attractiveness  and 
labour  market  relevance  of  vocational  education 
and training (VET). In compulsory  education, there 
are  large  educational  inequalities  linked  to  pupils’ 
socio-economic 
background, 
manifesting through large differences in outcomes 
between schools, which lead to poor labour market 

and  migrant 

6.754.010.17.73.770.66.32.6103.620.322.044.936.37.854.61.5Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Individuals' level of digital skills (% of population 16-74) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Dynamic labour markets and fair working conditionsEmployment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Social protection and inclusionAt risk of poverty or social exclusion (in %) (2020)At risk of poverty or social exclusion for children (in %) (2020)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Disability employment gap (ratio) (2020)Housing cost overburden (% of population) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Better than averageBest performers 
 
 
 
  
 
 
 
outcomes.  Adult  participation  in  learning  (25-64) 
over  the  past  four  weeks in 2020  was  below the  EU 
average  (10.2%  vs  10.8%),  in  particular  for  the 
low-educated (4.0%).  The share  of  the  population 
with  at  least  basic  digital  skills  is  at  the  EU 
average  (54%),  but  it  has  declined  over  time  and 
especially  for  young  low-skilled  people.  Further 
to 
strengthening 
participate 
the 
performance  and  inclusiveness  of  the  education 
and training systems are important for Belgium to 
contribute to reaching the 2030 EU headline target 
on skills. 

learning  and  enhancing 

for  adults 

incentives 

the 

in 

to 

the  overall  population 

The  share  of  people  at  risk  of  poverty  or 
social  exclusion  remains  high  in  particular 
for  specific  groups.  The  share  of  people  at  risk 
of  poverty  or  social  exclusion  in  2020  was 
significantly  higher  for  low-skilled  adults  (37.9%), 
adults  with  a  migrant 
(non-EU)  background 
(46.5%)  and  persons  with  disabilities  (31.9%) 
relative 
(20.3%), 
suggesting  a  strong  correlation  between  lower 
employment  rates  and  the  prevalence  of  poverty. 
The  share  of  children  at  risk  of  poverty  in  2020 
was, at 15.6%, recording a lower rate compared to 
the  EU  average  (18.9%),  but  with  important 
regional differences (it reached 41% in Brussels in 
2019;  Welzijnsbarometer,  2020).  Overall,  the 
participation  of  young  children  (less  than  3  years 
old)  in  childcare  is  high  (54.6%  in  2020), but this 
rate is much lower for children at risk of poverty or 
social  exclusion  (34.3%).  Strengthening  active 
social 
important  for  Belgium  to 
contribute to reaching the 2030 EU headline target 
on  poverty  reduction.  The  national  RRP  includes 
several measures to boost the employability of the 
most  vulnerable,  including  by  reducing  digital 
inequalities. Furthermore, it includes investment in 
childcare and social housing, including for persons 
with  disabilities.  The  ESF+  will  complement  these 
investments  with  actions 
support  de-
institutionalisation  of  persons  with  disabilities  in 
Wallonia. 

inclusion 

to 

is 

48 

 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Belgium’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  Strategic  Framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training Monitor. While Belgium scores above EU 
average  on  EU-level  targets  and  has  reached 
several of them, its education systems face equity 
challenges  that  risk  to  worsen  due  to  the 
pandemic  and  contribute  to  skills  mismatches. 
Teacher  shortages  could  further  affect  negatively 
educational outcomes. 

and 

and 

Belgium has reached the EU-level targets on 
early childhood education, early leavers from 
tertiary 
training 
education 
educational  attainment,  but  fails  to  make 
significant  progress  in  basic  skills  of  low-
achieving 15-year-olds and in adult learning. 
The  average  good  level  of  students’  basic  skills 
and  digital  skills  are  decreasing,  and  the  gap  in 
educational  outcomes  linked  to  pupils’  socio-
economic and migration background is high. There 
are  also  significant gaps  in  educational  outcomes 
for  students  with  special  needs,  between 

communities  and  regions,  and  between  schools 
and  education  tracks.  Despite  having  reached  the 
EU-level  target  on  reducing  early  school  leaving, 
the  level  is  above  the  EU  average  in  cities. 
Participation  in  adult  learning  is  particularly  low 
for the low-educated (4.0%) (see Annex 12). 

Teachers  are  not  well  prepared  to  provide 
quality instruction to the increasingly diverse 
student  population.  In  the  2018  TALIS  survey, 
Belgian  teachers  stressed  the  high  diversity  of 
students  in  the  classroom  more  than  teachers  in 
other  countries  did  (above  the  EU  average  for 
students being non-native speakers, having special 
needs,  being  migrants  or  with  a  migrant 
background,  and  coming  from  socio-economically 
disadvantaged homes). At the same time, teachers 
indicated  feeling  less  well  prepared  than  the  EU 
average 
in  a  multicultural  and/or 
to  teach 
multilingual setting.  

to 

the 

teaching  profession, 
Strengthening 
improving 
educational 
fundamental 
outcomes  for  all, 
is  highly  relevant  to 
address  the  growing  shortage  of  qualified 
in  other  EU  countries, 
teachers.  More  than 

Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

(1) The 2018 EU average on PISA reading performance does not include ES; d = definition differs, u = low reliability; Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills, exposure of vocational educational training graduates to work based learning and participation 
of adults in learning. 
Source: Eurostat (UOE, LFS); OECD (PISA).  

