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

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   EUROPEAN COMMISSION  Brussels, 23.5.2022  COM(2022) 602 final  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 {SWD(2022) 602 final} - {SWD(2022) 640 final}  
 
 
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 

THE COUNCIL OF THE EUROPEAN UNION, 

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

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

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

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

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021.  The  Recovery  and  Resilience  Facility  provides  financial  support  for  the 
implementation of reforms and investment, entailing a fiscal impulse financed by the 
Union.  It  contributes  to  the  economic  recovery  and  to  the  implementation  of 
sustainable and growth-enhancing reforms and investment, in particular to promote the 
green and digital transition, while strengthening the resilience and potential growth of 
the Member States’ economies. It also helps strengthen sustainable public finances and 
boost growth and job creation in the medium and long term. The maximum financial 
contribution  per  Member  State  under  the  Recovery  and  Resilience  Facility  [was] 
updated on [XX] June 2022, in line with Article 11(2) of Regulation (EU) 2021/241.  

On  24  November  2021,  the  Commission  adopted  the  Annual  Sustainable  Growth 
Survey,  marking  the  start  of  the  2022  European  Semester  for  economic  policy 
coordination.  It  took  due  account  of  the  reaffirmed  joint  commitment  of  the  Porto 
Social Summit of May 2021 to further implement the European Pillar of Social Rights, 
proclaimed  by  the  European  Parliament,  the  Council  and  the  Commission  on  17 
November  2017.  The  European  Council  endorsed  the  priorities  of  the  2022  Annual 

1 
2 

OJ L 209, 2.8.1997, p. 1. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
establishing the Recovery and Resilience Facility (OJ L 57, 18.2.2021, p. 17). 

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Sustainable Growth Survey on 25 March 2022. On 24 November 2021, on the basis of 
Regulation  (EU)  No  1176/2011,  the  Commission  also  adopted  the  Alert  Mechanism 
Report, in which it did not identify Belgium as one of the Member States for which an 
in-depth review3 would be needed. On the same date, the Commission also adopted a 
recommendation  for  a  Council  recommendation  on  the  economic  policy  of  the  euro 
area, which was adopted on 5 April 2022 by the Council, as well as the proposal for 
the 2022 Joint Employment Report analysing the implementation of the Employment 
Guidelines  and  the  principles  of  the  European  Pillar  of  Social  Rights,  which  was 
adopted by the Council on 14 March 2022.  

Russia’s  invasion  of  Ukraine,  in  the  wake  of  the  global  pandemic,  has  significantly 
altered the geopolitical and economic context. The impact of the invasion on Member 
States’ economies has been felt for example through higher energy and food prices and 
weaker  growth  prospects.  The  higher  energy  prices  weigh  particularly  on  the  most 
vulnerable households experiencing or at risk of energy poverty. The EU is also seeing 
an unprecedented inflow of people fleeing Ukraine. In this context, on 4 March 2022, 
the  Temporary  Protection  Directive  was  triggered4  for  the  first  time,  granting 
displaced persons from Ukraine the right to legally stay in the EU, as well as access to 
education and training, labour market, healthcare, housing and social welfare. 

Taking  account  of  the  rapidly  changing  economic  and  geopolitical  situation,  the 
European Semester resumes its broad economic and employment policy coordination 
in 2022, while evolving in line with the implementation requirements of the Recovery 
and  Resilience  Facility,  as  outlined  in  the  2022  Annual  Sustainable  Growth  Survey. 
The  implementation  of  the  adopted  recovery  and  resilience  plans  is  essential  for  the 
delivery of the policy priorities under the European Semester, as the plans address all 
or a significant subset of the relevant country-specific recommendations issued in the 
2019  and  2020  Semester  cycles.  The  2019  and  2020  country-specific 
recommendations  remain  equally  relevant  also  for  recovery  and  resilience  plans 
revised, updated or amended in accordance with Articles 14, 18 and 21 of Regulation 
(EU) 2021/241, in addition to any country-specific recommendations issued up to the 
date of submission of the modified plan.  
The General Escape Clause has been active since March 20205. In its Communication 
of  3  March  20216,  the  Commission  set  out  its  view  that  the  decision  on  the 
deactivation or continued application of the general escape clause should be taken as 
an overall assessment of the state of the economy, with the level of economic activity 
in the EU or euro area compared to pre-crisis levels (end-2019) as a key quantitative 
criterion. Heightened uncertainty and  strong downside risks to  the economic outlook 
in  the  context  of  war  in  Europe,  unprecedented  energy  price  hikes  and  continued 
supply  chain  disturbances  warrant  the  extension  of  the  general  escape  clause  of  the 
Stability and Growth Pact through 2023. 

Regulation (EU) No 1176/2011 of the European Parliament and of the Council of 16 November 2011 
on the prevention and correction of macroeconomic imbalances, OJ L 306, 23.11.2011, p. 25. 
Council Implementing Decision (EU) 2022/382 of 4 March 2022 establishing the existence of a mass 
influx of displaced persons from Ukraine within the meaning of Article 5 of Directive 2001/55/EC, and 
having the effect of introducing temporary protection, OJ L 71, 4.3.2022, p. 1.   
Communication from the Commission to the Council on the activation of the general escape clause of 
the Stability and Growth Pact, Brussels, 20.3.2020, COM(2020) 123 final. 

