COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Belgium Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Belgium and delivering a Council opinion on the 2023 Stability Programme of Belgium
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Belgium, economic policy, economic recovery, economic reform, education policy, energy policy, fiscal policy, labour market, stability pact, stability programme

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 601 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Belgium Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Belgium and delivering a Council opinion on the 2023 Stability Programme of Belgium {COM(2023) 601 final} - {SWD(2023) 600 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

resilience, it should reduce risks related to the 
housing market (1). 

… but persisting public finances 
challenges 

The  government  response  to  the  energy 
and  COVID-19  crises  have  put  public 
finances  under  continued  pressure  in  the 
last 3 years. By 2022, the government deficit 
was  still  high  at  3.9%,  affected  by  various 
support  measures  related  in  particular  to 
reducing the impact of high energy prices and 
the  war  in  Ukraine.  These  are  set  to  continue 
weighing on public finances in 2023, albeit to 
a lower extent. According to the Commission’s 
Spring  2023  Forecast,  the  government  deficit 
will reach 5% in 2023 (see Annex 20). 

The  high  government  budget  deficits 
projected  in  2023  and  in  2024  reflect 
Belgium’s  structural  fiscal  challenges.  In 
2024, the expected withdrawal of energy crisis 
measures  (see  Box  1.1)  will  ease  budgetary 
pressures  somewhat.  However,  the  projected 
budget  deficit  remains  elevated,  at  4.7%  of 
GDP,  as  permanent  current  spending 
is 
expected  to  grow  rapidly  in  2023-2024.  This 
reflects  the  impact  of  soaring  ageing  costs, 
which  are  estimated  to  increase  by  between 
0.1  and  0.2%  of  GDP  per  year  on  average  in 
the  coming  years  according  to  the  2021 
Ageing  Report (2).  This  is  compounded  by 
multiple  government  spending  indexations  in 
2022-2023  and  by  the  additional  budgetary 
impact  of  permanent  measures  adopted  in 
recent  years  (including  an  increase  in  the 
minimum pension). Furthermore, an energy tax 
residential  gas  and 
reform 

concerning 

(1)  European Systemic Risk Board, 2022. 

(2)  European Commission, 2021 Ageing Report 

A resilient Belgian economy… 

Belgium  recovered  quickly  from  the 
COVID-19  crisis,  but  growth  has  slowed 
as  a  result  of  high  energy  prices  and 
inflation.  Quarterly GDP growth  weakened in 
the  second  half  of  2022  but  showed  more 
resilience  than  initially  expected.  In  the  short 
term,  the  automatic  indexation  of  wages  and 
social 
protected 
has 
households’  purchasing  power  but  may  weigh 
on 
the 
Commission’s Spring 2023 Economic Forecast, 
headline inflation  is projected  to  slow, private 
continue 
consumption 
expanding and real GDP (adjusted for inflation) 
is  expected  to  grow  by  1.2%  in  2023  and  by 
1.4% in 2024. 

competitiveness.  According 

expected 

benefits 

largely 

to 

to 

is 

to 

core 

inflation.  According 

Headline inflation reached record highs in 
2022, hitting 10.3% after 3.2% in 2021. This 
was  mainly  driven  by  exceptionally  high 
energy  prices,  but  also  high  food  prices  and 
rising 
the 
Commission’s Spring 2023 Economic Forecast, 
headline inflation is projected to fall to 3.4% in 
2023  and  to  3.5%  in  2024,  due  to  the  fast 
transmission  of  the  decline  in  wholesale  gas 
and  electricity  prices  to  retail  prices  and  the 
effect of government measures to limit prices. 
Core  inflation  is  projected  to  remain  elevated 
in the first half of 2023, before slowly falling 
as pressures ease. 

Private  debt  remains  high,  even  though 
credit  growth  has  slowed  recently.  The 
sharp  increase  in  mortgage  rates  since  March 
2022  has  slowed  down  the  surge  in  house 
prices.  Together  with  measures  introduced  by 
the National Bank of Belgium to bolster banks’ 

2 

 
 
                                                 
electricity  contracts  is  estimated  to  be  deficit 
increasing  in  2023  and  2024.  A  lack  of 
significant  compensatory budgetary measures 
and  structurally  increasing  current  spending 
increasingly  on  government 
will  weigh 
finances  in  future  years,  while  higher  interest 
rates  will  gradually  increase  the  cost  of 
servicing  public  debt,  thereby  limiting  fiscal 
space further. 

Belgium’s  high  debt-to-GDP  ratio  is  not 
expected to stabilise in the medium term. 
While high inflation allowed for a reduction of 
the  government  debt  ratio 
in  2022,  at 
unchanged  policy  government  debt  would 
increase over the next decade, reaching about 
126%  of  GDP  in  2033  from  105.1%  in  2022 
(see Annex 21). 

Improving  the  design  of 
its  fiscal 
framework will help Belgium address the 
enduring  fiscal  challenges.  The  need  to 
finance  the  green  and  digital  transition  will 
require  it  to  increase  its  level  of  public 
investment.  While  this  is  going  up,  it  remains 
comparatively 
low  among  EU  countries. 
Improving  fiscal  coordination,  strengthening 
the  medium-term  framework  and  reviewing 
the  design,  number  and  coverage  of  fiscal 
rules  may  provide  a  useful  framework  for 
tackling the enduring fiscal challenges. 

… and some structural challenges 
remain 

structural 

Low  labour  market  participation  (people 
working or looking for a job) and regional 
disparities  in  labour  market  outcomes 
remain 
challenges.  While 
Belgium performs well overall in implementing 
the European Pillar of Social Rights (see Annex 
14),  the  high  level  of  inactivity  among  older 
workers and disadvantaged groups constitutes 
a  considerable  challenge  in  Belgium,  also  in 
view  of  the  green  and  digital  transition. 
Moreover,  unemployment 
shows  marked 
regional  disparities,  peaking  at  11.4%  in  the 
Brussels-Capital Region compared to 5.6% for 
Belgium as a whole in 2022 (see Annex 17). 

growth.  While 

Labour  productivity  remains  relatively 
high,  despite  the  sharp  slowdown  in 
productivity 
labour 
productivity per person is still around 130% of 
the  EU  average  (see  Graph  1.1),  productivity 
growth  has  been  lower  in  Belgium  than  the 
euro  area  and  most  of 
its  neighbouring 
countries (3).  This may be explained in part by 
lack  of  business  dynamism  and  a 
the 
comparatively  high 
in 
services,  as  well  as  insufficient  diffusion  of 
innovation and shortage of STEM workers (see 
Annexes 11 and 15). 

level  of  regulation 

Graph 1.1: GDP in current purchasing power 
standards per hour worked and in percentage 
of the EU 

Source: AMECO database, European Commission  

indexation 
Wage  and  social  benefit 
bolstered purchasing power in 2022-2023 
but  resulted  in  high  labour  costs  for 
employers.  The  projected  increase  in  2022 
in  nominal  compensation  per 
and  2023 
employee,  almost  exclusively  driven  by  the 
impact  of  automatic  indexation  in  line  with 
inflation,  is  likely to  outpace  that in  the  three 
main  neighbouring  countries (4).  Following  the 
implementation  of  the  legal  framework  to 
guide  wage  negotiations  in  Belgium,  which 
aims to help firms stay cost competitive while 
safeguarding  households’  purchasing  power, 
there will be no room for real wage increases 
in  the  new  wage  norm  (extent  to  which  the 
average  salary  cost  of  a  company  may 
increase) for 2023-2024 (see Annex 12). 

(3)  2022 Report from the National Productivity Board. 

(4)  National Bank of Belgium, Economic projections for 

Belgium, December 2022. 

3 

100105110115120125130135140145150990205081114172023% of EU27BENLFRDE 
   
                                                 
Box 1.1:  Energy policy response in Belgium 

Belgium  has adopted several support  measures to cushion the impact of energy price inflation 
on  households  and  businesses.  The  Commission’s  2023  Spring  Economic  Forecast  projects  the 
country’s gross  budgetary costs to amount to  0.6% of GDP in 2023 (5).  Most measures  do not 
target  the  most  vulnerable  but  most  of  them  preserve  the  price  signal  in  2023.  Most  energy 
support measures were phased out at the end of Q1-2023. 

While not counted explicitly as a support measure, Belgium’s mechanism of automatic indexation 
of  wages  and  social  benefits  helped  preserve  the  purchasing  power  of  a  large  part  of  the 
population during the energy crisis. Key measures adopted by the government include the energy 
package,  which  provides  monthly  lump  sum  transfers  to  most  households  (up  to  EUR  196  for 
households using electricity and gas) between November 2022 and April 2023, and other lump 
sum transfers to households using heating oil, propane, butane or fuel pellets. The criteria to be 
eligible for the social tariff for electricity and gas was extended, which allowed a larger group of 
vulnerable  households  to  benefit  from  lower  electricity  and  gas  prices.  In  addition,  the 
government  cut  excise  duties  on  petrol  and  lowered  the  VAT  rate  on  electricity  and  gas  from 
21% to 6% between April 2022 and April 2023. 

Belgium applies a national measure in application of Council Regulation (EU) 2022/1854, namely 
a  special  contribution  from  the  international  gas  network  system  operator  Fluxys  in  2023.  A 
contribution rate of EUR 6.9 per tonne of crude oil processed is applied to the petroleum sector 
in  the  fiscal  years  2022  and  2023 (6),  as  well  as  a  cap  on  market  revenues  for  electricity 
producers over the same period. 

Belgium  postponed  the  phase-out  date  of  two  of  its  nuclear  power  plants  by  10  years,  raised 
awareness  of  energy  consumption  through  an  energy  savings  campaign  and  provided  several 
new financial incentives for carrying out energy efficiency renovations. 

its  strong 

Belgium  faces  significant  challenges  in 
moving  to  a  green  and  climate-resilient 
economy.  Given 
reliance  on 
imported  fossil  fuels,  further  efforts  are 
needed for Belgium to become climate-neutral 
in 2050. Additional investments and measures 
to  remove  bottlenecks  to  the  expansion  of 
renewable  energy  sources  and 
the 
the  grid  would  help 
modernisation  of 
decarbonise  electricity  production  and  cope 
with  increased  electrification.  There  is  still 
considerable  scope  for 
increasing  energy 
efficiency  in  buildings  and  also  in  industry 
there  is  room  for  reaching  higher  efficiency. 
Promoting  clean  mobility  solutions  and 
reducing  vulnerabilities  to  climate  change  will 
contribute to the green transition (see Annexes 
6, 7, 8 and 9). 

to 

Belgium  scores  quite  well  on  the  UN’s 
Sustainable  Development  Goals  (SDGs), 
although  challenges  remain  in  certain 
areas  such  as  affordable  and  clean 
energy  (SDG  7).  The  country  is  also  lagging 
behind  on  SDG  15  (Life  on  land).  It  performs 
very well and is making further progress on all 
SDGs  on  productivity  (SDGs  4,  8  and  9). 
Belgium  also  made  progress  on  several 
indicators  related  to  employment  (SDG  8). 
However, on reducing inequalities (SDG 10), it 
is lagging behind on ensuring that people with 
a migrant background participate in the labour 
market  and  on 
in 
educational  outcomes 
socio-
economic background (see Annex 1). 

inequalities 
to 

tackling 

linked 

(5)  For 2022, gross budgetary costs of measures amounted 
to 0.6% of GDP. All of the measures outlined in this box 
were already in place in 2022. 

(6)  Member States can keep or introduce national 
measures that are equivalent to the solidarity 
contribution set in Council Regulation (EU) 2022/1854 
provided they are compatible with the objectives of the 

Regulation and generate higher or comparable 
proceeds. These measures must also cover the 
extraordinary and unexpected profits of businesses 
active in the crude petroleum, natural gas, coal and 
refinery sectors. 

4 

 
                                                 
 
                                                                        
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

sustainability 

Belgium’s  recovery  and  resilience  plan 
(RRP)  aims  to  address  key  challenges 
related  to  mobility  and  public  works, 
and 
productivity, 
innovation,  and  digital  and 
social 
inclusion.  It  consists  of  35  reforms  and  105 
investments  that  are  supported  by  EUR  5.9 
billion  in  grants,  representing  1.2%  of  GDP 
details) (7). 
(see 
Complementary  recovery  plans  were  adopted 
at different levels of government. 

for  more 

Annex  3 

of 

implementation 

Belgium’s 
The 
recovery and resilience plan is underway, 
however  with  increasing  risk  of  delays. 
Belgium  has  not  yet  submitted  a  payment 
request.  An  effective  governance  will  be 
needed  to  allow  for  a  swift  and  steady 
implementation.  The  plan  is  expected  to  be 
revised  in  2023,  to  include  among  others  a 
REPowerEU  chapter,  while  taking  into  account 
the  downward  revision  of  the  RRF  maximum 
grant allocation to Belgium resulting from the 
general update of grant allocations to Member 
States  in  2022.  Belgium  also  expressed  its 
intention  on  31  March  2023  to  request  EUR 
1,024,900,000 of additional loan support. The 
following,  more  detailed  review  of  measures 
being  implemented  under  the  RRP  in  no  way 
implies 
formal  Commission  approval  or 
rejection of any payment requests. 

the 

digital 

Measures  to  boost  the  digital  transition 
implemented.  Belgium’s  RRP 
are  being 
supports 
transition  with 
in  the  digitisation  of  public 
investments 
administration, in skills and digital inclusion, in 
cybersecurity  and  in  connectivity.  In  view  of 
the first payment request, Belgium has started 
the  reforms  needed  to  enable  the  digitisation 

(7)  In line with Article 11(2) of the Recovery and Resilience 
Facility regulation, the maximum financial contribution 
for Belgium was also updated on 30 June 2022 to EUR 
4.5 billion in grants. 