49 

96%98.2%d91.9%98.3%201992.8%2019Reading< 15%19.5% 20.4%21.3%201822.5%2018Mathematics< 15%20.1% 22.2%19.7%201822.9%2018Science< 15%19.8% 21.1%20.0%201822.3%2018< 9 %10.1%11.0%6.7%9.7%Men11.6%12.5%8.9%11.4%Women8.6%9.4%4.5%7.9%Cities13.6%9.6%9.6% 8.7%Rural areas9.5%12.2%4.9%10.0%Native9.0%10.0%5.8%8.5%EU-born16.6%20.7%10.8%u21.4%Non EU-born19.1%23.4%14.9%21.6%45%43.1%36.5%50.9%41.2%Men37.1%31.2%44.0%35.7%Women49.2%41.8%57.8%46.8%Cities45.7%46.2%52.7%51.4%Rural areas39.1%26.9%44.9%29.6%Native45.3%37.7%52.8%42.1%EU-born46.3%32.7%54.0%40.7%Non EU-born27.6%27.0%38.1%34.7%27.8% 38.3%28.0%201938.9%201920152021IndicatorTargetBelgiumEU27BelgiumEU27Participation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or over 
 
 
 
  
 
principals  report  that  shortages  of  qualified 
teachers  (BE  46.5%,  BEnl  34.2%,  BEfr  65.6%  vs 
EU-23  24.6%),  including  for  students  with  special 
needs (BE 55.6%, BEnl 39.4%, BEfr 80.9% vs EU-
23  37.8%)  and  for  vocational  education  and 
training (VET) (BE 33.8%, BEnl 28.0%, BEfr 43.3% 
vs  EU-23  16.4%),  hinder  schools’  capacity  to 
provide quality instruction (TALIS 2018). While the 
age  pyramid  of  teachers  is  more  favourable  than 
on average in the EU, the number of young people 
choosing  education  as  a  first  career  choice  is 
decreasing.  Newly  recruited  teachers  have  less 
favourable  working  conditions  than  older  ones, 
including temporary contracts and assignments to 
multiple  and  disadvantaged  schools.  Newly 
recruited teachers in Belgium received less formal 
induction  activities  than  the  EU  average  (6.6%  vs 
EU-23  25.1%;  BEnl  1.2%;  BEfr  15.2%).  The  EU’s 
Structural  Reform  Support  Programme  (SRSP)  is 
currently  providing  support 
the  Flemish 
Community  to  develop  coherent  support  for 
teachers  at  the  start  of  their  careers  and  give 
guidance to its highly autonomous schools on how 
to  set  up  such  induction  schemes  (2020-2022). 
is  a 
Continuing 
is  no  minimum 
professional  duty,  but  there 
number  of  defined  hours 
the  Flemish 
in 
Community.  In  the  French  Community,  principals 
reported the second lowest planning of continuing 
professional  development  at  school  level  (23.1% 
vs EU 56.2%; BEnl:  48.2%).  More than one out  of 
two principals reported that there is no mentoring 
programme  for  teachers  in  schools.  Since  TALIS 
2018,  the  Communities  have  been  taken  some 
measures  to  improve  the  professionalisation  of 
the  teaching  profession.  From  2023/2024,  the 
French  Community  will  strengthen  initial  teacher 
training and increase it to 4 years. 

professional  development 

to 

Graph A13.1: Shortages of qualified teachers as 
reported by principals 

Source: Talis 2018 (OECD, 2019) 

Belgium’s  spending  on  education  as  a  share 
of  GDP  was  among  the  highest  in  the  EU 
(6.2%  vs  4.7%)  and  its  expenditure  on 
employee  compensation  as  a  share of public 
spending  on  education  was  also  the  highest 
(82%  vs  64%).  Comparing  Belgium  with  other 
‘high  spending’  countries  and  given  that  spending 
is set to remain high, better educational outcomes 
should be possible. 

The reforms and investment measures under 
the recovery and resilience plan (RRP) aim to 
improve  the  performance  of  the  education 
system,  but  only  few  measures  have  as  a 
specific  objective  to  address  the  structural 
inequalities  in  the  education  system.  Key 
support  is  expected  to  help  improve  the  digital 
performance  of  young  people  in  the  primary, 
secondary  and  higher  education  systems.  In  the 
French  Community,  a  global  action  plan  against 
early school leaving and COVID-19 related support 
to  students  in  compulsory  education,  as  well  as 
support for school infrastructure are foreseen. The 
RRP  will  also  help  modernise  higher  education  in 
the Flemish Community.  