Communication  from  the  Commission  to  the  Council  on  one  year  since  the  outbreak  of  COVID-19: 
fiscal policy response, Brussels, 3.3.2021, COM(2021) 105 final. 

(3) 

(4) 

(5) 

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(6) 

(7) 

Following the approach in the Council opinion of 18 June 2021 on the 2021 Stability 
Programme,  the  fiscal  stance  is  currently  best  measured  as  the  change  in  primary 
expenditure  (net  of  discretionary  revenue  measures),  excluding  COVID-19  crisis-
related  temporary  emergency  measures  but  including  expenditure  financed  by  non-
repayable  support  (grants)  from  the  Recovery  and  Resilience  Facility  and  other  EU 
funds,  relative  to  medium-term  potential  growth7.  Going  beyond  the  overall  fiscal 
stance, in order to assess whether national fiscal policy is prudent and its composition 
is conducive to a sustainable recovery consistent with the green and digital transitions, 
attention  is  also  paid  to  the  evolution  of  nationally-financed8  primary  current 
expenditure  (net  of  discretionary  revenue  measures  and  excluding  COVID-19  crisis-
related temporary emergency measures) and investment. 

On  2  March  2022,  the  Commission  adopted  a  Communication  providing  broad 
guidance  for  fiscal  policy  in  2023,  aiming  at  supporting  the  preparation  of  Member 
States’  Stability  and  Convergence  Programmes  and  thereby  strengthening  policy 
coordination9.  The  Commission  noted  that,  based  on  the  macroeconomic  outlook  of 
the  2022  winter  forecast,  transitioning  from  an  aggregate  supportive  fiscal  stance  in 
2020-2022  to  a  broadly  neutral  aggregate  fiscal  stance  would  appear  appropriate  in 
2023,  while  standing  ready  to  react  to  the  evolving  economic  situation.  The 
Commission announced that the fiscal recommendations for 2023 should continue to 
differentiate  across  Member  States  and  take  into  account  possible  cross-country 
spillovers. The Commission invited the Member States to reflect the guidance in their 
Stability  and  Convergence  Programmes.  The  Commission  committed  to  closely 
monitor  the  economic  developments  and  adjust  its  policy  guidance  as  needed  and  at 
the latest in its Semester spring package of late May 2022. 

(8)  With  respect  to  the  fiscal  guidance  provided  on  2  March  2022,  the  fiscal 
recommendations  for  2023  take  into  account  the  worsened  economic  outlook,  the 
heightened uncertainty and further downside risks, and the higher inflation compared 
to the winter forecast. Against these considerations, the fiscal response has to expand 
public investment for the green and digital transition and energy security, and sustain 
the purchasing power of the most vulnerable households so as to cushion the impact of 
the energy price hike and help limit inflationary pressures from second round effects 
via targeted and temporary measures; fiscal policy has to remain agile so as to adjust 
to the rapidly evolving circumstances, and be differentiated across countries depending 
on their fiscal and economic situation, including as regards the exposure to the crisis 
and the inflow of displaced persons from Ukraine. 

(9) 

On 30 April 2021, Belgium submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 

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The  estimates  on  the  fiscal  stance  and  its  components  in  this  recommendation  are  Commission 
estimates  based  on  the  assumptions  underlying  the  Commission  2022  spring  forecast.  The 
Commission’s estimates of medium-term potential growth do not include the positive impact of reforms 
that are part of the Recovery and Resilience Plan and that can boost potential growth.  

Not financed by grants from the Recovery and Resilience Facility and other EU funds. 

Communication  from  the  Commission  to  the  Council:  Fiscal  policy  guidance  for  2023,  Brussels, 
2.3.2022, COM(2022) 85 final. 

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2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery  and  resilience  plan  for  Belgium10.  The  release  of  instalments  is  conditional 
on  a  decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of 
Regulation  (EU)  2021/241,  that  Belgium  has  satisfactorily  fulfilled  the  relevant 
milestones  and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory 
fulfilment  presupposes  that  the  achievement  of  preceding  milestones  and  targets  has 
not been reversed. 

(10)  On 30 April 2022, Belgium submitted its 2022 National Reform Programme and  its 
2022  Stability  Programme,  in  line  with  the  deadline  established  in  Article  4  of 
Regulation  (EC)  No  1466/97.  To  take  account  of  their  interlinkages,  the  two 
programmes have been assessed together. In accordance with Article 27 of Regulation 
(EU)  2021/241,  the  2022  National  Reform  Programme  also  reflects  Belgium’s  bi-
annual reporting on the progress made in achieving its recovery and resilience plan.  

the 

(11)  The Commission published the 2022 country report for Belgium11  on 23 May 2022. It 
assessed  Belgium’s  progress 
relevant  country-specific 
in  addressing 
recommendations adopted by the Council in 2019, 2020 and 2021, and  took stock of 
Belgium’s  implementation  of  the  recovery  and  resilience  plan,  building  on  the 
Recovery  and  Resilience  Scoreboard.  Based  on  this  analysis,  the  country  report 
identified gaps with respect to those challenges that are not addressed or only partially 
addressed  by  the  recovery  and  resilience  plan,  as  well  as  new  and  emerging 
challenges,  including  those  emerging  from  Russia’s  invasion  of  Ukraine.  It  also 
assessed Belgium's progress on implementing the European Pillar of Social Rights and 
on achieving the EU headline targets on employment, skills and poverty reduction, as 
well as progress in achieving the UN’s Sustainable Development Goals.  