5 

of  public  administration  and  5G  roll-out.  In 
particular, the federal government has worked 
on  introducing  a  program  management  office 
with a clear governance structure to digitalise 
the  FPS  Justice.  The  Brussels-Capital  Region 
has  also  taken  initial  steps  to  set  up  regional 
data  exchange  platforms.  One  of  them  will 
enable  urban  ‘digital  twins’  to  be  established 
(virtual  representations  of  a  city’s  physical 
facilitate 
assets),  while 
interactions  between  the  administration  and 
individuals/businesses.  Belgium  has  also 
worked  on  adopting  a  plan  to  implement  EU 
Connectivity Toolbox best practices, including a 
roadmap  for  simplifying  the  licensing  and 
permitting procedures relevant for the roll-out 
of 5G and very high capacity networks. 

the  other  will 

progress 

is  making 

Belgium 
on 
implementing  measures  that  contribute 
to  the  green  transition.  The  RRP  supports 
the  green  transition  through  investments  and 
reforms in areas such as sustainable mobility, 
renovation  of  buildings, 
energy-efficient 
the  circular 
industry  decarbonisation  and 
economy. Several measures in the plan aim to 
invest in the hydrogen value chain. As part of 
the  first  set  of  milestones  and  targets,  the 
the 
federal 
preferential  tax  scheme  for  company  cars, 
limiting  it  to  cars  with  zero  emissions  from 
2026  onwards.  It  has  also  amended  the 
‘mobility  budget’  to  promote  alternatives  to 
company  cars  for  employees.  Flanders  has 
worked  on  adopting  a  framework  to  deploy 
charging  infrastructure,  whereas  the  federal 
government  has  worked  on  adopting  a  tax 
incentive  to  install  private  and  semi-public 
charging points across the country. 

government 

revised 

has 

that 

underway. 

strengthen 

social 
Measures 
resilience  are 
RRP 
strengthens  social  resilience  with  measures 
that promote inclusive education systems, the 
participation of vulnerable groups in the labour 
market, and an increase in social housing and 

The 

 
 
                                                 
Box 2.1:  Key deliverables under the RRP in 2023-2024 

  Adoption of pension system reform 

 

Integration of spending reviews into the budgetary process 

  Delivery of instruments to raise cybersecurity awareness and increase cyber resilience  

  Award of contracts for hydrogen projects 

 

Investments to make public and private buildings more energy efficient 

  Award of contracts for recycling facilities and circular projects 

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

  Upgrade of railways and works to make stations more accessible 

  Deployment of charging stations for electric vehicles 

  Digitisation of the justice system 

  Digitisation of administrative and tendering procedures  

  Equipping schools with ICT infrastructure and devices 

  Adoption  of  legislation  to  fight  discrimination  and  promote  labour  market  integration  of 

vulnerable groups 

early  childcare.  The  RRP  also 
includes 
measures  to  reform  the  end  of  career  rules 
and the pension system in order to (i) address 
social  and  financial  sustainability  challenges; 
(ii)  increase  the  employment  rate  of  older 
workers; (iii) increase the solidarity role of the 
pension  system;  and  (iv)  ensure  convergence 
between  and  within  the  different  pension 
systems. 
In  the  field  of  education,  the 
Brussels-Capital  Region  has  started  equipping 
schools/institutions  with  suitable  ICT  devices 
and infrastructure. The French Community has 
developed  a  response  to  the  psychosocial, 
educational  and  pedagogical  problems  of 
pupils in primary and secondary schools and to 
combatting  early  school  leaving  by  deploying 
additional 
teachers, 
educators,  psychological  support  staff).  In  the 
field  of  social  infrastructure,  Wallonia  has 
started to develop public housing and housing 
for vulnerable people. 

(such  as 

resources 

to 

strengthen 

economic 
Measures 
resilience  are  ongoing.  The  RRP  aims  to 
improve  the  labour  market  with  measures 
focused  on  skills  acquisition  in  line  with 
labour  market  needs, 
current  and  future 
including  the  green  and  digital  transition.  It 
also  includes  measures  to  help  develop  the 

circular  economy,  address 
climate  and 
environmental  risks  and  strengthen  resilience 
to  foreign  supply  disruptions.  Since  the  plan 
was adopted, the federal government has also 
worked  on  reforms  to  ensure  that  all  workers 
are  entitled  to  an  average  of  5  days  of 
training  a  year  and  that  companies  have 
incentives  to  provide  training.  Wallonia  has 
also adopted the necessary legal framework to 
provide  coaching  and  solutions-based  support 
for jobseekers. To support the development of 
the  circular  economy,  Flanders  has  appointed 
a  steering  group  for  its  governance  and 
adopted  a  roadmap  and  work  agendas  for 
guiding circular economy projects. 

Belgium  is  implementing  measures  to 
improve  the  quality  and  composition  of 
public  expenditure.  The  RRP  also  includes 
reforms 
to  make  public  spending  more 
efficient  and  sustainable.  In  view  of  the 
systematic  integration  of  spending  reviews  in 
their  budgetary  process,  the  Walloon  Region, 
Brussels-Capital  Region  and 
federal 
government  have  worked  on  implementing 
pilots,  while  Flanders  has  modified 
its 
introduced  an 
budgetary  framework  and 
expenditure norm (maximum growth path). 

the 

6 

 
 
FURTHER PRIORITIES AHEAD 

addressing 

employment, 

Beyond the challenges tackled in its RRP, 
Belgium  faces  additional  ones.  These 
include  addressing  fiscal  sustainability  issues, 
improving  the  tax  and  benefits  system  to 
boost 
skills 
mismatches and taking resolute steps towards 
achieving  climate  neutrality.  Addressing  these 
challenges will also help Belgium make further 
progress in achieving the SDGs where there is 
currently  room  for  further  improvement,  in 
particular SDG 7 (Affordable and clean energy) 
and  SDG  10  (Reduced  inequalities)  on  labour 
educational 
market 
inequalities.  Moreover,  closing  the  gap  in 
regional disparities would stimulate long-term 
sustainable and inclusive growth, boosting the 
country’s economic potential. 

participation 

and 

Ensuring the sustainability of 
public finances as the population 
ages 

Belgium’s  fiscal  sustainability  challenges 
remain  substantial  (see  Annex  21).  These 
relate  to  both  the  high  level  of  government 
debt  and  the  projected  increase  in  ageing 
costs,  mostly  due  to  pension  and  long-term 
care spending. 

The  2022  Annual  Report  of  the  Study 
Committee (8)  on  Ageing  projects  pension 
spending  to  increase  by  3.1  percentage 
points  (pps)  of  GDP  between  2019  and 
2070.  This  is  almost  fully  in  line  with  the 
projected  increase  of  3  pps  of  GDP  in  the 
Commission’s 2021 Ageing Report (9). Over the 

(8)  The Study Committee (‘Comité d’etude sur le 

vieillissement’) has been created by law in 2001. It 
publishes an annual report on the budgetary and social 
consequences of ageing in Belgium. 

(9)  Note that the pension projections of the Study 
Committee and the Ageing Report are not fully 

same  time  span,  the  Commission  projects 
pension spending in the euro area to increase 
by  0.1  pps  on  average.  The  bulk  of  the 
projected  increase  would  already  occur  by 
2040 (see Graph 3.1), when pension spending 
would increase by 2.7 pps of GDP to 14.7% of 
GDP. It will steadily continue to increase to hit 
15.2% of GDP in 2070. Belgium’s RRP includes 
a  pension  reform  that  aims  to  help  address 
this  issue,  alongside  other  objectives  such  as 
improving  the  social  sustainability  of  the 
pension 
greater 
and 
convergence  between  and  within  pension 
systems.  

ensuring 

system 

Graph 3.1: Gross public pension spending in 
Belgium, 2019-2070 (% of GDP) 

Source: European Commission, 2021 Ageing Report 

to 

the 

challenges 

The  2021  Ageing  Report  also  points  to 
major 
fiscal 
sustainability  of  long-term  care  in  both 
the medium and long term. In 2019, public 
spending on long-term care amounted to 2.2% 
of  GDP  (EU  average  1.7%),  which  made 
Belgium one of the countries with the highest 
long-term  care  spending  in  the  EU.  By  2070, 

comparable due to different demographic and 
macroeconomic assumptions. Moreover, the 2021 
Ageing Report projections did not account, contrary to 
2022 projections of the Study Committee, for measures 
adopted by the government at the end of 2020, the 
cost of which was roughly estimated at 0.9 pps of GDP 
annually by 2070. 

7 

101112131415161925303540455055606570% of GDPBEEAEU 
 
                                                 
 
   
                                                                        
is  projected  to 
long-term  care  spending 
increase further to between 4.1% and 6.0% of 
GDP,  depending  on  the  hypotheses  of  each 
scenario. 

Some  evidence  suggests  a  possible 
care 
residential 
overuse 
and 
of 
unnecessary 
premature 
or 
institutionalisation.  Available  data  suggest 
least  premature 
that  unnecessary  or  at 
institutionalisation 
residential  care 
(in  a 
facility)  remains  high,  although  decreasing 
over  recent  years (10).  In  particular,  the  share 
of  individuals  affected  by  this  issue  was  high 
in  Brussels-Capital  and  Walloon  Region.  The 
overuse of residential care suggests that there 
may be room to improve the cost-efficient use 
of  the  different  care  settings,  including  by 
strengthening community-based services. 

The  policy  response  to  long-term  care 
does not focus sufficiently on addressing 
the  fiscal  sustainability  challenge.  Some 
measures have been adopted by the federated 
entities  to  which  responsibility  on  long-term 
care  has  been  devolved  since  2019. 
In 
Wallonia,  these  measures  focus  on  improving 
the quality of long-term care spending but fail 
to  address  the  envisaged  cost  increase  in  the 
medium and long term. In Flanders, long-term 
care  spending  falls  under 
the  spending 
norm. (11) However, it fails to point to concrete 
policy  measures  to  contain  spending  in  the 
medium  to  long  term,  while  ensuring  a  high 
level  of  quality  services.  In  the  Brussels-
Capital  Region,  the  focus  has  been  on 
promoting  services  as  an  alternative 
to 
residential care. 

(10)  Available at https://www.healthybelgium.be/en/health-

system-performance-assessment/specific-
domains/care-for-the-elderly#ELD-1.  

(11)  A spending norm was included for the first time in the 
Flemish Multi-Year Estimate 2022-2027. It aims at 
guaranteeing the sustainability of the public finances by 
maintaining expenditure growth below a determined 
threshold. 

8 

Improving the quality of the fiscal 
framework 

Strengthening  and  adapting  the  fiscal 
framework  could  facilitate  coordinated 
fiscal  consolidation.  As  described 
in 
previous  country  reports (see  in  particular the 
2020  country  report),  the  provisions  of  the 
2013  Cooperation  Agreement,  signed  by  the 
federated entities and the federal government 
to  ensure  effective  budgetary  coordination, 
have  not  been  fully  implemented  (see  Annex 
13). 
In  2022,  as  in  previous  years,  the 
Consultative  Committee  did  not  approve  but 
the  overall  fiscal 
merely 
trajectory 
stability 
in 
programme.  The  lack  of  agreement  on  the 
targets  at  each  level  of  government  prevents 
‘Public  sector  borrowing  requirement’ 
the 
section  of  the  High  Council  of  Finance  from 
effectively  monitoring  compliance  with  these 
targets. This also undermines the credibility of 
the overall fiscal consolidation trajectory. 

took  note  of 

presented 

the 

Graph 3.2: Index of quality of the medium-
term budgetary framework process, 2021 

Source: European Commission 

Belgium  performs  below  the  EU  average 
its  medium-term 
on  the  quality  of 
(see  Graph  3.2). 
budgetary  framework 
Although multiannual fiscal planning exists for 
local  authorities  and  to  a  certain  extent  for 
some  Regions  and  Communities,  there  is  no 
fully  developed  multiannual  fiscal  planning  at 
national  level (12).  While  Belgium’s  stability 
programme  outlines  fiscal  trajectories  that 

(12)  National Bank of Belgium, 2020, Belgium’s fiscal 

framework: what is good and what could be better? 

0,00,10,20,30,40,50,60,70,80,91,0ESLVELNLITLUSIFILTMTSKEAFREEBEATIEDECYPTHR 
                                                 
   
                                                 
extend beyond the traditional one-year period, 
their level  of detail is limited,  and the targets 
are  not  stable  and  reliable  as  they  may  be 
revised as time goes by. Moreover, there is no 
justify 
obligation  for  the  government  to 
publicly (before Parliament), through a ‘comply 
or  explain’ mechanism,  discrepancies between 
the  budget  trajectory  and  the  High  Council  of 
Finance’s recommendations. 

The  design,  number  and  coverage  of 
fiscal  rules  can  be  improved.  According  to 
the  Commission  fiscal  governance  database, 
existing  fiscal  rules  in  Belgium  cover  the 
federal  government,  the  social  security  sector 
and local authorities. Despite the regions’ high 
in  general  government  expenditure, 
share 
there are no fiscal rules governing the regional 
level. 
Flanders’  2022-2027  multiannual 
budget  factored  in  the  implementation  of  a 
spending norm for the first time. Moreover, in 
Belgium  there  is  a  lack  of  green  budgetary 
practices  to  help  increase  the  accountability 
and  transparency  of  the  budget’s  contribution 
towards the country’s green objectives. 

Reforming the tax and benefits 
system to reduce disincentives to 
work 

taxes 

labour 

create 

High 
sizeable 
disincentives to work. The tax wedge (social 
security  contributions  and  taxation  of  labour 
income) remains well above the EU average at 
all  wage  levels,  except  for  very  low  wage 
earners  (50%  of  the  average;  see  Annex  19). 
Some  measures,  such  as  the  job  bonus  in 
Flanders  and  in-work  benefits  for  the  long-
term  unemployed  or  interregional  mobility 
(federal), have been introduced to increase the 
net  income  of  low  wage  earners.  However, 
they  also  further  increase  the  high  marginal 
tax rate for lower middle income earners – the 
‘low  wage  trap’  –  (see  Graph  3.3).  The  High 
Council  of  Finance  estimates  that  the  very 
high  marginal  pressure  on  low-wage  earners 
could  be  eliminated  by  adopting  a  general 

employment  bonus (13).  Low  wage  traps  may 
discourage investments in lifelong learning as 
well  as  increases  in  the  number  of  hours 
worked. 