50 

0102030405060708090Shortage of qualified teachers hinder schools’ capacity to provide quality instructionShortage of teacherscompetent to teachstudents with specialneedsShortage of qualifiedteachers for Vocationaleducation and training(VET)%BEBE-nlBE-frEU 
  
 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Belgium.  

Life  expectancy  in  Belgium  is  higher  than  in 
the EU as a whole, but fell sharply in 2020 by 
more than 15 months due to COVID-19. As of 
17  April  2022,  Belgium  reported  2.71  cumulative 
COVID-19  deaths  per  1  000  inhabitants  and  347 
confirmed  cumulative  COVID-19  cases  per  1  000 
inhabitants. Before the pandemic, ischaemic heart 
disease,  strokes  and  lung  cancer  were  the  main 
causes of death. Low treatable mortality was also 
reflected in low cancer mortality rates.  

Graph A14.1: Life expectancy at birth, years 

Graph A14.2: Projected increase in public 
expenditure on health-care over 2019-2070 (AWG 
reference scenario) 

Source: European Commission/EPC (2021) 

Through  its  recovery  and  resilience  plan 
(RRP), Belgium plans to invest EUR 83 million 
in  health-related  measures.  The  investment 
mainly  relates  to  digital  health  services  and 
improving  health  data  collection  and  availability 
(notably  by  developing  standardised  data  sets  to 
improve  data  sharing).  The  plan  also  includes 
investments 
in  nuclear  medicine  for  cancer 
treatment and in health research and innovation. 

Source: Eurostat database 

Health  spending  relative  to  GDP  in  Belgium 
was  above  the  EU  average 
in  2019. 
Compulsory  health 
insurance  ensures  almost 
universal  coverage  (99%  of  the  population).  Most 
is  publicly  funded,  but  still 
health  spending 
remains  slightly  below  the  EU  average.  Public 
spending on health is projected to increase by 0.6 
(pps)  of  GDP  by  2070 
percentage  points 
(compared  to  0.9  pps  for  the  EU) (2021  Ageing 
Report). 

in  Belgium  has 
The  number  of  doctors 
increased  at  a  slower  pace  than  in  most  EU 
countries in the last decade, remaining below 
the EU average. About 44% of doctors are over 
55  years  old,  raising  concerns  about  growing 
shortages in the future. In response, the number of 
students  admitted 
to  medical  schools  has 
increased  in  recent  years.  Workforce  shortages 
were apparent during the first wave of COVID-19, 
especially intensive care nurses. 

51 

80.580.980.981.81.380.481.181.581.681.782.180.8201520162017201820192020EUBelgium6.65.70.90.602468EUBelgium% of GDP20192070increase 
 
  
  
 
 
 
Table A14.1: Key health indicators 

(1) Doctors' density data refer to practising doctors except for FI, EL, PT (licensed to practice) and SK (professionally active). 
Nurses' density data refer to practising nurses (imputation from year 2014 for FI) except for IE, FR, PT, SK (professionally active) 
and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-eu/country-health-profiles_en 
Source:  Eurostat Database; except: * Eurostat Database and OECD, ** ECDC. 

52 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)71.571.070.565.092.1 (2017)Cancer mortality per 100 000 population246.5238.5229.8229.0252.5 (2017)Current expenditure on health, % GDP 10.810.810.810.79.9 (2019)Public share of health expenditure, % of current health expenditure77.377.476.976.879.5 (2018)Spending on prevention, % of current health expenditure 1.41.51.61.62.8 (2018)Acute care beds per 100 000 population512.1500.5496.7500.0387.4 (2019)Doctors per 1 000 population *3.13.13.13.23.8 (2018)Nurses per 1 000 population *11.011.211.18.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **22.521.220.719.815.314.5 (2020) 
 
 
 
 
 
  
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Graph A15.1: Unemployment rate, 2020 in Belgium 

Source: European Commission 

shows  marked 

regional 
Unemployment 
disparities.  Belgian  unemployment  was  5.6%  in 
2020.  Unemployment  in  the  Flemish  region  is 
systematically  lower,  whereas  in  the  Walloon 
region  it  is  higher  except  for  Luxembourg  (see 
Graph  A15.1).  Unemployment  is  highest  in  the 
Brussels  Region  (12.3%),  although  on  a  declining 
trend.  Labour  mobility  across 
regions  has 
increased in recent years, but remains limited. The 
COVID-19 pandemic affected unemployment most 
in  Liège,  followed  by  West-Flanders  and  the 
Brussels Region. 