(12)  On  23  May  2022,  the  Commission  issued  a  report  under  Article  126(3)  TFEU.  This 
report discussed the budgetary situation of Belgium, as its general government deficit 
in 2021 exceeded the 3% of GDP Treaty reference value, while its general government 
debt  exceeded  the  60%  of  GDP  Treaty  reference  value  and  did  not  respect  the  debt 
reduction benchmark. The report concluded that the deficit and debt criteria were not 
fulfilled.  In  line  with  the  Communication  of  2  March  2022,  the  Commission 
considered, within its assessment of all relevant factors, that compliance with the debt 
reduction benchmark would imply a too demanding frontloaded fiscal effort that risks 
to jeopardise growth. Therefore, in the view of the Commission, compliance with the 
debt  reduction  benchmark  is  not  warranted  under  the  current  exceptional  economic 
conditions.  As  announced,  the  Commission  did  not  propose  to  open  new  excessive 
deficit  procedures  in  spring  2022  and  it  will  reassess  the  relevance  of  proposing  to 
open excessive deficit procedures in autumn 2022.   

(13)  On  20  July  2020,  the  Council  recommended  Belgium  to  take  in  2020  and  2021  all 
necessary measures, in  line with  the general  escape clause, to  effectively  address  the 
the  ensuing  recovery.  It  also 
pandemic,  sustain 
recommended  Belgium  to  pursue,  when  economic  conditions  allow,  fiscal  policies 
aimed  at  achieving  prudent  medium-term  fiscal  positions  and  ensuring  debt 
sustainability,  while  enhancing  investment.  In  2021,  based  on  data  validated  by 
Eurostat,  Belgium’s  general  government  deficit  fell  from  9.0%  of  GDP  in  2020  to 

the economy  and  support 

10 

11 

Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Belgium (ST 10161 2021 INIT; ST 10161 2021 ADD 1). 
SWD(2022) 602 final 

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5.5% in 2021. The fiscal policy response by Belgium supported the economic recovery 
in 2021, while temporary emergency support measures declined from 4.4% of GDP in 
2020 to 2.9% in 2021. The measures taken by Belgium in 2021 have been in line with 
the Council Recommendation of 20 July 2020. The discretionary budgetary measures 
adopted by the government in 2020 and 2021 were  mostly temporary or matched by 
offsetting measures. At the same time, some of the discretionary measures adopted by 
the  government  over  the  period  2020  to  2021  were  not  temporary  or  matched  by 
offsetting  measures,  mainly  consisting  of  permanent  increases  in  minimum  pensions 
and health sector wages. Based on data validated by Eurostat, general government debt 
stood at 108.2% of GDP in 2021. 

(14)  The  macroeconomic  scenario  underpinning  the  budgetary  projections  in  the  2022 
Stability  Programme  is  favourable.  The  government  projects  real  GDP  to  grow  by 
3.0%  in  2022  and  1.9%  in  2023.  By  comparison,  the  Commission’s  2022  spring 
forecast projects a lower real GDP growth of 2.0% in 2022 and 1.6% in 2023, mainly 
due to the earlier cut-off date for the macroeconomic projections underlying the 2022 
Stability Programme, which was before the start of Russia’s war of aggression against 
Ukraine.  In  its  2022  Stability  Programme,  the  Government  expects  that  the  headline 
deficit  will  decrease  to  5.2%  of  GDP  in  2022  and  to  3.6%  in  2023.  The  decrease  in 
2022 mainly reflects the solid growth in economic activity and the unwinding of most 
emergency  measures.  According  to  the  Programme,  the  general  government  debt-to-
GDP  ratio  is  expected  to  (marginally)  decrease  to  108.0%  in  2022,  and  to  rise  to 
108.8% in 2023. Based on policy measures known at the cut-off date of the forecast, 
the Commission 2022 spring forecast projects a government deficit for 2022 and 2023 
of  5.0%  of  GDP  and  4.4%  respectively.  In  2022,  this  is  in  line  with  the  deficit 
projected in the 2022 Stability Programme, despite the less favourable macroeconomic 
scenario in the Commission 2022 spring forecast, as the budgetary projections in the 
2022  Stability  Programme  take  into  account  a  technical  correction  reflecting  the 
budget impact of the consequences of the Russia’s war of aggression against Ukraine 
in  2022  (only).  In  2023,  the  Commission  2022  spring  forecast  projects  a  higher 
general  government  budget  deficit,  mainly  due  to  a  less  favourable  macroeconomic 
scenario  and  measures  not  yet  specified  in  the  outer  years  of  the  Programme.  The 
Commission 2022 spring forecast projects a broadly similar general government debt-
to-GDP  ratio  of  107.5%  in  2022  but  a  lower  ratio  of  107.6%  in  2023,  reflecting  the 
lower increase in the GDP deflator in the 2022 Stability Programme. 