Graph 3.3: Marginal effective tax rate per 
wage level, 2020 

Source: High Council of Finance (2020) 

to 

linked 

The social benefits system is complex and 
lacks  transparency,  which  contributes  to 
existing disincentives to work. The benefits 
includes  several  non-cash  social 
system 
benefits,  with 
the 
some 
unemployment  status  of  beneficiaries.  While 
they  help  tackle  poverty  for  those  on  low 
incomes,  non-cash  benefits  may  contribute  to 
existing  inactivity,  unemployment  and  low 
wage  traps,  and  could  make  the  benefits 
system more  complex  and  less  transparent  in 
terms  of  work 
incentives.  Unemployment 
benefits  are  also  unlimited  in  time  and  not 
means-tested  for  the  long-term  unemployed, 
which  may 
the  effectiveness  of 
activation policies (policies to encourage more 
people  to  work  or 
in 
job  search  and 
lenient 
combination  with 
availability  conditions (14).  A  recent  evaluation 
of  the  2012  reform,  which  increased  the 
degressivity 
benefits, 
provides  little  ground  to  further  increase  it, 
though  the  evaluation  suggests  that  the 
system  could  be  simplified  to  make  it  easier 

unemployment 

look  for  a 

reduce 

job) 

of 

(13)  Extending the in-work tax credit and social security 

reduction to all private sector employees, irrespective of 
the wage level (budgetary cost of 2.5% of GDP), would 
bring the tax burden on labour in Belgium close to the 
euro area average. 

(14)  OECD, 2018, How Demanding are Activation 

Requirements for Jobseekers? 

9 

 40 45 50 55 60 65 70 75 80 40 50 60 70 80 90 100 110 120 130 140 150 160 170Marginal effective tax rate (%)Wage level (% average wage)Current systemGeneral employment bonus 
   
                                                 
While reforming energy taxation, Belgium 
is 
increasing  environmentally  harmful 
subsidies.  Faced  with  spiking  inflation  and 
energy  prices,  Belgium  permanently  reduced 
the  VAT  rate  on  electricity  and  gas  for 
residential  contracts  and  reformed  excise 
duties on energy products (see Box 1.1). While 
providing  household  support,  reduced  VAT 
rates continue to favour fossil fuels in the long 
term  and  discourage  further  diversification 
and energy savings (see next section). Against 
the 
traffic 
of 
congestion  and  air  pollution  issues,  transport 
taxes  and  pollution  taxes  still  seem  to  be 
underused. 

background 

increasing 

is  considering  a  first  step 
Belgium 
towards  a  broader  tax  reform  to  reduce 
labour taxes. The reform would increase the 
tax-free  allowance  as  well  as  the  upper  limit 
of  the  45%  personal  income  tax  bracket  and 
extend  the  employment  bonus.  Moreover, 
some  work  disincentives  for  second  income 
earners  would  be  reduced  by  abolishing  the 
marital quotient. A 9% reduced VAT rate would 
be introduced to replace the 6% and 12% VAT 
rates. Some environmentally harmful subsidies 
would be removed, including the partial refund 
of excise duties on diesel for professional use 
and  the  reduced  VAT  rate  for  coal.  This  first 
step  of  the  reform  would  be  budget-neutral 
when  considering  payback  effects  and  would 
be  phased  in  as  of  2024.  A  second  step  is 
expected by the end of 2023. 

Addressing skills mismatches and 
education inequalities to decrease 
labour shortages 

Although  the  employment  rate  increased 
to  an  all-time  high, 
labour  market 
participation  is  well  below  the  2030 
national  target  of  an  80%  employment 
rate  (72.3%  in  Q4-2022),  with  considerable 
regional  differences.  This  is  mainly  driven  by 
the  low  activity  rate  (aged  20-64),  which  is 
well  below  the  EU  average  at  76.0%  (versus 
79.4% in 2022). 

for  jobseekers  to  understand  and  make  it 
easier to administrate (15). 

tax 

leads 

schemes 

The  extensive  use  of  tax  deductions  and 
to 
special 
inefficiencies  and  distortions.  The  heavy 
tax  burden  on  labour  is  offset  by many  wage 
subsidies. Special schemes like meal vouchers, 
tax 
commuting  subsidies  or  withholding 
exemption  for  overtime,  R&D  work  and 
night/shift work are costly for the budget and 
tend  to  create  inefficiencies.  Moreover,  some 
personal  income  tax  deductions  (e.g.  interest 
deduction 
for  second  home  mortgages, 
deduction  for  service  vouchers  to  pay  for 
household 
cleaning) 
disproportionally  benefit  high-income  earners. 
These tax features also favour certain types of 
leading 
remuneration  and  expenses, 
to 
economic, 
environmental 
social 
distortions.  The  corporate tax  system  includes 
special  tax  schemes  (e.g.  R&D  tax  credit,  tax 
shelter  for  audiovisual  and  film  productions), 
which  do  not  seem  to  be  the  most  cost-
efficient  means  to  support  specific  sectors. 
The  widespread  application  of  reduced  VAT 
rates  and  exemptions  also  increases  the  risk 
of VAT non-compliance (see Annex 19). 

services 

and 

like 

distorts 

Capital  taxation  is  complex  and  distorts 
investment  behaviour.  Capital  income  is 
excluded  from  the  personal  income  tax  base 
but  is  subject  to  a  final  withholding  tax  rate. 
However, reduced rates apply to several types 
of  investment  like  certain  pension  schemes 
and  interest  income  from  savings  accounts. 
resource 
This 
and 
potentially 
tax-induced 
generates 
overinvestment  in  certain  types  of  assets. 
Moreover,  there  are  still  tax  incentives  for 
immovable  property  investments  at  federal 
level (cadastral values that underestimate the 
actual  rental  income,  interest  deductibility  for 
second  home  mortgages)  and  regional  level 
(‘Chèque  Habitat’ 
in  Wallonia).  Financial 
investments  continue  to  be  distorted  by  the 
tax on securities accounts (see Annex 18). 

allocation 

(15)  Salvatori, A., 2022, The effect of declining 

unemployment benefits on transitions to employment: 
Evidence from Belgium, OECD. 

10 

 
                                                 
technology, 

including  civil 
green  skills  or  knowledge, 
engineering  technicians,  civil  engineers  and 
power  plant  operators.  While  demand  for 
science, 
and 
mathematics  (STEM)  skills  is  particularly  high 
on  the  labour  market,  the  number  of  STEM 
graduates  in  Belgium  remains  below  the  EU 
average,  especially  for  women  (see  Annexes 
11 and 15). 

engineering 

Graph 3.4: Employment and unemployment 
rates by region and by education level 

Bubble size corresponds to the size of the working age 
population with a given level of educational attainment 
(high, medium or low) relative to the total working age 
population in the region. 
Source: European Commission 

Increased  participation  of  adults 
in 
training  and  education  activities  could 
support  up-  and  reskilling  and  improve 
employability.  Available  evidence  from  the 
OECD  regarding  Flanders  suggests  that  work, 
childcare  and  family  responsibilities  prevent 
more than 40% of people from participating in 
adult learning (10.3% of those aged 25-64 in 
2022),  especially  among  low-qualified  people. 
Adult  learning  could  be  further  hampered  by 
employment  and  low  wage  traps,  seniority 
payments  and  shorter  working  careers.  The 
current  incentives  for  adult  learning  may  not 
reach those that would benefit the most from 
upskilling, such as the low-educated and older 
workers.  In  addition,  upskilling  and  reskilling 
for  the  green  transition  are  essential  to 
accelerate  the  transition  to  a  net  zero 
economy  (see  Annex  8).  The  RRP  and  the 
regional 
Plus 
programmes  focus  heavily  on  adult  learning, 
with  particular  attention  on  disadvantaged 
groups  and  digital  skills  (see  Annex  4),  while 

European 

Social 

Fund 

There  is  a  high  level  of  inactivity  in 
particular  among  workers  aged  over  60 
who  leave  the  labour  market  early.  The 
number  of  workers  on  long-term  sick  leave 
now  exceeds  the  number  of  unemployed 
(471 000  vs  303 000  in  2021),  with  burnout 
and depression representing about 25% of the 
cases.  The 
federal  government  adopted 
measures  to  improve  the  reintegration  of 
workers  with 
issues  by 
making  dismissal  more  difficult  and  using 
financial 
place  more 
responsibility  on  employers  and  on  workers 
who are on long-term sick leave but refuse to 
cooperate in the reintegration process. 

long-term  health 

incentives 

to 

Disadvantaged groups are less integrated 
in  the  labour  market.  These  include  people 
with  low  education  attainment,  a  migrant 
background or with disabilities (see Annex 14). 
There 
is  also  evidence  of  discrimination 
against  people  with  a  migrant  background, 
who represent around one-third of the working 
age  population (16).  Regional  disparities  in  the 
unemployment rate are significant (see Graph 
3.4 and Annex 17). 

The  level  of  labour  shortages  and  skills 
mismatches  have  further  increased.  The 
vacancy  rate  reached  4.5%  by  the  end  of 
2022, one of the highest in the EU. There are 
increasing  shortages  in  both  low-  and  high-
skilled occupations, with the biggest shortages 
in  catering,  ICT,  professional,  technical  and 
scientific jobs,  and healthcare (see Annex  16). 
In  addition,  the  lack  of  relevant  skills  for  the 
green  transition  creates  bottlenecks  in  the 
transition  to  a  net  zero  economy.  In  2022, 
labour  shortages  were  reported  in  particular 
for  103  occupations (17)  that  require  specific 

(16)  FOD WASO & Unia, 2022, Arbeidsmarkt en origine, 

Socio-economische monitoring 

Baert, S. and S. Vujić, 2016, Immigrant volunteering: A way 
out of labour market discrimination?, IZA Discussion 
Paper No. 9763, Bonn. 

(17)  European Labour Authority, 2023, EURES Report on 
labour shortages and surpluses 2022. Skills and 
knowledge requirements are based on the ESCO 
(European Skills Competences and Occupations) 
taxonomy of skills for the green transition (for 
occupations at ISCO 4-digit level of which there are 
436 in total). Examples are identified based on their 
ESCO ‘greenness’ score and relevant sectors. 

11 

BXL -LowBXL -MediumBXL -HighFL -LowFL -MediumFL -HighWAL -LowWAL -MediumWAL -High0510152025303530507090Unemployment rate (%)Employment rate (%)BXL: BrusselsFL: FlandersWAL: Wallonia 
                                                 
   
Belgium  set  itself  a  target  of  60.9%  of  all 
adults in learning by 2030 (see Annex 14). 

Advancing the green transition 

background 

Addressing  educational  inequalities  could 
also  help  reduce  labour  shortages.  About 
one out of five pupils aged 15 fails to perform 
basic  mathematics,  reading  or  science  tasks 
(OECD Pisa Results 2018). Students with a low 
are 
socio-economic 
underachieving  in  reading,  maths  and  science 
(see  Annex  15).  In  addition,  children  with 
parents  with  a  low  level  of  education  and 
young  people  with  disabilities  are  more  likely 
to leave school early. Disadvantaged students 
have less access to experienced teachers than 
the  EU  average.  Against  this  background,  the 
growing  shortage  of  qualified  teachers  risks 
further  exacerbating  educational  inequalities. 
Pursuing 
the 
respective  Communities  to  ensure  suitable 
training and career pathways for teachers and 
improving  the  attractiveness  of  the  teaching 
profession will be key. With a third of students 
aged  16-19  still  lacking  basic  digital  skills, 
digital  skills  training  for  teachers  will  also  be 
crucial.  The  quality  and 
labour  market 
relevance of vocational education and training 
remains a concern (see 2022 Belgium Country 
Report). 

reforms  planned  by 

the 

More  effective  and  targeted  activation 
measures  could  help  unlock  the  large 
untapped  labour  potential  and  alleviate 
the  growing 
labour  shortages.  Low 
transition rates of disadvantaged groups from 
unemployment  or  inactivity  to  employment 
suggest  there  is  scope  for  strengthening  the 
effectiveness of active labour market policies. 
This  includes  the  more  systematic  evaluation 
of  existing  activation  measures  and  better 
integrated 
disadvantaged 
jobseekers, who often face several barriers to 
finding  a  job.  Furthermore,  there is  still  scope 
for  more  interregional  mobility.  The  2022 
public employment service reform in Wallonia, 
supported  by  the  Recovery  and  Resilience 
Facility,  is  an  example  of  a  step  in  the  right 
direction  as  it  strengthened  the  provision  of 
more  personalised  support  to  disadvantaged 
jobseekers. 

pathways 

for 

More  action  is  needed  to  put  Belgium  on 
the  path  to  climate  neutrality.  Even  with 
planned additional measures, Belgium will fall 
short  of meeting  its  new 2030  climate  target 
for  the  effort  sharing  sectors (18),  achieving  a 
reduction  of  only  38% 
instead  of  47% 
compared  to  2005  (see  Annex  6).  Further 
policy  reforms  and  additional  investments  to 
in  the 
reduce  greenhouse  gas  emissions 
energy, industry, building and transport sectors 
would  also  help 
reduce  Belgium’s  high 
dependency  overall  on  fossil  fuel  imports  and 
help  ensuring  security  of  supply.  Belgium  has 
made  significant  progress  in  reducing  its 
dependency on Russian gas and is expected to 
continue  its  diversification  efforts.  Moreover, 
decreased, 
while 
uncertainty  remains  regarding  next  winter, 
which requires continued efforts to structurally 
reduce  gas  demand.  The  REPowerEU  initiative 
provides  an  opportunity  to  support  energy-
related measures and scale up existing ones to 
further Belgium’s decarbonisation objectives.  

energy 

prices 

have 

in  Belgium 

is 
The  energy  transition 
progressing  but  needs  to  accelerate  to 
keep  in pace with  EU  climate  and  energy 
targets. With a share of renewable energy in 
final energy consumption of 13% in 2021, the 
deployment of renewables remains on the low 
side.  Belgium  will  need 
to  significantly 
increase its renewable energy target, currently 
17.5% by 2030, to reflect the more ambitious 
EU  targets  (see  Annex  6).  To  achieve  climate 
targets,  the  decarbonisation  of  electricity 
production  will  be  crucial.  Belgium  intends  to 
partly  compensate  the  planned  decreased 
share of nuclear in the electricity mix in 2025 
by  building  additional  gas-fired  power  plants, 
with a requirement for operators to finalise an 
emission 
containing 
intermediate  targets  for  2035  and  2045  with 
a view to achieving zero or negative emissions 

reduction 

plan 

(18)  Regulation (EU) 2023/857 (the Effort Sharing 

Regulation) amending Regulation (EU) 2018/842, sets 
targets in line with the European Climate Law’s 
objective to reduce greenhouse gas emissions by 55% 
below 1990 levels by 2030. 

12 

 
                                                 
by  2050.  In  addition,  to  meet  the  rise  in 
electricity  demand,  the  share  of  electricity 
from renewable sources will need to increase. 