Climate  transition  affects  Belgian  regions 
differently. 
In  agreement  with  the  Belgian 
authorities,  the  Commission  decided  to  allocate 
the full amount of the Just Transition Fund to the 
Hainaut  province,  in  particular  to  Charleroi,  Mons 
and  Tournai  (see  Graph  A15.2).  These  have  the 
industrial  greenhouse  gas  emission 
highest 
intensity of Belgium, mainly due to the production 
of  cement,  chemicals  and  electricity.  In  addition, 
Hainaut once depended on steel, textiles and coal. 
Its  industrial  transition  is  still  underway,  which 
economic 
poses 
terms 
relatively  high 
development  and  causes  a 
unemployment. 
carbon-intensive 
Furthermore, 
sectors  in  the  region  employ  more  than  13 000 
people. 

difficulties 

of 

in 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development  across  all  regions.  Although  average 
GDP per capita is higher in Belgium than in the EU, 
regions  are 
disparities  between  and  within 
significant.  Regional  disparities  remain  significant 
in Belgium and have not fundamentally decreased 
in  recent  years.  Several  regions  are  drifting  away 
from the EU average. GDP per head in Flanders is 
120%  of  the  EU  average  while  in  Wallonia  it  is 
around  87%  of  the  EU  average  (with  large 
differences  ranging  from  163%  for  Walloon 
Brabant  to  72%  for  Luxembourg)  (see  Table 
A15.1).  It  is  important  to  highlight  the  specific 
performance  of  Brussels,  where  GDP  per  capita 
corresponds to 205% of the EU average, reflecting 
the  importance  of  incoming  commuters.  However, 
real  GDP  growth  between  2010  and  2019  has 
been  higher  in  Flanders  (+1.8%)  and  Wallonia 
(+1.7%)  than  in  Brussels  (+0.9%),  whose  GDP 
growth  rate  is  well  below  the  national  average 
(+1.6%). 

Competitiveness  also  differs  widely  across 
the  2019  Regional 
to 
regions.  According 
Competitiveness Index, the three most competitive 
regions  of  Belgium  are  the  Brussels  Region, 
Walloon  Brabant  and  Flemish  Brabant,  all  scoring 
84.7. While the four Walloon provinces of Hainaut, 
Namur,  Liège  and  Luxembourg  range  between 
59.6  and  64.6,  the  Flemish  provinces  (excluding 
Flemish  Brabant)  range  between  76.4  and  82.4. 
R&I  intensity  appears  to  be  among  the  factors 
explaining the difference in performance. 

Labour  productivity  varies  at  sub-national 
level.  Overall,  real  labour  productivity,  measured 
as  gross  value  added  per  person,  was  130% 
higher  than  the  EU  average  in  2019.  Labour 
productivity  is  the  highest  in  the  Brussels  Region 
and in Walloon Brabant, although real productivity 
growth differs considerably: 0.29% in the Brussels 
Region  and  1.93%  in  Walloon  Brabant.  These 
values represent the lowest  and highest values in 
Belgium, respectively. 

53 

 
 
 
 
Graph A15.2: Territories most affected by the 
climate transition in Belgium 

Graph A15.3: CO2 emissions from fossil fuels per 
head, 2018 in Belgium 

Source: European Commission 

Source: European Commission 

Table A15.1: Selected indicators at regional level 

Source: Eurostat, *EDGAR Database. 

54 

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)GDP growthUnemployment ratePopulation with high educational attainmentR&D expenditureRegional Competitiveness IndexCO2 emissions from fossil fuels  per headEU27=100, 2020EU27=100, 2018Avg % change on preceding year, 2010-2019% of active population, 2020% of population aged 30-34, 2017-2019% of GDP, 2017Range 0-100, 2019tCO2 equivalent, 2018European Union1001001.577.139.42.1957.37.2Belgium1191301.615.647.02.6876.0Brussels Region2051610.8512.355.42.0484.74.6Flemish Region1201271.843.547.92.6576.99.5Antwerp1411432.034.045.13.4582.410.6Limburg951091.833.646.51.5876.88.1East Flanders1071221.792.749.42.6982.111.3Flemish Brabant1281441.793.855.84.2084.710.9West Flanders1141181.753.342.61.3376.46.4Walloon Region871151.676.744.82.5263.110.9Walloon Brabant1631603.526.261.07.6784.77.7Hainaut741041.188.337.61.4359.611.4Liège831081.187.840.42.1863.810.6Luxembourg72981.235.143.00.2860.611.1Namur791041.246.142.01.0264.613.9 
 
 
 
 
 
 
 
 
  