(15) 

Based  on  the  Commission  spring  2022  forecast,  the  medium-term  (10-year  average) 
potential output growth is estimated at 1.4 %. However, this estimate does not include 
the  impact  of  the  reforms  that  are  part  of  the  Recovery  and  Resilience  Plan  and  can 
boost Belgium’s potential growth. 

In 2022, the government phased out the majority of measures taken in response to the 
COVID-19 crisis, such that the temporary emergency support measures  are projected 
to  decline  from  2.9%  of  GDP  in  2021  to  0.4%  in  2022.  The  government  deficit  in 
2022 is impacted by the measures adopted to counter the economic and social impact 
of  the  increase  in  energy  prices,  which  in  the  Commission  spring  2022  forecast  are 
estimated at 0.5% of GDP in 2022 and 0% of GDP in 2023.12 These measures mainly 
consist  of  lump  sum  transfers  to  households  and  cuts  to  indirect  taxes  on  energy 
consumption. These measures have been announced as temporary and concern 2022. 

12 

The figures represent the level of annual budgetary costs of  those  measures taken since autumn 2021, 
including current revenue and expenditure as well as – where relevant – capital expenditure measures. 

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However, in case energy prices remain elevated also in 2023, some of these measures 
could be continued. Some of these measures are not targeted, notably across the board 
transfers to households to support energy consumption and cuts in VAT rates on gas 
and electricity and excise duties on petrol. The government deficit is also impacted by 
the costs to offer temporary protection to displaced persons from Ukraine, which in the 
Commission  2022  spring  forecast  are  projected  at  0.1%  of  GDP  in  both  2022  and 
202313,  as  well  as  by  the  increased  cost  of  defence  expenditure  (0.1%  of  GDP  in 
2022).  

(16)  On  18  June  2021,  the  Council  recommended  that  in  2022  Belgium14  should  use  the 
Recovery  and  Resilience  Facility  to  finance  additional  investment  in  support  of  the 
recovery  while  pursuing  a  prudent  fiscal  policy.  Moreover,  it  should  preserve 
nationally-financed  investment.  It  also  recommended  Belgium  to  pursue,  when 
economic  conditions  allow,  a  fiscal  policy  aimed  at  achieving  prudent  medium-term 
fiscal positions and ensuring fiscal sustainability in the medium term, and at the same 
time, to enhance investment to boost growth potential. 

(17) 

In  2022,  based  on  the  Commission’s  2022  spring  forecast  and  including  the 
information incorporated in Belgium’s 2022 Stability Programme, the fiscal stance is 
projected  to  be  supportive  at  -2.4%  of  GDP.15  Belgium  plans  to  provide  continued 
support  to  the  recovery  by  making  use  of  the  Recovery  and  Resilience  Facility  to 
finance  additional  investment  as  recommended  by  the  Council.  The  positive 
contribution to economic activity of expenditure financed by Recovery and Resilience 
Facility grants and other EU funds is projected to increase by 0.2% percentage points 
of  GDP  compared  to  2021.  Nationally-financed  investment  is  projected  to  provide  a 
neutral  contribution  to  the  fiscal  stance  in  2022.16  Therefore,  Belgium  plans  to 
preserve nationally financed investment, as recommended by the Council. At the same 
time,  the  growth  in  nationally-financed  primary  current  expenditure  (net  of  new 
revenue measures) in 2022 is projected to provide an expansionary contribution of 2.1 
percentage  points  to  the  overall  fiscal  stance.  This  significant  expansionary 
contribution  includes  the  additional  impact  of  the  measures  to  address  the  economic 
and social impact of the increase in energy prices (0.5% of GDP) as well as the costs 
to  offer  temporary  protection  to  displaced  persons  from  Ukraine  (0.1%  of  GDP). 
Furthermore, the increase in government spending due to the automatic indexation of 
public  sector  wages  and  social  benefits,  and  to  a  lower  extent  to  higher  government 
consumption  of  goods  and  services,  are  also  projected  to  contribute  to  the 
expansionary  contribution  of  nationally  financed  (net)  primary  current  expenditure. 

13 

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16 

The total number of displaced persons from Ukraine to the EU is assumed to gradually reach 6 million 
by  the  end  of  2022,  and  their  geographical  distribution  is  estimated  based  on  the  size  of  the  existing 
diaspora, the relative population of the receiving Member State, and the actual distribution of displaced 
persons from Ukraine across the EU as of March 2022. For budgetary costs per person, estimates are 
based on the Euromod microsimulation model of the Commission’s Joint Research Centre, taking into 
account both cash transfers people may be eligible for as well as in-kind benefits such as education and 
healthcare. 
Council  Recommendation  of  18  June  2021  delivering  a  Council  opinion  on  the  2021  Stability 
Programme of Belgium, OJ C 304, 29.7.2021, p. 1. 
A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other  nationally-financed  capital  expenditure  is  projected  to  provide  an  expansionary  contribution  of 
0.1 percentage point of GDP. 

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(18) 

(19) 

Based on the Commission’s forecast, these measures and drivers of higher expenditure 
are not fully matched by offsetting measures.   