Belgium  has  ambitious  objectives  for 
further  developing  offshore  wind  (see 
Annexes 6 and 7). It is a front runner in this 
field, which has led to the creation of a value 
chain in this industry on an international scale. 
The  further  development  of  onshore  wind 
power  is  still  being  hampered  by  low  public 
acceptance  and  long  delays  (up  to  9  years) 
related  to  permit-granting  procedures,  due  to 
repetitive and lengthy appeal procedures. 

Further  steps  can  be  taken  to  facilitate 
the  deployment  of  onshore  wind  power. 
Spatial planning and a review of the minimum 
distance  rules  of  wind  turbines  from  airports, 
radars  and  military  zones  could  free  up  more 
space for wind energy. Other possible reforms 
include  granting  wind  and  grid  infrastructure 
projects the status of overriding public interest 
and speeding up  the processing of appeals at 
the Council of State. Getting municipalities and 
in  new  renewable 
citizens  to  participate 
generation  projects  could 
local 
increase 
acceptability.  Several  initiatives  have  already 
been  launched  or  are  underway,  such  as  at 
federal  level  on  the  reform  of  the  Council  of 
State  and  the  review  of  distance  rules.  There 
are also initiatives in Flanders and Wallonia to 
reduce  the  hurdles  to  onshore  wind  projects 
(see Annex 7). 

and 

sources 

limited  capacity  of  the  onshore 
The 
electricity network is a cause for concern 
given  the  increasing  use  of  variable 
energy 
increased 
electrification.  The  length  of  the  permit-
granting  procedure  at  regional 
level  for 
transmission  lines  is  a  serious  obstacle  that 
undermines  timely  network  reinforcement,  as 
evidenced  by  the  Ventilus  and  Boucle  de 
Hainaut  projects.  Both  projects  should  be 
ready in time to ensure the inland distribution 
of  additional  offshore  wind  power.  The 
proactive development of more integrated and 
consistent  ten-year  network  investment  plans 
could  avoid  delays  in  connecting  new  wind 
energy projects (and other renewable sources) 
as  well  as  end  users  (heat  pumps,  charging 
points  for  electric  cars),  and  should  anticipate 

the  expected  surge  in  industrial  electricity 
consumption (19). 

Energy efficiency gains in industry can be 
further incentivised. In 2020, oil and natural 
gas together covered almost 70% of industrial 
energy  demand.  While  policy  measures  have 
recently  been  decided  or  are  underway,  there 
improving  voluntary 
is, 
agreements,  mandatory  energy  savings  and 
decarbonisation  plans  for  the  largest  fossil 
fuel  users,  still  scope  for  further  stimulating 
electrification and the deployment of industrial 
heat pumps in factories with low heat demand.  

in  addition 

to 

Rooftop  solar  power  capacity  is  on  the 
rise,  but  there  is  still  considerable  scope 
for further expansion. The year 2022 saw a 
record  solar  power  production  of  6 412  GWh, 
or 37% more than in 2021 (20). In March 2022, 
the  federal  government  reduced  the  VAT  rate 
for  solar  panel  installations  from  21%  to  6% 
also  for  houses  less  than  10  years  old  (until 
the end of 2023). While the market situation is 
now  favourable  for  installing  solar  panels, 
further  possible  measures 
include  binding 
requirements  for  large  public  and  commercial 
buildings,  incentives  for  landlords,  and  legal 
frameworks that facilitate energy sharing and 
promote  self-consumption  and  demand  side 
flexibility. 

The  renovation  challenge  of  reducing 
fossil  fuel  demand  in  buildings  is  still 
huge. Overall, 11% of oil demand and 37% of 
gas  consumption  in  2020  involve  heating 
buildings.  Belgium’s  housing  stock  includes  a 
high share of old buildings. Around 80% of the 
building stock is still not energy efficient (EPC 
label  C  or  lower).  In  addition  to  the  reforms 
and  investments  included  in  the  RRP,  the 
regional  governments  have  adopted  or  are 
planning  complementary  measures  to  make 
buildings more energy efficient. This includes a 
ban  on  fossil  fuels  in  new  builds,  mandatory 
energy-efficient 
renovations,  phasing  out 
financial  support for fossil fuel-based heating 

(19)  Industrial electricity consumption in Belgium is expected 
to grow by 50% by 2030. Elia, 2022, Powering Industry 
towards Net Zero. 

(20)  Elia, 2023, Belgium’s 2022 electricity mix. 

13 

 
                                                 
and  shifting  incentives  towards  low  carbon 
heating  solutions  such  as  heat  pumps  and 
heat  networks  supplied  with  renewable  or 
recovered energy. At the same time, education 
and  training  will  have  to  be  aligned  with  the 
emerging  skills  needed  by  technicians  and 
construction  workers  to  work  on  this  energy 
transition. 

The transport sector accounts for a large 
share  of  oil  consumption  and  road 
congestion  costs  remain  high.  The  number 
of passenger cars has steadily increased in the 
last  10  years  by  0.8%  per  year  on  average, 
adding  to  road  congestion  and  air  pollution. 
While  on  the  rise,  the  number  of  hybrid  and 
electric  cars  made  up  only  7.5%  of  the 
passenger  car  fleet  in  2022  (see  Annex  6). 
According  to  the  Belgian  Mobility  Dashboard, 
the cost of congestion in 2022 was more than 
EUR  4.1  billion.  Policy  options  to  discourage 
individual  car  use  include  the  introduction  of 
road charging for cars (and vans), encouraging 
forms of soft mobility such as car sharing and 
cycling  and  promoting  public  transport.  While 
the  RRP 
in  cycling 
infrastructure  and  public  transport,  more  can 
be  done  to  develop  clean  mobility  solutions, 
while  improving  suburban  and  intercity  public 
transport. 

investments 

includes 

the  vulnerabilities  of 

the 
Reducing 
economy to the effects of climate change 
requires  sustained  action.  In  the  face  of 
extreme  weather  events,  ecosystems  need  to 
be made more robust and resilient by reducing 
pollution  and  ensuring  sustainable  water 
management.  Tackling  drought  as  well  as 
flood  risks  requires  that  diversified  structural 
measures,  such  as  those  included  in  the  Blue 
Deal programme in Flanders supported by the 
RRP,  are  rolled  out  on  a  broad  scale. 
Particularly  in  Flanders,  but  also  in  Wallonia, 
high  levels  of  nitrogen  pollution  compromise 
the quality of groundwater and surface waters 
(see  Annex  6). 
robust 
framework  of  measures  to  reverse  this  trend 
will contribute to greater climate resilience. 

Implementing  a 

14 

 
  reviewing  tax  expenditure  with  a  view  to 
and 

reduce 
environmental harmful impact; 

economic, 

social 

their 

  addressing 

labour  shortages  and  skills 
mismatches,  in  particular  for  the  green 
by 
transition, 
strengthening 
notably 
activation  policies 
for  disadvantaged 
groups in the labour market; 

  improving  the  performance  and  equity  of 
the  education  and  training  systems  and 
continue 
the 
reforms 
teaching profession; 

strengthen 

to 

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

  further  stimulating  decarbonisation  and 

energy efficiency in industry; 

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

  accelerating  the  deployment  of  renewable 
energies and related grid infrastructures by 
streamlining the permitting procedures and 
to  boost 
adopting 
energy 
investments 
installations and facilitate energy sharing.  

frameworks 

renewable 

legal 

in 

  improving  climate  resilience  through  more 
robust  ecosystems by ensuring sustainable 
water  management  and  tackling  nitrogen 
emissions. 

KEY FINDINGS 

Belgium’s  RRP 
includes  measures  to 
address a  series  of  structural challenges 
through: 

  a  reform  to  improve  the  sustainability  of 

the pension system; 

  measures  to  improve  the  efficiency  and 
to 

quality  of  public  spending 
spending reviews; 

thanks 

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

  investments 

in 

energy-efficient 
the 
renovation  of  buildings,  clean  mobility,  the 
circular  economy  and  the  hydrogen  value 
chain. 

an 

should 

ensure 

effective 
Belgium 
governance  to  allow  for  a  swift  and  steady 
implementation  of  its  recovery  and  resilience 
plan.  Belgium  should  also  swiftly  finalise  the 
REPowerEU  chapter  with  a  view  to  rapidly 
starting its implementation.  

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

  strengthening  the  quality and  design  of its 

fiscal framework;  

  improving  the  effectiveness  and  efficiency 
of  its  long-term  care  systems,  contributing 
to the country’s fiscal sustainability; 

  reforming  the  tax  and  benefits  system  to 
reduce disincentives to work, by shifting the 
tax  burden  away  from  labour  and  by 
simplifying the tax and benefits system; 

15 

 
 
 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2022 CSRs 
Key elements of the Belgian RRP 

19 

22 

22 

24 

27 

28 

31 

32 

32 

37 

41 

44 

44 

46 

48 

50 

53 

55 

55 

57 

59 

61 

63 

63 

65 

67 

68 

25 
27 

 
 
 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key Energy Indicators 
A8.1. 
Key indicators for a Fair Transition 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social scoreboard for Belgium 
A14.2.  2030 National targets for Belgium 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level 
A18.1.  Financial soundness indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Belgium 
A21.2.  Heat map of fiscal sustainability risks - Belgium 

LIST OF GRAPHS 

Progress towards the SDGs in Belgium in the last 5 years 
Belgium's progress on the 2019-2022 CSRs (2023 European Semester) 
Share of RRF funds allocated to each policy pillar 
Cohesion policy funds 2021-2027 in Belgium: budget by fund 
Synergies between Cohesion policy funds and RRF six pillars in Belgium 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Belgium 
Thematic – greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and Electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment, p.a. 2014-2020 
Underground gas storage levels in Belgium 
Share of gas consumption per sector, 2021 
Belgium´s retail energy prices for industry (top) and households (bottom) 
Public investment in Energy Union R&I priorities 
Fair transition challenges in Belgium 
Distributional impacts of energy prices due to rising energy expenditure (2021-2023) 
Trend in material use 
Treatment of municipal waste 
Innovation indicators Wallonia 

A1.1. 
A2.1. 
A3.1. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A7.4. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1. 
A12.1.  Producer prices in industry 
A12.2.  Business environment and productivity drivers 
A13.1.  a) Share of the working age population who are public sector workers; b) share of women and men in senior positions; c) 
open government data maturity indicator: 2022 scores (% of the total maximum score) (left side); country ranking, overall 
score (right side) 

A15.1.  Underachievers in reading, maths and science (combined) by socio-economic status, PISA 2018 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  GDP per capita (2010) and GDP growth (2010-2020) - Belgium 
A17.2.  Unemployment in Belgium regions in the period 2019-2021 
A19.1.  Tax wedge for single and second earners as a % of total labour costs, 2022 
A19.2.  VAT efficiency indicators, 2020 

LIST OF MAPS 

A17.1.  Greenhouse gas emissions per capita in Belgium in 2021 

20 

31 
36 
40 
42 
45 
47 
49 
50 
54 
55 
56 
58 
60 
62 
63 
65 
67 
69 
70 

23 
24 
27 
28 
28 
29 
32 
33 
34 
37 
38 
39 
39 
41 
42 
44 
45 
49 
50 
51 

54 
57 
59 
59 
61 
61 
66 
66 

62 

 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

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  and  the 
environmental crisis, 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.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

While  Belgium performs  well or  is  improving 
on  most  of  the  SDG  indicators  related  to 
environmental  sustainability, 
it  needs  to 
catch  up  with  the  EU  average,  in  particular 
on  SDG  2  (Zero  hunger),  6  (Clean  water  and 

in  2016 

to  13.0% 

sanitation),  7  (Affordable  and  clean  energy) 
and  SDG  15  (Life  on  land).  Belgium  has  made 
some  progress  on  energy  consumption  indicators, 
including  the  share  of  renewable  energy  in  gross 
final energy consumption (SDG 7), which increased 
from  8.7% 
in  2021. 
Nevertheless,  it  remains  below  the  EU  average 
(21.8% in 2021). Belgium’s recovery and resilience 
plan (RRP)  includes measures that aim to support 
the  shift  from  fossil  fuels,  in  particular  for  the 
energy renovation of buildings, decarbonisation of 
industrial  production,  and  sustainable  transport. 
Emissions from agriculture (ammonia, nitrates) are 
above  the  EU  average  (SDG  2  and  6)  and  this  is 
also the case for the indicator phosphate in rivers 
(SDG  15).  On  SDG  12,  the  circular  material  use 
rate  improved  from  17.6%  in  2016  to  20.5%  in 
2021 and is well above the EU average (11.7%).  

Belgium  performs  well  or  is  improving  on 
most  SDG  indicators  related  to  fairness 
(SDGs 1, 3, 4, 5, 7, 8, 10). The country performs 

Graph A1.1: Progress towards the SDGs in Belgium in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators – Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat,  latest update of early April 2023, except for the EU Labour Force Survey (LFS) indicators released on 27 April 
2023. Data mainly refer to 2016-2021 or 2017-2022. 

21 

 
 
 
 
 
 
 
As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

the 

like 

includes 

indicators 

better  than  the  EU  average  on  poverty  and 
inclusive  growth  (SDGs  1  and  8).  This  relates  to 
the  high  redistributive  impact  of  the  tax  and 
benefits  system.  The  share  of  people  at  risk  of 
poverty  or  social  exclusion  fell in  2021  to  18.8%, 
below  the  EU  average  of  21.7%.  Belgium  has 
made progress on various employment indicators. 
This 
long-term 
unemployment rate (3.7% in 2016, 2.6% in 2021) 
in 
or  the  number  of  young  people  neither 
employment nor in education and training (12.2% 
in 2016, 10.1% in 2021). Several measures in the 
RRP  aim  to  further  tackle  unemployment,  in 
particular  by  improving  training  and  life-long 
learning.  However,  despite  these  measures  the 
employment  rate  remains  well  below  the  2030 
national  target,  held  back  by  a  low  activity  rate 
(see Annex 12). In particular for vulnerable groups, 
such  as 
low-educated  adults,  people  with  a 
migrant  background  and  people  with  disabilities, 
labour market participation remains low.  