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL DEVELOPMENTS 

solvency 

This  Annex  provides  an  overview  of  key 
developments  in  Belgium’s  financial  sector. 
The  financial  sector  appears  relatively  sound  and 
is 
profitable.  Banks 
moderately 
satisfactory,  with  a  slightly  increasing  capital 
adequacy  ratio  close  to  20.6%  in  Q3  2021  (vs. 
19.3%  in  the  EU).  Credit  quality  is  strong,  with  a 
record  low  non-performing  loans  ratio  of  1.6%  in 
Q3  2021  (vs.  2.1%  in  the  EU).  With  a  return-on-
equity of 8.9%, Belgian banks are only moderately 
profitable  but  still  perform  better,  on  average, 
than  the  EU  (7.1%).  Belgian  banks  face  several 
challenges. Like in other Member States, they need 
to  manage  the  risk  of  persistently  low  interest 
rates, the risk of a sudden rise in inflation, climate 
transition,  digitalisation,  compliance  costs  and 
fierce  competition.  Other  challenges  are  more 
specific  to  Belgium  and 
include  a  buoyant 
residential  real  estate  market,  a  relatively  high 
banking tax and the obligation to pay  a minimum 
interest 
regulated  savings 
accounts, which can put net interest margins under 
pressure in a low interest rate environment. There 
is  also  the  fact  that  the  contributions  to  the 
Belgian  Deposit  Guarantee  Scheme  (DGS)  are  not 
invested into a segregated and diversified portfolio 
of low-risk assets (see previous country reports for 
details). 

(0.11%)  on 

rate 

after 

issued 

having 

(2022), 

vulnerabilities: 

The  residential  real  estate  market  exhibits 
medium vulnerabilities that are mitigated by 
appropriate  and  sufficient  macro-prudential 
policy  measures.  The  European  Systemic  Risk 
a 
Board 
recommendation  in  2019,  has  identified  several 
key 
signs  of  house  price 
overvaluation,  elevated  house  price  growth, 
indebtedness, 
rising  household 
elevated  and 
dynamic  housing  credit  growth  and  loose  though 
gradually  tightening  credit  standards.  Since  2015, 
growth  in  loans  to  households  has  been  strong 
and reached 6.5% in December 2021 (vs. 4.2% in 
the euro area), one of the highest growth rates in 
the EU. Nevertheless, the current policy mix can be 
considered  appropriate  and  sufficient  and  has 
risks.  The 
instrumental 
been 
borrower-based  measures 
loan-to-
value-thresholds  for  various  sub-segments  of 
loans  have  led  to  a  marked  improvement  in  the 
quality of the mortgage production. Moreover, the 
conversion of the current Article 458 of the Capital 
Requirements  Regulation  measure  into  a  sectoral 
systemic  risk  buffer  of  equivalent  magnitude  will 

in  mitigating 

introducing 

continue  to  ensure  an  appropriate  capital  buffer 
against unexpected losses on the stock of loans. 

Graph A16.1: Credit growth 

(1) Loans adjusted for sales and securitisation (year-on-year 
change) 
Source: ECB 

Graph A16.2: Evolution of house price index 

Source: Eurostat 

55 

-8-6-4-20246810122009201020112012201320142015201620172018201920202021Total privateNFCHH%020406080100120140-40-30-20-10010203007Q408Q409Q410Q411Q412Q413Q414Q415Q416Q417Q418Q419Q420Q421Q42015=100Rate of change y-o-y (%)MFI loans for house purchase (y-o-y growth rate)Real House Price Index (2015=100), right axisNominal House Price Index (2015=100), right axis 
 
 
  
 
  
 
 
 
 
 
 
 
 
Table A16.1: Financial soundness indicators 

(1)Last data: Q3 2021. 
(2) Includes issuance by supranationals such as EU.  
Source: ECB, Eurostat, Refinitiv.  

56 

20172018201920202021Total assets of the banking sector (% of GDP)229.2217.8215.4243.8235.3Share (total assets) of the five largest bank (%)68.873.474.075.3-Share (total assets) of domestic credit institutions (%)¹50.950.349.650.652.0Financial soundness indicators:¹- non-performing loans (% of total loans)2.72.32.12.11.6- capital adequacy ratio (%)19.018.818.720.320.6- return on equity (%)8.88.28.65.98.9NFC credit growth (year-on-year % change)6.49.57.52.02.7HH credit growth (year-on-year % change)5.25.77.04.76.5Cost-to-income ratio (%)¹58.261.259.556.754.6Loan-to-deposit ratio (%)¹90.293.293.479.077.3Central bank liquidity as % of liabilities2.92.72.28.48.4Private sector debt (% of GDP)187.8184.6186.6192.0-Long-term interest rate spread versus Bund (basis points)40.539.844.636.235.9Market funding ratio (%)65.464.163.062.7-Green bond issuance (bn EUR)²-10.9-1.317.5 
 
 
 
  
 
ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  Annex  provides  an 
indicator-based 
overview  of  Belgium’s  tax  system.  It  includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax  that  Belgium  derives  most  revenue  from,  the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
provides 
tax  collection  and 
compliance,  and  on  the  risks  of  aggressive  tax 
planning. 

information  on 

Belgium’s  tax  revenues  are  high  in  relation 
to  GDP and  the  tax  system  relies  heavily  on 
labour  taxation.  Total  tax  revenues  amount  to 
43.6%  of  GDP,  compared  to  40.1%  in  the  EU  on 
average.  Tax  revenues  have  remained  broadly 
stable  since  2010,  but  a  series  of  tax  reforms 
have  reduced  labour  taxation  (22.7  %  of  GDP  in 
2020,  a  reduction  of  1  percentage  point  since 
2010).  Revenue  from  recurrent  property  taxes, 
environmental  taxes  and  consumption  taxes  is 
close to the EU average. Revenue from transaction 
taxes  on  immovable  property  are  among  the 
highest in the EU. 