In 2023, the fiscal stance is projected in the Commission 2022 spring forecast at 0.0% 
of  GDP  on  a  no-policy  change  assumption.17  Belgium  is  projected  to  continue  using 
the  grants  from  the  Recovery  and  Resilience  Facility  in  2023  to  finance  additional 
investment in support of the recovery. The positive contribution to economic activity 
of  expenditure  financed  by  Recovery  and  Resilience  Facility  grants  and  other  EU 
funds is projected to remain stable compared to 2022. Nationally-financed investment 
is  projected  to  provide  an  expansionary  contribution  to  the  fiscal  stance  of  0.1 
percentage  point  in  2023.18  At  the  same  time,  the  growth  in  nationally-financed 
primary  current  expenditure  (net  of  new  revenue  measures)  in  2023  is  projected  to 
provide  a  broadly  neutral  contribution  of  0.1  percentage  point  to  the  overall  fiscal 
stance. This includes the impact from the phasing out of the measures addressing the 
increased energy prices (0.5 % of GDP).   

In  the  2022  Stability  Programme,  the  general  government  deficit  is  expected  to 
gradually decline to 3.4% of GDP in 2024 and to 2.7% by 2025. Therefore, the general 
government deficit is planned to go below 3% of GDP by 2025. These projections are 
based  on  a  macroeconomic  scenario  elaborated  prior  to  the  Russian  invasion  of 
Ukraine, and assume measures not yet specified in the outer years of the Programme, 
notably  a  so-called  ‘flexible  budgetary  effort’ amounting 
to  0.8%  of  GDP 
between 2023 and 2025. According to the Programme, the general  government debt-
to-GDP ratio is expected to increase by 2025, specifically with an increase to 109.7% 
in  2024,  and  a  rise  to 110.1%  in  2025.  Based  on  the  Commission’s  analysis,  debt 
sustainability risks appear high over the medium term.  

(20)  At unchanged policies, the rapidly ageing population is expected to worsen the impact 
of ageing-related expenditure on public finances. The 2021 Ageing Report projects an 
increase  of  3.6  percentage  points  by  2040  and  by  5.4  percentage  points  of  GDP  by 
2070  in  ageing-related  spending,  mostly  due  to  pension  and  long-term  care 
expenditure.  In  its  recovery  and  resilience  plan,  Belgium  has  committed  to 
implementing  a  pension  reform  inter  alia  to  improve  the  financial  and  social 
sustainability  of  the  system  and  promote  convergence  amongst  different  pension 
schemes.  With  regard  to  long-term  care,  Belgium  was  already  one  of  the  highest 
spenders in the EU in 201919, and its spending is expected to further increase by 14% 
by 2030 and by 2.2 percentage points of GDP by 2070. Reforms to improve the cost-
efficient use of the different care settings, notably to avoid and delay unnecessary or 
premature  institutionalisation,  which  concerns  one  in  four  people  in  residential  care, 
have  been  started  although  large  regional  differences  are  observed.  The  COVID-19 
crisis  has  stalled  the  implementation  of  planned  cost-saving  measures.  This  suggests 
that there may be scope to further reduce over-institutionalisation while strengthening 
the  use  of  quality  home  care  services  and,  addressing  financial  barriers  that  limit 
access  to  these  services  for  the  most  vulnerable  groups.  A  swift  and  ambitious 
implementation of reforms would help address sustainability concerns.  

17 

18 
19 

A negative (positive) sign of the indicator corresponds to an excess (shortfall) of primary expenditure 
growth  compared  with  medium-term  economic  growth,  indicating  an  expansionary  (contractionary) 
fiscal policy. 
Other nationally-financed capital expenditure is projected to provide a neutral contribution. 
European  Commission,  2021,  The  2021  Ageing  Report:  Economic  and  Budgetary  Projections  for  the 
EU Member States (2019-2070), Institutional Paper 148. 

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(21)  The  Belgian  tax  system  is  characterised  by  a  high  labour  tax  burden,  with  relatively 
high  tax  rates,  and  narrow  tax  brackets.  This  limits  the  real  progressivity  of  the  tax 
system and further weakens  labour participation. While the 2016 tax reform  reduced 
the  tax  burden  on  labour  for  the  lowest  income  earners,  the  tax  wedge  remains  the 
highest in the EU for those earning the average wage. High labour taxation may also 
discourage participation  in lifelong learning. In addition, some design features of the 
unemployment benefit system risk undermining incentives to work for jobseekers and 
may reduce the effectiveness of activation policies. The complexity of social support 
and  limited  possibilities  to  combine  income  from  work  and  social  benefits  may  also 
create  disincentives  to  take  up  work,  in  particular  for  those  with  a  low  earning 
potential.  Furthermore,  partly  to  temper  the  high  tax  rates,  tax  bases  are  eroded  by 
numerous  exemptions,  deductions  and  reduced  rates,  which  create  efficiency  losses 
and  introduce  distortions.  Some  features  of  the  tax  system  contribute  to  distorting 
investment  choices  and  lead  to  overinvestment  in  certain  assets.  For  instance,  rents 
from immovable property are undertaxed and interest on housing loans for secondary 
residences  are  tax-deductible.  Moreover,  tax  incentives  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 of February 
2021 also acts as a disincentive to invest in financial instruments. Moreover, there is 
scope  to  develop  environmental  taxation,  by  reducing  fossil  fuel  subsidies  and 
encouraging  investment  in  the  low  carbon  economy.  For  instance,  reviewing  excise 
duties on fossil fuels used for heating (e.g. gas oil, natural gas), which are low when 
compared to electricity, would encourage investment in low carbon heating solutions. 
Policy options such as introducing road charging for private vehicles (as for lorries), 
while  ensuring  a  sufficient  offer  of  public  transport,  could  be  used  to  address 
congestion,  with  the  average  number  of  hours  per  year  spent  in  traffic  jams  being 
among  the  highest  in  the  EU.  It  could  also  help  reduce  non-ETS  greenhouse  gas 
emissions.  Combining  a  shift  away  from  labour  and  broadening  the  tax  base  could 
improve  the  fairness  of  the  tax  system,  boost  employment  as  well  as  promote  social 
and environmental objectives.  