Belgium performs well and is making further 
progress on all SDGs on productivity (SDGs 4, 
8,  9).  It  performs  strongly  in  particular  on 
innovation, with R&D intensity of 3.19% of GDP in 
2021,  well  above  the  EU  average  (2.27%).  The 
share  of  households  with  a  high-speed  internet 
connection  in  2021  (68.9%)  is  still  slightly  below 
the  EU  average  (70.2%).  Belgium  is  performing 
well on education indicators overall, although there 
in 
are  still  concerns  over  high 
educational  outcomes 
the  socio-
linked 
economic  background  of  pupils.  The  share  of 
adults with at least basic digital skills was slightly 
above  the  EU  average  in  2021  at  54.2%  (EU 
53.9%).  Nevertheless,  the  country  still  faces  a 
significant  challenge  to  improve  digital  skills.  The 
RRP  includes  large  investments  to  improve  digital 
infrastructure and equipment in schools. 

inequalities 
to 

Belgium  is  improving  on  SDG  indicators 
related  to  macroeconomic  stability  (SDGs  8, 
16,  17).  It  performs  well  on  the  quality  of  its 
institutions  (SDG  16),  in  particular  on  access  to 
justice  and  personal  security.  However,  trust  in 
institutions 
the 
in  the  European 
population  with  confidence 
Parliament  decreased  from  60%  in  2017  to  51% 
in 2022 (EU: increase from 47% to 50%). Belgium 
performs better than the EU average on indicators 
related  to  SDG  8  (Decent  work  and  economic 
growth).  

is  declining.  The  share  of 

22 

 
 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Belgium's progress on the 2019-2022 
CSRs (2023 European Semester) 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (21) 
addressed  to  Belgium  as  part  of  the  European 
Semester. These recommendations concern a wide 
range of policy areas that are related to 14 of the 
17 Sustainable Development Goals (see Annexes 1 
and 3). The assessment considers the policy action 
the 
taken  by  Belgium 
commitments  in  its  recovery  and  resilience  plan 
(RRP) (23).  At  this  stage  of  RRP  implementation, 
74%  of  the  CSRs  focusing  on  structural  issues 
from  2019-2022  have  recorded  at  least  ‘some 
progress’,  while  23%  recorded  ‘limited  progress’ 
(see  Graph  A2.1).  As  the  RRP  is  implemented 
further,  considerable  progress 
in  addressing 
structural CSRs is expected in the years to come. 

to  date (22)  and 

Source: European Commission 

(21)  2022 CSRs: EUR-Lex - 32022H0901(01) - EN - EUR-Lex 

(europa.eu) 
2021 CSRs: EUR-Lex - 32021H0729(01) - EN - EUR-Lex 
(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(01) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(01) - EN - EUR-Lex 
(europa.eu) 

(22)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(23)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here considers the 
degree of implementation of the measures included in the 
RRP and of those carried out outside of the RRP at the time 
of assessment. Measures laid down in the Annex of the 
adopted Council Implementing Decision on approving the 
assessment of the RRP, which are not yet adopted or 
implemented but considered credibly announced, in line with 
the CSR assessment methodology, warrant ‘limited progress’. 
Once implemented, these measures can lead to 
‘some/substantial progress or full implementation’, 
depending on their relevance. 

23 

No progress3%Limited progress23%Some progress54%Substantial progress15%Full implementation5% 
 
                                                 
               
 
 
 
 
 
 
 
 
 
 
 
  
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

24 

BelgiumAssessment in May 2023*RRP coverage of CSRs until 2026Relevant SDGs2019 CSR 1Limited 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 applicableSDG 8, 16Usewindfallgainstoacceleratethereductionofthegeneralgovernment debt ratio. Not relevant anymoreNot applicableSDG 8, 16Continue reforms to ensure the fiscal sustainability of the long-term care  Limited ProgressSDG 3andpensionsystems,includingbylimitingearlyexitpossibilitiesfrom the labour market. Limited ProgressRelevant RRP measures planned as of 2021SDG 8Improvethecompositionandefficiencyofpublicspending,inparticular through spending reviews, Some ProgressSDG 8, 16andthecoordinationoffiscalpoliciesbyalllevelsofgovernmenttocreate room for public investment.Limited ProgressSDG 8, 162019 CSR 2Some 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.SDG 8, 10Improve the performance and inclusiveness of the education and training systems Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026SDG 4, 8, 10and address skills mismatches.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026SDG 42019 CSR 3Some progressFocus investment-related economic policy on sustainable transport, including upgrading rail infrastructure, Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024SDG 10, 11the low carbon and energy transition Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2026SDG 7, 9, 10, 11, 13and research and innovation, in particular in digitalisation, taking into account regional disparities. Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025,SDG 9, 10, 11Tackle 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, 2026SDG 112019 CSR 4Some progressReduce the regulatory and administrative burden to incentivise entrepreneurship Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024SDG 8, 9andremovebarrierstocompetitioninservices,particularlytelecommunication, retail and professional services.Some ProgressSDG 92020 CSR 1Substantial progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableSDG 8, 16Reinforcetheoverallresilienceofthehealthsystemandensurethesupply of critical medical products.Substantial ProgressRelevant RRP measures planned as of 2022, 2023SDG 32020 CSR 2Some progressMitigate the employment and social impact of the COVID-19 crisis, notably by promoting effective active labour market measures Substantial ProgressRelevant RRP measures planned as of 2023, 2024SDG 1, 2, 8, 10and fostering skills development.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025SDG 42020 CSR 3Some progressEnsure effective implementation of the measures to provide liquidity to assist SMEs and the self-employed Full ImplementationSDG 8, 9and improve the business environment.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024 SDG 8, 9 Front-load mature public investment projects Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026SDG 8, 16and promote private investment to foster the economic recovery. Some ProgressRelevant RRP measures planned as of 2022SDG 8, 9Focusinvestmentonthegreenanddigitaltransition,inparticularoninfrastructure for sustainable transport, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026SDG 11clean and efficient production and use of energy, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024SDG 7, 9, 13the circular economy, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024SDG 6, 12, 15digital infrastructure, such as 5G and Gigabit Networks, Some ProgressRelevant RRP measures planned as of 2021, 2022, 2025, 2026SDG 9and research and innovation.Substantial ProgressRelevant RRP measures planned as of 2022, 2023SDG 9 
 
 
 
  
 
Table (continued) 

Note: * See footnote (23).  
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as 'being implemented' 
are only those included in the RRF payment requests submitted and positively assessed by the European Commission.  
Source: European Commission 

25 

2021 CSR 1Some progressIn2022,usetheRecoveryandResilienceFacilitytofinanceadditionalinvestmentinsupportoftherecoverywhilepursuingaprudent fiscal policy. Preserve nationally financed investment. Full ImplementationNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Some ProgressNot applicableSDG 8, 16Atthesametime,enhanceinvestmenttoboostgrowthpotential.Payparticularattentiontothecompositionofpublicfinances,onboththerevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasuresinordertoensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,inparticular investment supporting the green and digital transition. Substantial ProgressNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,including,whererelevant,bystrengtheningthecoverage,adequacyandsustainabilityofhealthand social protection systems for all.Limited ProgressNot applicableSDG 8, 162022 CSR 1Limited progressIn2023,ensureprudentfiscalpolicy,inparticularbylimitingthegrowthofnationallyfinancedprimarycurrentexpenditurebelowmedium-termpotentialoutputgrowth,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Stand ready to adjust current spending to the evolving situation.No ProgressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandother Union funds.Substantial ProgressNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringcredibleandgradualdebtreductionandfiscalsustainabilityinthemediumtermthroughgradualconsolidation,investmentandreforms.Limited ProgressNot applicableSDG 8, 16Prioritisereformstoimprovethefiscalsustainabilityoflong-termcare,includingbypromotingacostefficientuseofthedifferentcaresettings.Limited ProgressSDG 3Reformthetaxationandbenefitsystemstoreducedisincentivestoworkbyshiftingthetaxburdenawayfromlabourandbysimplifyingthetaxandbenefitsystem.Reducetaxexpendituresandmakethetax system more investment-neutral.Limited ProgressSDG 8, 10, 122022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 13 July 2021.Submitthe2021-2027cohesionpolicyprogrammingdocumentswithaviewtofinalisingtheirnegotiationswiththeCommissionandsubsequently starting their implementation.2022 CSR 3Some progressAddresslabourshortagesandskillsmismatches,notablybyimprovingtheperformanceandinclusivenessoftheeducationandtrainingsystem,enhancingthequalityandlabourmarketrelevanceofthevocationaleducationandtraininganddevelopingmoreflexibleand attractive career paths and training for teachers.Some ProgressRelevant RRP measures planned as of 2021, 2022, 2023, 2024, 2025, 2026SDG 42022 CSR 4Some progressReduce overall reliance on fossil fuelsLimited ProgressRelevant RRP measures planned as of 2022, 2023SDG 7, 9, 13bysteppingupenergyefficiencyimprovementsandthereductionoffossil fuel use in buildings,Some ProgressRelevant RRP measures planned as of 2022, 2023, 2024SDG 7promotingtheuseandsupplyofpublictransportaswellassoftmobilitySome ProgressRelevant RRP measures planned as of 2021,2022, 2023, 2024, 2025, 2026SDG 11andacceleratingthedeploymentofrenewableenergiesandrelatedgridinfrastructurebyfurtherstreamliningthepermittingproceduresincludingbyreducingthelengthofappealproceduresandadoptingframeworkconditionstoboostinvestmentsinsolarenergyinstallationsSome ProgressRelevant RRP measures planned as of 2022, 2023SDG 7, 8, 9, 13RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. Progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

overview  of  the  progress  made  in  implementing 
the RRF as a whole, in a transparent manner. 

Table A3.1: Key elements of the Belgian RRP 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  green  and  digital  transition  and 
strengthen  resilience  against  future  shocks. 
The  RRF  also  helps 
implement  the  UN 
Sustainable  Development  Goals  and  address 
the  country-specific  recommendations  (see 
Annex 2). Belgium submitted its current recovery 
and  resilience  plan  (RRP)  on  30 April 2021.  The 
on 
Commission’s 
23 June 2021 
on 
and 
Council’s 
the  way  for  disbursing 
13 July 2021  paved 
EUR 5.9 billion in grants under the RRF over 2021-
2026. 

assessment 

approval 

positive 

Since  the  RRF  Regulation  entered  into  force 
and  the  national  RRPs  were  assessed, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
To  effectively  address  these  disruptions,  the 
(adjusted)  RRF  Regulation  allows  Member  States 
to  amend  their  RRPs  for  a  variety  of  reasons.  In 
line  with  Article  11(2)  of  the  RRF  Regulation,  the 
maximum  financial  contribution  for  Belgium  was 
also updated on 30 June 2022 to EUR 4.5 billion in 
grants. 

Belgium’s  progress  in  implementing  its  plan 
is  published  in  the  Recovery  and  Resilience 
Scoreboard.  The  Scoreboard  also  gives  an 

Source: Recovery and Resilience Scoreboard 

Under  the  RRF,  EUR  770  million  has  so  far 
been  disbursed  to  Belgium.  It  received  this 
amount  in  pre-financing  on  3  August  2021, 
equivalent to 13% of the financial allocation. 

Graph A3.1: Share of RRF funds allocated to each policy pillar 

Note: Each measure contributes to two policy areas of the six pillars. The total allocation to all pillars displayed here therefore 
amounts to 200% of the estimated cost of the RRP. The bottom part represents the amount of the primary pillar, the top part the 
amount of the secondary pillar. 
Source: Recovery and Resilience Scoreboard – https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

26 

Current RRPScope Initial planCID adoption date13 July 2021Total allocation EUR 5.9 billion in grants (1.2% of 2021 GDP) Investments and reforms 105 investments and 35 reforms Total number of milestones and targets2100%10%20%30%40%50%60%70%Green transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
 
 
 
  
 
 
  
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Belgium: budget by fund 

(1) million EUR in current prices, % of total; (total amount 
including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

part  of  its  support  to  local  industries.  Under  the 
(ESF+),  Belgium 
European  Social  Fund  Plus 
allocates EUR 421 million to social  inclusion, with 
a  focus  on  vulnerable  groups,  strengthening  their 
position  in  the  labour  market  and  society.  It 
includes support for re- and upskilling in the green 
and  digital  economy  and  for  more  inclusive 
working environments. 

Of  the  investments  mentioned  above,  EUR 
407  million  will  be  invested  in  line  with 
REPowerEU objectives. This is on top of the EUR 
119  million  dedicated  to  REPowerEU  under  the 
2014-2020 budget. EUR 349 million (2021-2027) 
and EUR 100 million (2014-2020) is for improving 
energy efficiency; and EUR 58 million (2021-2027) 
and  EUR  19  million  (2014-2020)  for  renewable 
energy and low-carbon R&I. 

Graph A4.2: Synergies between Cohesion policy 
funds and RRF six pillars in Belgium 

In  2021-2027,  in  Belgium,  cohesion  policy 
funds (24)  will  invest  EUR  1.3  billion  in  the 
green  transition  and  EUR  220  million  in  the 
transformation  as  part  of  the 
digital 
country’s  total  allocation  of  EUR  5.7  billion. 
In  particular,  the  European  Regional  Development 
Fund  (ERDF) will  boost  research  and  innovation 
and  foster  the  transfer  of  advanced  technologies. 
It  will  support  more  than  10 000  companies  in 
total,  with  a  focus  on  digitalisation  of  small  and 
medium enterprises. Investment in greenhouse gas 
efficiency  and 
emission 
renewable  energy  are  at  the  centre  of  ERDF 
funding  in  Belgium  and  is  expected  to  improve 
energy performance of more than 230 000 square 
for 
meters  of  public  buildings.  Strategies 
integrated  territorial  development  will  contribute 
to  improve  the  lives  of  more  than  1.2  million 
individuals.  The  Just  Transition  Fund  (JTF)  will  set 
up  a  decentralised  production  system  for  green 
energy  and  energy  recovery  from  local  renewable 
resources  in  Wallonia.  The  JTF  will  also  deliver 
further economic diversification and modernisation 
by investing in SMEs and in the industrial sector as 

reduction, 

energy 

(24)  European Regional Development Fund (ERDF), Cohesion Fund 
(CF), European Social Fund+ (ESF+), Just Transition Fund 
(JTF), excluding Interreg programmes. The total amount 
includes national and EU contributions. Data source: 
Cohesion Open Data.  

27 

(1) million EUR in current prices (total amount, including EU 
and national co-financing)   
Source: European Commission  

In  2014-2020,  cohesion  policy  funds  made 
EUR  2.3  billion  available  to  Belgium (25),  with 
an  absorption  of  70% (26). 
Including  national 
financing,  the  total  investment  amounts  to  EUR 
4.4 billion - around 0.1% of GDP for 2014-2020.  