While  recent  reforms  have  reduced  the 
labour  tax  burden  for  those  earning  a  very 
low  wage,  it  remains  among  the  highest  in 
the  EU  for  most  wage  levels.  The  ’tax  shift’ 
reform  reduced  the  total  tax  burden  for  very  low 

Table A17.1: Taxation indicators 

wage  levels  in  various  steps  between  2015  and 
2018.  This  is  seen  in  the  evolution  of  the  tax 
wedge  for  single  workers  at  50%  of  the  average 
wage,  which  decreased  from  41.8%  in  2010  to 
34.6%  in  2021  (the  tax  wedge  measures  the 
difference  between  the  wage  cost  for  employers 
and  the  net  wage  for  workers).  While  these 
reductions  are  substantial,  the  total  tax  burden 
remains  very  high  for  workers  earning  slightly 
more,  e.g.  at  67%  of  the  average  wage  (both  for 
single  earners  and  for  second  earners;  see  Graph 
A17.1). For workers earning 100% or 167% of the 
average wage, the tax wedge is the highest in the 
EU. These high statutory tax rates are coupled with 
a  wide  range  of  deductions  and  exemptions  that 
make  the tax  system  complex  and  untransparent. 
Overall,  the  ability  of  the  tax  and  benefit  system 
to  reduce  income  inequality  (as  measured  by  its 
effect on the GINI coefficient) is high. 

is  doing  moderately  well  on 
Belgium 
digitalising the tax administration, which can 
help  reduce  tax  arrears  as  well  as  cut 
compliance  costs.  Outstanding  tax  arrears  have 
increased slightly by 0.3 pps to 15.5% of total net 
revenue.  This  is  significantly  below  the  EU27 
average of 31.8%, though that average is inflated 
by very large values in a few Member States. The 
Annual  Report  on  Taxation  2021  highlights  room 
for  improvement  in  the  rate  of  filing  tax  returns 

(1)  Forward-looking Effective Tax Rate (OECD) 
(*) EU-27 simple average, as no aggregated EU-27 value 
For more data on tax revenues as well as the methodology applied see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office, 2021, https://data.europa.eu/doi/10.2778/843047 and the ‘Data on Taxation’ webpage (data 
https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en). For more details on VAT GAP see 
European Commission, Directorate-General for Taxation and Customs Union, “VAT gap in the EU : report 2021”, Publications 
Office, 2021, https://data.europa.eu/doi/10.2778/30877 
Source:  European Commission 

57 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)43.644.843.543.637.940.139.940.1Labour taxes (as % of GDP)23.722.221.722.720.020.720.721.5Consumption taxes (as % of GDP)10.911.010.810.510.811.111.110.8Capital taxes (as % of GDP)8.811.510.810.37.18.28.17.9Total property taxes (as % of GDP)3.13.53.53.51.92.22.22.3Recurrent taxes on immovable property (as % of GDP)1.31.21.31.31.11.21.21.2Environmental taxes as % of GDP2.42.72.62.52.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)41.834.133.132.834.633.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)55.952.752.352.252.641.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)23.823.820.319.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)11.010.312.912.48.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)15.215.531.931.8VAT Gap (% of VTTL)11.412.311.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)9.615.09.810.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)1.96.713.647.846.236.7Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity RiskBelgiumEU-27 
 
 
 
  
 
online (European  Commission,  2021b).  The  VAT 
gap  (an  indicator  of  the  effectiveness  of  VAT 
enforcement  and  compliance)  has 
remained 
relatively  stable  in  Belgium  at  12.3%,  above  the 
EU-wide  gap  of  10.5%.  Furthermore,  the  average 
forward-looking  effective  corporate  income  tax 
rate  was  above  the  EU  average  in  2020.  After  a 
spike  to  15%  in  2019,  the  share  of  dividends, 
in  Belgium’s  GDP 
payments  and 
decreased to 9.8% in 2020, below the EU average 
of  10.5%.  A  disproportionate  share  of  such 
transfers  suggests  that  companies  engage  in  a 
country for aggressive tax planning. 

royalties 

Graph A17.1: Tax wedge indicators (%) 