(22) 

in  addition 

in  2019  and  2020, 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2, to Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These help address 
all  or  a  significant  subset  of  the  economic  and  social  challenges  outlined  in  the 
country-specific  recommendations  addressed  to  Belgium  by  the  Council  in  the 
European  Semester 
to  any  country-specific 
recommendations issued up to the date of adoption of a plan. In particular, Belgium’s 
recovery  and  resilience  plan  is  expected  to  help  address  a  significant  subset  of  the 
challenges  identified  in  the  relevant  country-specific  recommendations.  To  improve 
the  quality  and  efficiency  of  public  spending,  the  recovery  and  resilience  plan  of 
Belgium  includes  the  systematic  integration  of  spending  reviews  in  the  budgetary 
planning cycles of all government levels. Against the background of increasing public 
pension  expenditure,  the  plan  includes  a  pension  reform,  which  aims  inter  alia  at 
improving  the  financial  and  social  sustainability  of  the  pension  system.  The  Belgian 
recovery and resilience plan also includes several measures to address labour market 
challenges  and  strengthen  the  social  and  labour  market  integration  of  vulnerable 
groups,  such  as  people  with  a  migrant  background,  women,  youth,  people  with 
disabilities and people at risk of digital exclusion. Under the plan, Belgium will ensure 
5G deployment. The plan will also contains a reform of the company car tax scheme, 
aiming for the full electrification of company car fleets.  

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(23)  The  implementation  of  the  recovery  and  resilience  plan  of  Belgium  is  expected  to 
contribute  to  making  further  progress  on  the  green  and  digital  transition.  Measures 
supporting  the  climate  objectives  in  Belgium  account  for  49.6%  of  the  plan’s  total 
allocation,  while  measures  supporting  digital  objectives  account  for  26.6%  of  the 
plan’s total allocation. The fully fledged implementation of the recovery and resilience 
plan,  in  line  with  the  relevant  milestones  and  targets,  will  help  Belgium  swiftly 
recover  from  the  fallout  of  the  COVID-19  crisis,  while  strengthening  its  resilience. 
The systematic involvement of social partners and other relevant stakeholders remains 
important  for  the  successful  implementation  of  the  recovery  and  resilience  plan,  as 
well  as  other  economic  and  employment  policies  going  beyond  the  plan,  to  ensure 
broad ownership of the overall policy agenda. 

(24)  Belgium  has  not  yet  submitted  the  Partnership  Agreement  and  the  other  cohesion 
policy  programming  documents20.  In  line  with  Regulation  (EU)  2021/1060  of  the 
European  Parliament  and  of  the  Council  of  24  June  2021,  Belgium  shall  take  into 
account  the  relevant  country-specific  recommendations  in  the  programming  of  the 
2021-2027  cohesion  policy  funds.  This  is  a  prerequisite  for  improving  the 
effectiveness and maximising the added value of the financial support to be received 
from  cohesion  policy  funds,  while  promoting  the  coordination,  complementarity  and 
coherence between these funds and other Union instruments and funds. The successful 
implementation  of  the  Recovery  and  Resilience  Facility  and  cohesion  policy 
programmes also depends on the removal of bottlenecks to investment to support the 
green and digital transition and balanced territorial development.  

(25)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan, Belgium faces a number of additional challenges related to its labour market and 
education  system.  The  record  high  job  vacancy  rate  in  Belgium  indicates  that 
employers are finding it increasingly difficult to hire employees with the right skills. 
Labour  shortages  concern  all  skills  levels  and  are  persistent  in  various  sectors, 
including information and communication technologies, education, the care sector and 
construction.  In  particular,  there  are  too  few  graduates  in  science,  technology, 
engineering  and  mathematics  (STEM),  both  among  upper  secondary  graduates  from 
vocational  programmes  and  among  tertiary  graduates.  Skills  mismatches  are  also 
explained by low participation in adult learning, in particular for the low-educated, for 
whom upskilling could offer better employment opportunities. Under the recovery and 
resilience  plan,  individual  learning  accounts  and  individual  learning  rights  will  be 
developed for employees. However, the share of expenditure on active labour market 
policies  devoted  to  training  is  limited  and  only  a  small  –  although  increasing  – 
proportion  of  jobseekers  follow  a  training  related  to  a  job  in  shortage.  Addressing 
labour  shortages  and  skills  mismatches  is  a  key  lever  for  tackling  the  digital 
transformation and enabling the green transition, as well as for achieving the 2030 EU 
headline targets on employment and skills.  