Belgium  continues  to  benefit  from  cohesion 
support  economic 
to 
policy 
recovery,  step  up  convergence  and  provide 
vital support to regions following the COVID-

flexibility 

(25)  Cohesion policy funds include the ERDF, ESF and the Youth 
Employment Initiative (YEI). ETC programmes are excluded 
here. According to the ‘N+3 rule’, the funds committed for 
2014-2020 must be spent by 2023. REACT-EU is included in 
all figures. The total amount includes EU and national co-
financing. Data source: Cohesion Open Data. 

(26)  2014-2020 Cohesion policy EU payments by MS is updated 

daily on Cohesion Open Data.   

2.38842%2.89550%4578%ERDFESF+JTF511 49 1.071 2.554 44 7 1.310 220 983 2.679 32 306 050010001500200025003000Green transitionDigital transitionSmart, sustainableand inclusive growthSocial and territorialcohesionHealth, economic,social andinstitutionalresiliencePolicies for the nextgenerationEU CP 2014-2020EU CP 2021-2027 
 
   
                                                 
   
                                                 
 
 
19  pandemic.  The  Recovery  Assistance  for 
Cohesion and the Territories of Europe instrument 
(REACT-EU) (27)  under  NextGenerationEU  provides 
EUR  330  million  on  top  of  the  2014-2020 
cohesion  policy  allocation  for  Belgium.  REACT-EU 
provided  over  EUR  45  million  to  improve  SMEs’ 
energy  efficiency  and  transition  to  e-commerce. 
Over EUR 39 million went towards the purchase of 
medical  equipment  and  health-related  innovation.  
In  addition,  nearly  EUR  387  million  was 
provisionally  allocated  to  Belgium  through  the 
Brexit  Adjustment  Reserve 
(BAR).  With  SAFE 
(Supporting  Affordable  Energy),  the  2014-2020 
cohesion  policy  funds  may  also  be  mobilised  by 
Belgium  to  support  vulnerable  households,  jobs 
and  companies  particularly  affected  by  high 
energy prices.  

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in 
Belgium 

(1) 5 largest contributions to SDGs in million (EUR) current 
prices 
Source: European Commission  

In both 2014-2020 and 2021-2027, cohesion 
policy  funds  have  contributed  substantially 
the  Sustainable  Development  Goals 
to 
(SDGs).  These  funds  support  11  of  the  17  SDGs, 
notably SDG 8 ‘Decent work and economic growth” 
and 
and 
‘Industry, 
SDG 
infrastructure’ (28). 

innovation 

9 

Other  EU  funds  make  significant  support 
available  to  Belgium.  The  common  agricultural 
policy  (CAP)  made  EUR  5.8  billion  available  in 

(27)  REACT-EU allocation on Cohesion Open Data. 

(28)  Other EU funds contribute to the implementation of the 
SDGs. In 2014-2022, this includes both the European 
Agricultural Fund for Rural Development (EARDF) and the 
European Maritime and Fisheries Fund (EMFF). 

for 

Fund 

Agricultural 

2014-2022 and will keep supporting Belgium with 
EUR 3.2 billion in 2023-2027. The two CAP Funds 
(European  Agricultural  Guarantee  Fund  and 
European 
Rural 
Development),  contribute  to  the  European  Green 
Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas,  in  coordination  with  other  EU  Funds. 
The  European  Maritime  and  Fisheries  Fund  made 
EUR 42 million available to Belgium in 2014-2020 
and 
the  European  Maritime,  Fisheries  and 
Aquaculture  Fund  allocates  EUR  40  million  in 
2021-2027.  

Belgium  also  benefits  from  other  EU 
programmes,  notably  the  Connecting  Europe 
Facility,  which  under  CEF  2  (2021-2027)  has  so 
far  allocated  EUR  297  million  to  17  specific 
projects on strategic transport networks. Similarly, 
Horizon  Europe  has  so  far  allocated  nearly  EUR 
838 million for Belgian R&I on top of the EUR 3.4 
billion  earmarked  under  the  previous  programme 
(Horizon 2020). The Public Sector Loan Facility set 
up  under  the  Just  Transition  Mechanism  makes 
EUR  14  million  of  grant  support  from  the 
Commission  available  for  2021-2027,  which  will 
be  combined  with  loans  from  the  EIB  to  support 
just 
investments  by  public  sector  entities 
transition regions.  

in 

for 

risks 

temporary 

unemployment 

support 
in 

Belgium received support under the European 
to 
instrument 
mitigate 
an 
emergency  (SURE)  to  finance  short-time  work 
schemes and other similar measures, including an 
ancillary  health-related  measure,  to  soften  the 
impact of COVID-19. The Council granted financial 
assistance  to  Belgium  of  EUR  8 197  billion  in 
loans,  which  supported  around  29%  of  workers 
and  42%  of  firms  in  2020,  and  around  10%  of 
workers and 22% of firms in 2021. 

Instrument 
designing 

(TSI) 
The  Technical  Support 
and 
supports 
in 
Belgium 
implementing  growth-enhancing 
reforms, 
including  those  set  out  in  its  recovery  and 
resilience  plan  (RRP).  Belgium  has  received 
significant  support  since  2018.  Examples (29) 
include  support  to  identify  the  most  suitable 
its 
reforms  and 

investments  for  decreasing 

(29)  Country factsheets on reform support are available here. 

28 

1.700   689   742   189   702   1.845   925   923   618   539   02004006008001.0001.2001.4001.6001.8002.000SDG 8 Decent workand economicgrowthSDG 9 Industry,innovation,infrastructureSDG 1 No povertySDG 7 Affordableand clean energySDG 4 QualityeducationEU CP 2014-2020 (millions EUR)EU CP 2021-2027 (millions EUR) 
   
                                                 
                                                 
dependency on fossil fuels from Russia in line with 
the  REPowerEU  plan,  to  facilitate  energy  efficient 
renovation  of  private  housing,  and  for  the  digital 
transformation of the education system. 

29 

 
ANNEX 5: RESILIENCE 

This  Annex 
illustrates  Belgium’s  relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (30).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (31)  and  capacities (32)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and their underlying areas for Belgium and the EU-
27 (33). 

indices,  which 

Compared  to  the  EU  average,  Belgium  shows  an 
level  of 
overall  similar  yet  slightly  higher 
capacities  across  all  RDB  indicators.  It  has  high 
capacities  in  the  social  and  economic  dimension 
and  medium-high  capacities  in  the  green,  digital 
and  geopolitical  dimensions.  Belgium  shows 
stronger  capacities  than  the  EU  average  in  the 
areas  of  ‘inequalities  and  social  impact  of  the 
transitions’, 
and 
sustainable  agriculture’,  ‘industry  digitalisation’, 
‘raw  material  and  energy  supply’,  and  ‘value 
chains  and  trade’.  There  is  room  for  improving 
capacities  compared  to  the  EU  in  'climate  change 
mitigation and adaptation’ and ‘sustainable use of 
resources’. 

'ecosystems, 

biodiversity 

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

According  to  the  set  of  resilience  indicators 
under  the  RDB,  Belgium  generally  displays  a 
similar  level  of  vulnerabilities  compared  to 
the  EU  average.  Belgium  shows  medium 
vulnerabilities  in  all  dimensions  of  the  resilience 
dashboards:  social  and  economic,  green,  digital 
and  geopolitical.  It  has  higher  vulnerabilities  than 
the  EU  average  in  the  areas  'climate  change 
‘ecosystems, 
mitigation 
biodiversity, 
agriculture’, 
sustainable 
‘cybersecurity’,  ‘raw  material  and  energy  supply’ 
and ‘financial globalisation’. Belgium has relatively 
low  vulnerabilities  in  relation  to  the  ‘digitalisation 
of  personal  space’,  ‘health,  education  and  work’, 
and 
the 
transitions’ (34). 

‘inequalities  and  social 

adaptation’, 

impact  of 

and 

(30)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(31)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(32)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions. 

(33)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

(34)  This is driven by Belgium’s low income quintile share ratio 

and AROPE. At the same time Belgium has a high 

(1) Data are for 2021, and EU-27 refers to the value for the 
EU as a whole. Data underlying EU-27 vulnerabilities in the 
area ‘value chains and trade’ are not available as they 
comprise partner concentration measures that are not 
comparable with Member States’ level values. 
Source: JRC Resilience Dashboards - European Commission 

employment gap EU vs non-EU nationals in the area of 
‘security and demography’. 

30 

BEEU-27BEEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
 
  
 
                                                                              
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

The  green  transition  in  Belgium  requires 
continued  action  in  several  areas,  including 
renewable  energy,  energy  efficiency,  and 
sustainable  transport.  Implementation  of  the 
European Green Deal is underway in Belgium; this 
Annex  provides  a  snapshot  of  the  key  aspects 
involved (35). 

Belgium  has  not  yet  defined  all  the  climate 
policy  measures  it  needs  to  reach  its  new 
2030  climate  target  for  the  effort  sharing 
sectors (36).  Data 
for  2021  on  Belgium’s 
greenhouse  gas  emissions  in  these  sectors  are 
expected  to  show  the  country  generated  slightly 
its  annual  emission  allocations (37). 
less  than 
Current policies in Belgium are projected to reduce 
these emissions by 14% relative to 2005 levels in 
2030,  not  sufficient  to  reach  the  effort  sharing 
target  even  before  the  target  was  raised  in  line 
with  the  EU’s  55%  objective.  Additional  measures 
planned  would  reduce  emissions  further  by  38%, 
exceeding  the  current  target  but  not  reaching 
Belgium’s  new  target  reduction  of  47% (38). 

(35)  The overview in this Annex is complemented by Annex 7 on 
energy security and affordability, Annex 8 on the fair 
transition to climate neutrality and environmental 
sustainability, Annex 9 on resource productivity, efficiency 
and circularity, Annex 11 on innovation, and Annex 19 on 
taxation. 

(36)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839. 

(37)  Belgium's annual emission allocations for 2021 were some 
70.1 Mt CO2eq, and its approximated 2021 emissions were 
69.5 Mt. See European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343. 

(38)  See the information on the distance to the 2030 climate 

policy target in Table A6.1. Existing and additional measures 
as of 15 March 2021. See also Annex 2 on progress in 
implementing the country-specific recommendations for a 
complementary, more near-term perspective on climate 
policy measures. 

Belgium  allocated  50%  of 
its  Recovery  and 
Resilience  Facility  grants  to  key  reforms  and 
investments to attain climate objectives (39). 

Graph A6.1: Thematic – greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

Belgium is not on track to meet its 2030 net 
carbon  removals  target  for  its  land  use 
sector. Greenhouse gas emissions from Belgium’s 
land  use,  land  use  change  and  forestry  sector 
(LULUCF)  are  relatively  high.  Its  forests  and 
grassland  achieve  a  major  share  of  net  carbon 
removals  through  land  use.  For  2030,  Belgium’s 
LULUCF  net  removals  target  implies  to  remove 
1 352 kt CO2eq (see Table A6.1) (40). Net removals 
have  fallen  since  2013.  Both  the  Walloon  and 
Flemish common agricultural policy strategic plans 
include  several  measures  related  to  carbon 
farming. 

Fossil  fuels  still  play  a  strong  role  in 
Belgium’s  energy  mix  and  the  gradual 
be 
nuclear 

phase-out 

power 

to 

is 

(39)  For example, investment in the energy-efficient renovation 
of buildings, including social housing, and sustainable 
mobility (railway infrastructure, green public buses, electric 
charging stations, urban public transport and creating or 
refurbishing cycling pathways). The plan also includes an 
important reform to promote electric road transport by 
limiting preferential tax rates for company cars to zero-
emission vehicles by 2026. It supports the decarbonisation 
of the energy sector by promoting the use of hydrogen as an 
energy source. On biodiversity and climate change 
adaptation, investments include reconnecting ecosystems, 
enhancing protected natural areas, forests and wetlands and 
structural measures to sustainably manage water 
availability. 

(40)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

31 

010203040506070809020052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
                                                 
   
                                                 
 
 
by 

(CRM) 

additional 

the  capacity 
including 

capacity 
compensated 
remuneration 
remunerated  by 
mechanism 
demand-side 
management  and  by  increasing  renewables.  In 
2021,  oil  provided  37%  of  Belgium’s  energy  mix 
(gross inland consumption), natural  gas 27%, and 
renewable  sources  10% 
(see  Graph  A6.2). 
Belgium’s  electricity  mix  is  highly  decarbonised, 
with 50% from nuclear and 25% from renewable 
sources in 2021 (see Graph A6.2). The energy and 
climate  plan  envisaged  phasing  out  the  6GW 
nuclear  capacity  by  2025,  but  in  April  2022, 
Belgium  decided  to  extend  the  use  of  2GW  of 
nuclear power. The Belgian government negotiates 
with  the  owner  of  the  two  plants  their  extension 
for 10 years. 