(1) The second earner average tax wedge measures how much extra personal income tax plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), “Taxing Wages 2016”, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en   
(*) EU-27 simple average as there is no aggregated EU-27 value.  
The tax wedge is defined as the sum of personal income taxes and employee and employer social security contributions net of 
family allowances, expressed as a percentage of total labour costs (the sum of the gross wage and social security contributions 
paid by the employer). It is calculated for specific types of tax payers in terms of household composition and income level 
expressed as % of average wage. 
Source:  European Commission 

58 

34.646.252.658.956.9At 50% of Average Wage(Single person)At 67% of Average Wage(Single person)At 100% of Average Wage(Single person)At 167% of Average Wage(Single person)For second earner at 67% ofAverage Wage (Two earnercouple, 1st earner 100% ofAW) (1)BEEU-27 (*) 
 
 
 
 
 
 
 
 
  
 
  
  
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares 
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches.                                                                                                                                                                    
Source: Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022) 

59 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)3.00.71.52.1-5.76.22.01.8Potential growth (y-o-y)2.11.41.21.51.31.41.51.6Private consumption (y-o-y)1.61.51.51.8-8.26.44.22.5Public consumption (y-o-y)1.41.30.62.0-0.44.40.80.3Gross fixed capital formation (y-o-y)6.00.22.54.4-6.17.8-0.13.0Exports of goods and services (y-o-y)5.70.83.62.0-5.59.63.33.9Imports of goods and services (y-o-y) 5.91.33.81.6-5.99.13.64.1Contribution to GDP growth:Domestic demand (y-o-y)2.41.11.52.4-5.86.12.22.0Inventories (y-o-y)0.50.00.1-0.6-0.3-0.50.00.0Net exports (y-o-y)0.2-0.3-0.20.30.40.6-0.2-0.3Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.60.60.40.50.60.60.70.7Capital accumulation (y-o-y)0.60.50.60.70.50.70.60.6Total factor productivity (y-o-y)0.80.40.20.20.20.20.20.2Output gap1.3-0.40.01.5-5.5-1.0-0.5-0.3Unemployment rate8.37.77.95.55.86.35.85.6GDP deflator (y-o-y)2.01.61.51.81.34.54.53.0Harmonised index of consumer prices (HICP, y-o-y)2.12.51.41.20.43.27.81.9Nominal compensation per employee (y-o-y)2.72.51.32.0-1.54.26.05.5Labour productivity (real, hours worked, y-o-y)1.80.00.70.73.1-1.3-2.00.7Unit labour costs (ULC, whole economy, y-o-y)0.92.60.71.54.4-0.25.04.4Real unit labour costs (y-o-y)-1.10.9-0.7-0.33.1-4.50.41.4Real effective exchange rate (ULC, y-o-y)0.10.30.0-1.6....Real effective exchange rate (HICP, y-o-y)0.3-0.30.9-1.21.20.7..Net savings rate of households (net saving as percentage of net disposable income)10.79.95.75.613.9...Private credit flow, consolidated (% of GDP)9.311.77.67.61.1...Private sector debt, consolidated (% of GDP)125.2176.2178.0186.6192.1...of which household debt, consolidated (% of GDP)44.153.057.960.465.6...of which non-financial corporate debt, consolidated (% of GDP)81.1123.2120.1126.3126.5...Gross non-performing debt (% of total debt instruments and total loans and advances) (2)2.64.23.11.81.8...Corporations, net lending (+) or net borrowing (-) (% of GDP)1.31.51.61.13.53.23.33.2Corporations, gross operating surplus (% of GDP)24.223.624.826.125.928.027.727.0Households, net lending (+) or net borrowing (-) (% of GDP)3.63.81.41.06.43.00.70.8Deflated house price index (y-o-y)6.80.80.52.63.6...Residential investment (% of GDP)5.96.15.86.16.26.3..Current account balance (% of GDP), balance of payments2.30.10.60.20.8-0.4-2.2-1.7Trade balance (% of GDP), balance of payments2.5-0.20.60.71.40.1..Terms of trade of goods and services (y-o-y)-0.5-0.60.20.80.5-0.7-1.90.7Capital account balance (% of GDP)-0.20.00.00.10.00.2..Net international investment position (% of GDP)35.649.946.341.144.557.0..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1).58.448.938.837.836.9..IIP liabilities excluding non-defaultable instruments (% of GDP) (1).241.1194.2189.4204.6198.9..Export performance vs. advanced countries (% change over 5 years)0.4-3.2-6.8-4.111.4...Export market share, goods and services (y-o-y)-2.5-3.30.1-0.75.6-0.3-1.3-0.4Net FDI flows (% of GDP)-2.0-3.02.3-1.0-0.33.3..General government balance (% of GDP)-0.7-3.9-2.1-2.0-9.0-5.5-5.0-4.4Structural budget balance (% of GDP)..-2.4-3.0-5.8-4.6-4.5-4.2General government gross debt (% of GDP)92.8100.4104.197.7112.8108.2107.5107.6forecast 
 
 
 
 
  
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 

‘adverse interest-growth rate’ scenario assumes a 
in  the 
less  favourable  snowball  effect  than 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022. 