(26) 

In  terms  of  labour  shortages  and  skills  mismatches,  there  are  concerns  in  particular 
about the performance and inclusiveness of the education system, also in the light of 

20 

Regulation  (EU)  2021/1060  of  the  European  Parliament  and  of  the  Council  of  24  June  2021  laying 
down  common  provisions  on  the  European  Regional  Development  Fund,  the  European  Social  Fund 
Plus,  the  Cohesion  Fund,  the  Just  Transition  Fund  and  the  European  Maritime,  Fisheries  and 
Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal  Security  Fund  and  the  Instrument  for  Financial  Support  for  Border  Management  and  Visa 
Policy. OJ L 231, 30.6.2021, p. 159. 

EN 

9 

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high  public  spending  on  education  21.  The  gap  in  educational  outcomes  is  closely 
linked to students’ socio-economic and migrant background and is among the largest 
in  the  EU,  leading  to  inequalities  in  education.  More  than  one  in  three  young  adults 
with  disabilities do not  finish secondary education. Moreover, only 6.2%  of students 
participated  in  work-based  learning  in  Belgium  in  2019,  well  below  the  EU  average 
(29%). Increasing the labour market relevance of the vocational education and training 
(VET) systems is particularly warranted in the French Community as only 3 out of the 
10  most  popular  upper  secondary  VET  options  prepare  for  occupations  with  labour 
shortages. Overall, concerns in Belgium remain on the attractiveness of VET as a track 
of  excellence,  as  reflected  in  the  large  share  of  the  population  with  a  negative 
perception  of  VET.  Strengthening  the  teaching  profession  would  help  to  retain 
teachers and reduce a growing shortage of qualified teachers. This poses a particular 
challenge to  disadvantaged schools, risking further increasing existing inequalities in 
the  education  system.  Despite  measures  already  taken,  the  attractiveness  of  the 
teaching  profession  would  be  strengthened  by  providing  better  initial  education  and 
continuous professional development, and by developing more flexible and attractive 
career paths.  

(27) 

In  response  to  the  mandate  by  the  EU  Heads  of  State  or  Government  set  out  in  the 
Versailles Declaration, the REPowerEU plan aims to phase out the European Union´s 
dependence on fossil fuel imports from Russia as soon as possible. For this purpose, 
the most suitable projects, investments and reforms at national, regional and EU level 
are being identified in dialogue with the Member States. These measures aim to reduce 
overall reliance on fossil fuels, and shift fossil fuel imports away from Russia. 

(28)  Around 70% of Belgium’s gross inland energy consumption is covered by fossil fuel 
imports. According to 2020 data, dependency on fossil fuel imports from Russia is of 
30%  for  crude  oil  (share  of  total  imports),  higher  than  the  EU27  average  (26%)  and 
comparatively  lower  for  natural  gas  (7%  versus  44%  for  the  EU)  and  for  coal  (39% 
versus 54%)22. The shares in the energy mix of oil (39% of gross inland consumption 
versus 33%) and natural gas (30% versus 24%) are both above the EU average, while 
the share of coal is lower (5% versus 11%). The share of nuclear energy in the energy 
mix is 16% of gross inland consumption. Renewable energy accounted for only 13% 
of final energy consumption in 2020. Belgium will need to take significant additional 
steps  to  accelerate  the  development  of  renewable  energy  sources  in  order  to  make 
progress  towards  climate  neutrality  in  2050  and  reduce  its  dependency  on  imported 
fossil  fuels.  The  development  of  onshore  wind  projects  and  the  related  expansion  of 
the power grid are, however, severely hampered by long delays for building permits in 
particular  due  to  numerous,  repetitive  and  lengthy  appeal  procedures.  Alignment 
between  all  governmental  levels  (federal,  regional,  local)  on  the  objectives  and 
strategy  needed  to  achieve  Belgium’s  renewable  targets  would  provide  for  a  clearer 
framework for investors, and reduce the number of appeals and accelerate renewables 
deployment  and  related  grid  reinforcement.  Furthermore,  permitting  could  be  made 
easier  by  reinforcing  the  capacity  of  appeal  bodies  and  adopting  further  measures  to 
reduce  the  length  of  appeal  procedures  and  the  likelihood  of  successive  appeals,  by 
easing restrictions in the neighbourhood of airports, radars and military zones, and by 

21 
22 

OECD – PISA Results 2018, Volume 1. 
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. 

EN 

10 

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updating  minimum  distance  requirements  (to  wind  turbines).  The  introduction  of 
spatial planning that takes into account the resource potential of territories and higher 
participation of municipalities in renewable energy generation projects could increase 
acceptability among local residents. The potential of rooftop solar (for both small scale 
and  large  scale  installations)  could  be  better  harnessed  by  adopting  framework 
conditions  that  are  predictable  and  sufficient  to  stimulate  self-consumption,  energy 
sharing  and  demand  side  response.  To  accommodate  the  increased  level  of  variable 
energy sources in the electricity grid, the grid would need to be strengthened and made 
smarter. New infrastructure and network investments related to gas are recommended 
to  be  future-proof  where  possible,  in  order  to  facilitate  their  long-term  sustainability 
through future repurposing for sustainable fuels. 