Graph A6.2: Energy mix (top) and Electricity mix 
(bottom), 2021 

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  order  to  compensate  for  the  partial 
nuclear  phase-out,  efforts  for  a  higher 
deployment  of  renewables  would  allow 
Belgium  to  reach  its  targets.  Deployment  of 

renewable  energy  remains  limited  –  the  share  of 
renewable energy in final energy consumption has 
reached  13.0% 
including  0.57% 
in  2021, 
statistical  transfers  (compared  to  an  EU  average 
of  21.8%).  Belgium’s  target  of  17.5%  share  of 
energy  from  renewable  sources  in  gross  final 
energy  consumption  by  2030  included  in  the 
national  energy  and  climate  plan  (NECP)  was 
considered  unambitious  in  the  2020  assessment 
to 
the  Commission.  Belgium  will  need 
by 
substantially  strengthen 
its  renewable  energy 
target  in  the  updated  NECP  to  reflect  the  more 
ambitious EU climate and energy targets in the Fit 
for  55  Package  and  in  the  REPowerEU  Plan. 
According  to  IRENA (41),  the  Belgium’s  solar  PV 
capacity  increased  from  4.6  (2019)  to  5.6  (2020) 
to  6.0  (2021)  to  6.9  (2022)  GW,  i.e.  the  annual 
growth  increased  in  2022  (+15%)  compared  to 
2021 (+8%), but not yet up to 2019 level (+20%). 
On  February  17,  2023,  The  Flemish  government 
approved a photovoltaic solar panel obligation for 
buildings with a significant electricity offtake from 
the  grid:  electricity  consumers  with  a  yearly 
electricity  offtake  from  the  grid  of  more  than  1 
GWh and buildings of public organisations with an 
offtake of more than 250 MWh will be required to 
install solar panels on a minimum portion of their 
roofs by 2025 (and with a strengthening path for 
2030 and 2035). Belgium’s recovery and resilience 
plan  includes  EUR  100  million  for  an  offshore 
energy island with transmission infrastructure. This 
will enable the connection of an additional 3.5 GW 
of  planned  offshore  electricity  produced  in  wind 
parks  in  the  Princess  Elisabeth  zone  (above  the 
currently  installed  2.3  GW),  to  reach  5.8  GW  by 
2030 (42)  and  interconnections  with  Denmark  and 
the UK. The island will  contribute to the goals set 
by  the  North  Sea  Energy  Cooperation  and  to  the 
ambitious combined targets for offshore wind. 

energy 

planned 

efficiency 
Belgium’s 
measures  call  for  swift 
implementation. 
Belgium’s  NECP  targets  for  primary  and  final 
low 
energy  consumption  were  considered  of 
ambition  in  the  2020  Commission  assessment. 
Based  on  the  energy  consumption  trajectory  for 
2018-2021,  Belgium  is  not  expected  to  be  on 
track to meet its 2030 target for both primary and 
final  energy  consumption,  as  these  were  notified 

(41)  IRENA Renewable capacity statistics 2023 

(42)  Federal government commitment, April 2022 

32 

2%23%25%50%Solid fossil fuels,peat and oil shaleGasRenewablesNuclear5%27%37%21%10%Solid fossil fuels,peat and oil shaleGasOilNuclearRenewables 
   
                                                 
Graph A6.3: Thematic – environmental investment 
needs and current investment, p.a. 2014-2020 

in  its  NECP (43).  Its  recovery  and  resilience  plan 
supports this target by allocating EUR 1 billion for 
energy  efficient  renovations  of  over  200 000 
private and social housing units and over 1 million 
m² of public buildings. The plan includes a reform 
to bring in one-stop-shops to help people apply for 
these  subsidies.  The  Flemish  government  has 
recently  approved  several  measures  to  further 
stimulate  the  energy  efficiency  and  electrification 
in industry. 

to 

sector 

transport 

Belgium’s 
generates 
significant  greenhouse  gas  and  nitrogen 
oxide  emissions.  The  share  of  electric  vehicles 
and  the  density  of  public  charging  points  is 
increasing  fast  but  is  still  below  the  EU  average. 
the  second  highest  share  of 
Belgium  has 
electrified  railway  lines  in  the  EU.  Nonetheless, 
individual  passenger  transport  remains  dominant: 
four  fifths  of 
the  passenger-kilometres  are 
performed  by  car (44).  This  adds 
traffic 
congestion and exacerbates seasonal air pollution, 
with  significant  health  and  economic  costs  in  six 
air  quality  zones.  Actions  to  discourage  individual 
car  use  and  to  invest  in  sustainable  transport 
would  help  bringing  down  these  costs.  The  high 
share of passenger cars in daily passenger traffic 
has  remained  stable  since  1999 (45).  The  use  of 
public  transport  has  not  yet  fully  recovered  after 
the  COVID-19  crisis.  Much  more  can  be  done  to 
promote  public  transport,  such  as 
improving 
suburban  and  intercity  services,  investments  in 
fleet  renewal  and  increased  service  frequency.  In 
2022, cycling has increased as a commuting mode 
of transport, particularly in Flanders and Brussels-
Capital  Region,  thanks  to  continuous  investments 
in  cycling  infrastructure,  promotion  initiatives  and 
targeted  incentives.  However,  there  is  still  scope 
for  further  acting  on 
in  cycling 
infrastructure  and  in  road  safety  for  cyclists.  The 
measures  under 
control 
programme remain insufficient. 

the  air  pollution 

investments 

(43)  After the conclusion of the negotiations for a recast Energy 

Efficiency Directive, the ambition of both the EU and national 
targets as well as of the national measures for energy 
efficiency to meet these targets is expected to increase. 

(44)  European Commission, Directorate-General for Mobility and 
Transport, EU transport in figures : statistical pocketbook 
2022, Publications Office of the European Union, 2022. 

(45)  Monitor survey, 2017. 

33 

Source: European Commission. 

Belgium  would  benefit  from  investing  more 
in environmental protection and in measures 
to tackle pollution (46). Between 2014 and 2020, 
the  environmental 
investment  needs  were 
estimated  to  be  at  least  EUR  5.7  billion,  while 
investment stood at about EUR 3.7 billion, leaving 
a gap of at least EUR 2 billion per year (see Graph 
A6.3) (47).  Belgium’s  land  Natura  2000  network 
covers  13%  of  its  land (48).  Biodiversity  faces 
particular  challenges  with  nearly  all  habitats  in 
unfavourable  conservation  status.  Conservation  in 
marine  sites  often  means  setting 
fishing 
restrictions,  which  is  challenging.  Belgium  has  yet 
to  allocate  sufficient  resources  to  biodiversity 
protection. 

Climate  change  implies  many  challenges  for 
Belgium,  including  on  water  management. 
Ecosystem 
pollution 
continue (49).  Extreme  climate-related  weather 

pressure 

from 

(46)  Environmental objectives include pollution prevention and 

control, water management and industries, circular economy 
and waste, biodiversity and ecosystems (European 
Commission, 2022, Environmental Implementation Review, 
country report Belgium). 

(47)  When also accounting for needs estimated at EU level only 

(e.g., water protection, higher circularity, biodiversity 
strategy).  

(48)  In 2021, Belgium had 14.7% terrestrial protected areas 

(Natura 2000 and nationally designated areas), against the 
EU average of 26.4% (European Environment Agency, 2023, 
Natura 2000 Barometer). 

(49)  European Environmental Agency, Advancing towards climate 

resilience in Europe, forthcoming. 

2251.4781.3122773671.1911.7341.91236550905001000150020002500Pollutionprevention andcontrolWater(industries, excl.protection)CircularEconomy (incl.waste)Biodiversity andecosystemsR&I&D andotherEUR million (at current prices)Current investmentTotal need 
                                                 
          
                                                 
events  between  1980  and  2020  caused  EUR  3 
billion in economic damages (50). The fluvial floods 
in  2021  caused  over  EUR  2  billion  in  damages, 
with  only  half  of  the  assets  insured.  Climate 
change  affects  mobility,  energy, 
the  built 
environment,  agriculture,  finance,  and  tourism. 
These  sectors  are  susceptible  to  increased  water 
scarcity  and  flooding  risks.  The  recovery  and 
resilience  plan  has  measures  on  water  retention, 
retracing  waterways,  creating  floodplains,  and 
protecting ecosystems. Challenges remain in water 
management,  however.  Infrastructure  investment 
is  needed  in  wastewater  collection  and  treatment 
in  Wallonia.  On  10  March  2023,  the  Flemish 
government  reached  a  political  agreement  about 
the  approach  to  reduce  nitrogen  emissions.  In 
Wallonia,  nitrate-compliance  action  programmes 
are  long  overdue.  Agriculture  remains  the  main 
source  of  ammonia  emissions  and 
intensive 
agriculture  in  Flanders  exerts  strong  pressure  on 
ecosystems.  Flanders’  and  Wallonia’s  common 
agricultural  policy  strategic  plans  contain  some 
measures to tackle these issues.  Belgium  has  the 
potential  to  rely  more  on  tax  measures  to 
internalise  the  cost  of  air  pollution  and  to  limit 
water pollution, in particular through an expanded 
use of environmental taxes (51) (see Annex 19). For 
instance,  the  current  pesticide  tax  has  scope  for 
extension, as it only covers five substances. 

Belgium  provides  fossil  fuel  and  other 
environmentally harmful subsidies that could 
be  considered  for  reform,  while  ensuring 
food  and  energy  security  and  mitigating 
social  effects.  It  provided  more  than  EUR  4 
billion  in  fossil  fuel  subsidies  in  2020 (52),  mainly 
through tax exemptions and reduced excise duty or 
VAT  rates,  putting  low-carbon  alternatives  to  a 
disadvantage. Belgium will gradually phase out the 
company  car  tax  scheme  for  fossil  fuel  cars,  but 
results  are  yet  to  materialise.  Environmentally 
harmful  subsidies  have  been  identified,  via  an 

(50)  See European Environmental Agency, Economic losses from 

climate-related extremes in Europe, published on 
03/02/2022. 

(51)  European Commission, 2021, Green taxation and other 

economic instruments – Internalising environmental costs to 
make the polluter pay, Ensuring that polluters pay. 

(52)  The information on the fossil fuel subsidies of 2020 is in EUR 
of 2021, from the 2022 State of the Energy Union report. A 
more recent national study finds that Belgium provided fossil 
fuel subsidies worth EUR 11 bn in 2021 (FOD Financiën 
(2021) “Federale inventaris van subsidies voor fossiele 
brandstoffen”, wettelijk depot D/2021/2196/15.). 

and 

initial  assessment,  in  the agriculture,  forestry  and 
fishing, electricity, gas, steam and air conditioning, 
transportation 
storage,  manufacturing 
services  and  water  supply  and  sewerage  sectors. 
Examples  of  such  subsidies  include  the  reduced 
VAT  rate  for  fertilisers  and  pesticides,  the  excise 
tax  refund  for  diesel  fuel  used  in  agriculture  and 
tax  relief  for  gas  oil,  the  reduced  energy  tax  rate 
for  light  fuel  oil  used  in  mobile  machinery,  the 
reimbursement  of  excise  duty  on  diesel  used  in 
freight  and  other  categories  of  passenger 
transport  or  the  excise  tax  exemption  and  tax 
relief for natural gas for industrial consumers (53). 
A  mapping  of  all  environmentally  harmful 
subsidies  by  Belgium  would  help  prioritise 
candidates for reform. 

By earmarking a higher share of Emissions Trading 
System  revenue  for  climate  action,  Belgium  could 
reduce its exposure to the cost of carbon. In 2021, 
its revenue from the EU Emissions Trading System 
amounted to some EUR 533 million. Of this, it has 
allocated only 14% to climate and energy-related 
purposes,  far  below  the  minimum  recommended 
50% set by the ETS Directive. 

(53)  Initial assessment of environmentally harmful subsidies 

done by the Commission in the 2022 toolbox for reforming 
environmentally harmful subsidies in Europe, using OECD 
definitions, and based on the following datasets: OECD 
Agriculture Policy Monitoring and Evaluations; OECD Policy 
Instruments for the Environment (PINE) Database; OECD 
Statistical Database for Fossil Fuels Support; IMF country-
level energy subsidy estimates. Annex 4 of the toolbox 
contains detailed examples of subsidies on the candidates 
for reform. 

34 

 
                                                 
                                                 
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions 
under the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment 
Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base 
year emissions under the Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The 
table above shows the base year emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-
2021 are expressed in percentage change from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The 
table shows the 2030 target under Regulation (EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change 
from 2005 base year emissions (AR5 GWP). Distance to target is the gap between Member States’ 2030 target (with AR5 GWP 
values) and projected emissions with existing measures (WEM) and with additional measures (WAM) (with AR4 GWP values), in 
percentage change from the 2005 base year emissions. Due to the difference in global warming potential values, the distance to 
target is only illustrative. The measures included reflect the state of play as of 15 March 2021.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 amending 
Regulation (EU) 2018/841 (LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and 
prevention of pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This 
indicator is based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an 
estimation of the current insurance penetration rate. The indicator does not provide information on the split between the 
private/public costs of climate-related disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very 
high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

35 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp80,29-12%-8%-10%-19%--47%-33-9Net carbon removals from LULUCF (2)kt CO2eq-1.765-645-608-480-335-324-1352n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%2%9%9%10%13%13%17,5%Energy efficiency: primary energy consumption (3)Mtoe51,648,546,548,443,948,842,7Energy efficiency: final energy consumption (3)Mtoe36,836,136,435,833,235,935,2201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP2,72,72,72,62,52,52,42,22,2Environmental taxes (% of total taxation) (4)% of taxation 6,06,06,06,15,85,75,95,65,5Government expenditure on environmental protection% of total exp.2,22,42,52,52,52,41,71,61,6Investment in environmental protection (5) % of GDP0,50,60,60,6--0,40,40,4Fossil fuel subsidies (6)EUR2021bn2,93,13,43,64,0-53,050,0-Climate protection gap (7) score 1-41,71,21,5Net greenhouse gas emissions1990 = 10080,082,083,082,076,077,076,069,072,0Greenhouse gas emission intensity of the economykg/EUR'100,310,300,290,290,28-0,310,30-Energy intensity of the economykgoe/EUR'100,140,140,130,130,13-0,110,11-Final energy consumption (FEC)2015=100101,3100,4101,299,592,399,8102,994,6101,1FEC in residential building sector2015=100100,599,098,095,695,6104,2101,3101,3106,8FEC in services building sector2015=100100,6100,4100,899,695,398,4100,194..3100,7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'100,500,480,470,440,42-0,930,86-Years of life lost due to air pollution by PM2.5per 100.000 inh.560,4535,4548,3424,1313,9-581,6544,5-Years of life lost due to air pollution by NO2per 100.000 inh.223,0206,0194,4159,084,8-309,6218,8-Nitrates in ground watermg NO3/litre30,329,428,628,328,7-21,020,8-Land protected areas% of total21,524,9-14,514,614,726,226,426,4Marine protected areas% of total36,8--36,8-37,810,7-12,1Organic farming% of total utilised agricultural area5,86,36,66,97,37,58,59,1-201720182019202020212022202020212022Share of zero-emission vehicles (9)% in new registrations0,50,71,63,55,89,55,48,910,7Number of AC/DC recharging points (AFIR categorisation)---8.82611.99620.012188.626330.028432.518Share of electrified railways%86,086,186,4n/a87,756,6n/a56,6Hours of congestion per commuting driver per year39,440,141,040,6n/an/a28,7n/an/aMobilityFiscal and financialindicatorsClimateEnergyPollutionBiodiversity'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetBelgiumEU 
 
   
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

is  still 

Before  Russia  invaded  Ukraine,  Belgium  had 
to  Russian  gas  and 
limited  exposure 
moderate exposure to oil compared to the EU 
averages.  However, 
importing 
it 
Russian  LNG  and  it  is  highly  dependent  on 
imported  fossil  fuels 
in  general.  This 
dependence  from  fossil  fuels  makes  its 
economy particularly sensitive to global price 
developments, requiring it to step up efforts 
on  the  energy  transition.  This  Annex (54)  sets 
out  actions  carried  out by  Belgium  to  achieve  the 
REPowerEU  objectives, 
the 
implementation of its recovery and resilience plan 
(RRP),  in  order  to  improve  energy  security  and 
affordability  while  accelerating  the  clean  energy 
transition,  and  contributing  to  enhancing  the  EU’s 
competitiveness in the clean energy sector (55). 

including 

through 

in 

the 

face  of 

Belgium  had  a  high  level  of  gas  supply 
challenging 
security 
circumstances.  Its  liquefied  and  natural  gas 
pipeline  infrastructure  can  contribute  to  the 
overall  security  of  supply  in  Europe.  Belgium 
operates one underground storage facility (56) with 
a total capacity of around 0.8 billion cubic metres 
(bcm),  representing  only  4%  of  its  total  yearly 
demand.  Belgium 
its 
underground  storage  level  by  1  November  2022 
and  ended  the  heating  season  with  a  filling  gas 
storage  at  40% at  15  April  2023 (57) (see  Graph 
A7.1). Belgium has gas pipeline connections to six 
countries (58):  Netherlands,  Germany,  Norway, 

reached  100% 

of 

(54)  It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition, by Annex 8 on the 
actions taken to mitigate energy poverty and protect the 
most vulnerable ones, by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability, and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU. 