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 
projected 
public 
expenditure  such  as  pensions,  health  care  and 

in  ageing-related 

change 

This  Annex  assesses  fiscal  sustainability 
risks for Belgium over the short, medium and 
long term. It follows the same multi-dimensional 
approach as the 2021 Fiscal Sustainability Report, 
updated  on  the  basis  of  the  Commission  2022 
spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU.  

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 
level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 

Table A19.1: Debt sustainability analysis for Belgium 

Source:  European Commission 

60 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)97.7112.8108.2107.5107.6107.7107.3107.5108.5109.8111.2112.9114.9117.1Change in debt-2.115.1-4.6-0.70.00.1-0.40.31.01.31.41.72.12.1of whichPrimary deficit0.07.13.93.53.13.12.93.13.43.63.73.83.94.0Snowball effect-1.86.6-9.6-5.3-3.5-3.0-3.3-2.8-2.4-2.3-2.3-2.1-1.8-1.9Stock-flow adjustment-0.31.51.11.10.50.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)15.623.719.719.318.518.318.118.519.119.620.220.721.421.9S1S2Overall index (pps. of GDP)6.67.0of whichInitial budgetary position1.83.0Debt requirement3.6Ageing costs1.23.9of whichPensions0.91.7Health care0.20.5Long-term care0.31.9Others-0.2-0.3                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators8590951001051101151201251301352019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p90859510511512513520192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
  
 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

risk 

sustainability 

Finally,  the  heat  map  presents  the  overall 
classification 
fiscal 
(Table A19.2).  The  short-term  risk  category  is 
based  on  the  S0  indicator,  an  early-detection 
indicator of fiscal stress in the upcoming year. The 
medium-term  risk  category  is  derived  from  the 
debt  sustainability  analysis  (DSA)  and  the  S1 
indicator.  The  DSA  assesses  risks to  sustainability 
based  on  several  criteria: the  projected  debt level 
in 10 years’ time, the debt trajectory (‘peak year’), 
the plausibility of fiscal assumptions and room for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA.  

simulations,  generally  pointing  to  high  risks 
the 
(Tables  A19.1  and  A19.2).  Moreover, 
sustainability  gap  indicator  S1  signals  that  an 
adjustment  of  6.6  pps.  of  GDP  of  the  structural 
primary  balance  would  be  needed  to  reduce  debt 
to 60% of GDP in 15 years’ time (Table 2). Overall, 
the high risk reflects the currently large deficit and 
high  debt,  the  high  sensitivity  to  adverse  shocks 
in  age-related 
and 
expenditure, in particular for pensions. 

the  projected 

increase 

Long-term  risks  to  fiscal  sustainability  are 
high.  Over  the  long  term,  both  the  sustainability 
gap  indicator  S2  (at  7  pps.  of  GDP)  and  the  DSA 
point to high risks. The S2 indicator suggests that, 
to  stabilise  debt  over  the  long  term,  it  will  be 
to  address  budgetary  pressures 
necessary 
stemming from population ageing, especially those 
related to long-term care and pension expenditure 
(Table 2). 

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection  indicator  (S0)  does  not  signal  major 
short-term fiscal risks (Table A19.2). 

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  high.  Both  elements  of  the  Commission’s 
medium-term  analysis  lead  to  this  conclusion. 
First,  the  debt  sustainability  analysis  (DSA)  shows 
that  government  debt  is  projected  to  rise  from 
about  108%  of  GDP  in  2022  to  around  117%  of 
GDP  in  2032  in  the  baseline  (Table 1).  This  debt 
path  is  also  sensitive  to  possible  shocks  to  fiscal, 
macroeconomic  and 
financial  variables,  as 
illustrated  by  alternative  scenarios  and  stochastic 

Table A19.2: Heat map of fiscal sustainability risks for Belgium 

(1)  Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%.  
(2) The debt peak year indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; 
yellow: peak towards the middle of the projection period; red: late peak.  
(3) Fiscal consolidation space measures the share of past fiscal positions in the country that were more stringent than the one 
assumed in the baseline. Green: high value, i.e. the assumed fiscal position is plausible by historical standards and leaves room 
for corrective measures if needed; yellow: intermediate; red: low.  
(4) Probability of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also 
reflecting the initial debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt 
distribution under 2000 different shocks. Green, yellow and red cells indicate increasing uncertainty. 
Source:  European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

61 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallHIGHMEDIUMHIGHHIGHHIGHHIGHDebt level (2032), % GDP11798118125119Debt peak year20322021203220322032Fiscal consolidation space96%84%96%96%96%Probability of debt ratio exceeding in 2026 its 2021 level47%Difference between 90th and 10th percentiles (pps. GDP)35Short termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)OverallHIGHHIGHDeterministic scenariosStochastic projectionsLOWHIGHHIGHHIGH 
 
  
 
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