(29)  Additional means to further boost energy efficiency and reduce energy consumption, 
emissions  and  dependency  on  fossil  fuels  include  investments  in  the  hydrogen  value 
chain,  the  energy  renovation  and  the  decarbonisation  of  buildings.  This  implies  that 
subsidies are  redirected to low carbon heating sources  and that regional  bans on oil-
fired boiler or gas boiler installations in new buildings are introduced or accelerated. 
The  fuel  switch  will  be  made  easier  if  energy  consumption  is  reduced  and  energy-
efficiency  improvements  are  stepped  up  (by  encouraging  deeper  renovation)  and 
conducted  in  parallel  to  the  fuel  switch.  Further  increase  in  ambition  for  reducing 
greenhouse  gas  emissions  and  increasing  renewables  and  energy  efficiency  will  be 
needed for Belgium to be in line with the ‘Fit for 55’ objectives. In transport, the high 
share of private  car use accounts for  a large part of the oil consumption in Belgium. 
Promoting ‘soft mobility’ (for example, cycling, shared mobility) and the use of public 
transport, including through improved public transport services, would help reduce the 
use of private cars and the related oil consumption. 

(30)  While  the  acceleration  of  the  transition  towards  climate  neutrality  and  away  from 
fossil  fuels  will  create  significant  restructuring  costs  in  several  sectors,  Belgium  can 
make  use  of  the  Just  Transition  Mechanism  in  the  context  of  cohesion  policy  to 
alleviate  the socio-economic impact  of the transition  in  the most  affected  regions.  In 
addition,  Belgium  can  make  use  of  the  European  Social  Fund  Plus  to  improve 
employment opportunities and strengthen social cohesion. 

(31) 

(32) 

In  the  light  of  the  Commission’s  assessment,  the  Council  has  examined  the  2022 
Stability Programme and its opinion 23 is reflected in the recommendation (1) below.  

In view of the close interlinkages between the economies of euro area Member States 
and  their  collective  contribution  to  the  functioning  of  the  Economic  and  Monetary 
Union,  the  Council  recommended  that  the  euro  area  Member  States  take  action, 
the 
including 
recommendation  on  the  economic  policy  of  the  euro  area.  For  Belgium,  this  is 
reflected in particular in recommendations (1), (2) and (3) below. 

resilience  plans, 

recovery  and 

implement 

through 

their 

to 

HEREBY RECOMMENDS that Belgium take action in 2022 and 2023 to:  

1. 

In  2023,  ensure  prudent  fiscal  policy,  in  particular  by  limiting  the  growth  of 
nationally-financed current expenditure below medium-term potential output growth, 
taking  into  account  continued  temporary  and  targeted  support  to  households  and 
firms  most  vulnerable  to  energy  price  hikes  and  to  people  fleeing  Ukraine.  Stand 
ready to adjust current spending to the evolving situation. Expand public investment 

23 

Under Article 5(2) of Council Regulation (EC) No 1466/97. 

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11 

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for the green and digital transition and for energy security, including by making use 
of the RRF, RePowerEU and other EU funds. For the period beyond 2023, pursue a 
fiscal policy aimed at achieving prudent medium-term fiscal positions and ensuring 
credible  and  gradual  debt  reduction  and  fiscal  sustainability  in  the  medium  term 
through gradual consolidation, investment and reforms. Prioritise reforms to improve 
the fiscal sustainability of long-term care, including by promoting a cost efficient use 
of  the  different  care  settings.  Reform  the  taxation  and  benefit  systems  to  reduce 
disincentives to work by shifting the tax burden away from labour and by simplifying 
the tax and benefit system. Reduce tax expenditures and make the tax system more 
investment-neutral.  

Proceed with the implementation of its recovery and resilience plan, in line with the 
milestones  and  targets  included  in  the  Council  Implementing  Decision  of  13  July 
2021. Submit the 2021-2027 cohesion policy programming documents with a view to 
finalising  their  negotiations  with  the  Commission  and  subsequently  starting  their 
implementation. 

Address  labour  shortages  and  skills  mismatches,  notably  by  improving  the 
performance  and  inclusiveness  of  the  education  and  training  system,  enhancing  the 
quality  and  labour  market  relevance  of  the  vocational  education  and  training  and 
developing more flexible and attractive career paths and training for teachers. 

Reduce  overall  reliance  on  fossil  fuels  by  stepping  up  energy  efficiency 
improvements and the reduction of fossil fuel use in buildings, promoting the use and 
supply of public transport and accelerating the deployment of renewable energies and 
related grid infrastructure by further streamlining the permitting procedures including 
by  reducing  the  length  of  appeal  procedures  and  adopting  framework  conditions  to 
boost investments in solar energy installations. 

2. 

3. 

4. 

Done at Brussels, 

For the Council 
The President 

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