(55)  in line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

(56)  Belgium has one underground storage facility: Loenhout 

managed by Fluxys. 

(57)  Regulation of the European Parliament and of the Council 
amending Regulations (EU) 2017/1938 and (EC) No 
715/2009 with regard to gas storage and Implementing 
Regulation (EU) 2022/2301 of 23 November 2022 setting 
the filling trajectory with intermediary targets for 2023 for 
each Member State with underground gas storage facilities 
on its territory and directly interconnected to its market area. 

(58)  Gas pipeline connections to : Netherlands (49 bcm/year for 
imports, 12 bcm/year for exports), Germany (10 bcm/year), 

liquefied  natural  gas 

United Kingdom, Luxembourg and France. It has a 
terminal 
large 
gasification capacity in Zeebrugge (59). As a result, 
Belgium  could  increase  the  LNG  imports  and 
export gas to neighbouring countries in 2022. Part 
of the cited LNG imports are from Russia. 

(LNG) 

Graph A7.1: Underground gas storage levels in 
Belgium 

Source: JRC calculation based on AGSI+ Transparency 
Platform, 2022 (Last update 2 May 2023) 

Belgium  has  taken  measures  to  reduce  gas 
its  continuous  efforts 
consumption  and 
would  help  to  prepare  for  next  winter.  Over 
the period August 2022-March 2023, 15% of gas 
consumption has been saved in Belgium compared 
to  the previous  5-years  average, thereby  meeting 
the 14% reduction target. Belgium took measures 
that  led  to  a  gas  demand  reduction  including 
national  awareness-raising  campaigns,  measures 
in the public sector (reduced lighting, temperature 
control,  energy  efficiency  of  heating,  ventilation 
and  air  conditioning  systems,  insulation),  in  the 
private  sector  (higher  premiums  for  renovation, 
insulation,  hybrid  heat  pumps),  and  in  industry 
(demand side management, fuel switch). 

Electricity  security  has  been  ensured  by  the 
large  capacities  of  base  load  (nuclear)  and 
dispatchable  (gas)  power  plants,  and  a  high 
level 
interconnection  with 
neighbouring  countries,  but  the  gradual 
phasing  out  of  nuclear  requires  action  to 
maintain supply security. In terms of electricity 
generation,  Belgium  still  relied  heavily  on  a 

grid 

of 

the UK (20 bcm/25 bcm), Norway (import capacity of 15 
bcm/year), Luxembourg (export capacity of 1.5 bcm/year) 
and France (export capacity of 28.5 bcm/year). 

(59)  Existing gasification capacity in Zeebrugge: 2 million cubic 

metres/hour; 11.4 bcm/year; two more units under 
construction (3.9 bcm/year in 2024; 1.8 bcm/year in 2026). 

36 

 
 
                                                 
 
 
                                                                              
 
 
combination  of  nuclear 
(51%)  and  gas-fired 
combined  cycle  power  plants  (23%)  in  2021  (see 
Annex  6).  Nuclear  capacity  (6  GW  in  2021)  was 
initially set to be phased out completely by 2025. 
However,  in  April  2022  the  Belgium  government 
decided  to  continue  operating  2  GW  until  2035. 
Negotiations  with  the  plants  owner  are  ongoing. 
The partial, then complete, nuclear phase-out  and 
expected electricity consumption growth are to be 
covered  by  a  capacity  remuneration  mechanism 
which  aims  at  maintaining  and  attracting 
sufficient  generation,  storage  and  demand  side 
management capacity in addition to the increased 
renewable 
remaining  nuclear 
generation,  to  ensure  security  of  supply  as  from 
the winter 2025-2026 and beyond. 

resources  and 

Graph A7.2: Share of gas consumption per sector, 
2021 

Source: Eurostat 

further 

Belgium  is  upgrading  its  grid  infrastructure, 
and 
investments 
infrastructure 
would  allow  it  to  accommodate  a  higher 
share of renewable electricity. Belgium´s high-
voltage  grid  requires  investment  due  to  growing 
electrification  and  offshore  wind  development. 
Difficulties  in  expanding  overhead  lines  mean 
delays  in  the  final  approval.  Flanders  decided  on 
31  March  on  the  Ventilus  final  trajectory,  which 
includes  10  km  of  underground  cables.  Flanders 
and  Brussels  have  phased  out  net  metering  and 
introduced a different tariff for injection of power 
in  the  grid,  to  foster  self-consumption  and  ease 
the  integration  of  renewable  energy  sources. 
Belgium  has  a  good  cross-border  electricity 
in  compliance  with  the 
interconnection 
interconnection 2030 target of 15%. 

level, 

For  households,  the  average  price  of  gas  and 
increased  by  101%  and  21% 
electricity 
respectively  between  the  first  half  of  2021  and 
the  second  half  of  2022  (see  Graph  A7.3).  To 
mitigate  the 
impact  on  households,  Belgium 
reduced  VAT  on  electricity  and  gas  from  21%  to 
6%  and 
introduced  energy  bill  support;  the 
eligibility for social tariff was extended (during the 
COVID-19  crisis), 
the  number  of 
increasing 
protected  consumers  to  approximately  1  million 
households.  In  response  to  these  energy  price 
surges,  the  Belgium’s  solar  PV  capacity  increased 
from  6.0  GW  in  2021  to  6.9  GW  in  2022,  the 
annual  growth  rate  increased  in  2022  (+15%) 
compared to 2021 (+8%), but not yet up to 2019 
level (+20%) (60). For industry, the average price of 
gas  and  electricity  increased  by  152%  and  59% 
respectively  between  the  first  half  of  2021  and 
the  second  half  of  2022  (see  Graph  A7.3).  The 
surge  in  energy  prices  has  had  a  considerable 
impact  on  Belgian  industry,  which  accounted  for 
33.5% of gas consumption in the country in 2021 
(see Graph A7.2). 

Belgium  has  taken  advantage  of  the  RRP  to 
accelerate  the  renovation  of  buildings,  but 
this  will  not  be  sufficient  to  reach  its 
renovation  and  energy  efficiency  targets. 
Belgium  faces  pressure  to  deliver  on  the  energy 
efficiency  and  savings  measures  planned  as  part 
of  the  national  climate  and  energy  plan  and  RRP, 
especially  on  the  financing  of  a  renovation  wave 
across regions to increase the energy efficiency of 
public  buildings,  social  housing  and  residential 
buildings. Belgium is carrying out a low number of 
checks  on  products  covered  by  eco-design  and 
energy  labelling.  This  generates  concerns  with 
respect to the level playing field among economic 
operators  and  uncertainty  as  to  the  compliance 
levels  of  the  concerned  products,  and  therefore 
possible missed energy and CO2 savings (61). 

Belgium aims to transform its energy system 
against  the  background  of  a  gradual  phase-
out  of  nuclear  energy  by  2025/2035  and 
growing  electricity  demand.  Deployment  of 
renewable  energy  remains  limited  (see  Annex  6). 
The  share  of  renewables  in  the  heating  and 
cooling  sector  is  particularly  low  (9.2%  compared 

introduced  by 
Despite  the  mechanisms 
Belgium  to  mitigate  soaring  energy  prices, 
retail  prices  have  risen  significantly  due  to 
the  increase  in  wholesale  electricity  prices. 

(60)  IRENA Renewable capacity statistics 2023. 

(61)  Internet-supported information and communication system 

for the pan-European market surveillance 

37 

26,6%33,5%0,6%13,1%23,6%2,5%EnergyIndustryTransportServices and publicsectorHouseholds 
   
                                                 
to an EU average of 22.9% in 2021). Belgium is a 
front  runner  in  the  deployment  of  offshore  wind 
energy  and  aims  to  further  increase  its  offshore 
capacities in close cooperation with other countries 
in  the  North  Sea  region.  A  wider  uptake  of 
decentralised renewable resources is supported by 
reduced  VAT  (from  21%  to  6%)  on  solar  panels 
and heat pumps. 

Graph A7.3: Belgium´s retail energy prices for 
industry (top) and households (bottom) 

(1) On electricity, the band consumption is DC for households 
and ID for industry; (2) On gas, the band consumption is D2 
for households and I4 for industry 
Source: Eurostat 

and 

grid 

Public  acceptance  of  large-scale  onshore 
renewables 
infrastructure 
deployment  remains  a  challenge.  The  Belgian 
authorities  are  taking  measures  to  reduce  the 
duration  of  permit-granting  procedures 
for 
renewables,  with  variable  progress.  The  federal 
government has initiated the screening of barriers 
to  the  deployment  of  renewables,  in  particular  in 
relation  to  aviation  security  rules;  the  Council  of 
Ministers approved on 18 November 2022 in first 
reading a proposal of draft law, to enable priority 
treatment  and  an  accelerated  procedure  in  the 
Council  of  State,  for  files  relating  to  the  use  of 
the  energy 
renewable  energy  sources  and 
to 
transition.  Flanders  has 
reinforce  the  capacity  of  appeal  bodies  through 
the  nomination  of  additional  judges,  to  speed  up 
the procedure and reduce the number of appeals, 

taken  measures 

notably  by  shifting  competence  for  wind  energy 
permitting from the municipal to the regional level. 
Wallonia  adopted  a  revised  plan  to  facilitate  the 
deployment of wind turbines, including a review of 
distance 
In 
September  2022,  Brussels-Capital  Region,  has 
opened 
to 
individuals,  companies  or  administrations,  for 
easier submission, follow-up or processing of files. 

the  digital  platform  MyPermit 

residential  buildings. 

rules 

to 

for 

and 

batteries, 

and 
decarbonising 

Belgium  has  developed  an  ecosystem  for 
offshore wind and smart grids, as well as for 
is 
components 
strengthening 
its 
hydrogen  ecosystem.  Belgian  companies  are 
members  of  the  Hy2Use  and  Hy2Tech  Important 
Projects  of  Common  European  Interest  for  the 
development  of  the  hydrogen  value  chain,  with 
some projects funded by the RRP. The deployment 
of  offshore  wind  parks  has  contributed  to  the 
creation  in  Belgium  of  an  ecosystem  capable  of 
supplying  components  for  wind  energy  across the 
world.  The  RRP  will  fund  an  energy  island  to 
interconnect  wind  parks  across  borders.  Public 
investment in research and innovation (R&I) as an 
EU  Energy  Union  priority (62) 
increased  from 
0.048% in 2014 to 0.053% in 2021 (as a share of 
GDP), which is above the EU-27 average. Over the 
same  period,  however,  private  R&I  investment  in 
Energy  Union  priorities  fell  from  0.072%  to 
0.054%. The number of patent families in Energy 
Union  priorities  also  decreased  from  12.0  per 
million inhabitants in 2014 to 9.2 in 2019.  

Graph A7.4: Public investment in Energy Union R&I 
priorities 

Source: JRC SETIS (2022) 

(62)  Renewables, smart systems, efficient systems, sustainable 

transport, carbon capture, utilisation and storage (CCUS) and 
nuclear safety, COM(2015) 80 final (Energy Union Package).  

38 

050100150200250300€/MWhGas BelgiumGas EUElectricity BelgiumElectricity EU050100150200250300350400450500€/MWhGas BelgiumGas EUElectricity BelgiumElectricity EU10%3%16%12%16%19%17%24%100%40%39%1%2%201020142021[% per priority]CCUSNuclear safetySustainable transportEfficient systemsSmart systemRenewables68192266Total [mn Euro] 
       
   
 
                                                 
Table A7.1: Key Energy Indicators 

(1) The ranking of the main suppliers is based on the latest available figures (for 2021) 
(2) Information about 2021 LNG imports from Norway, Netherlands, United Kingdom, Germany and France are unavailable. 
(3) Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a VC investment firm). 
Source: Eurostat, Gas Infrastructure Europe, JRC elaboration based on PitchBook data (6/2022) 

39 

20182019202020212018201920202021Import Dependency [%] 83%78%78%71%58%61%57%56%of Solid fossil fuels 104%102%102%92%44%44%36%37%of Oil and petroleum products 101%101%103%96%95%97%97%92%of Natural Gas 101%102%99%100%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Hard Coal40%40%39%43%40%44%49%47%of Crude Oil39%32%30%29%30%27%26%25%of Natural Gas 12%17%7%12%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)69,70885,61086,61975,04093,64689,455100,465-Combustible Fuels33,08831,55832,61533,17134,49735,27730,667-Nuclear26,10343,52342,22728,59743,52434,43550,326-Hydro1,4181,4891,3971,3081,1811,3151,350-Wind5,5745,4206,5217,5749,75512,81911,998-Solar 3,0573,0953,3083,9034,2535,1125,618-Geothermal 0000000-Other Sources469524551487436498507-Net Imports of Electricity (GWh)20,9996,1836,02217,328-1,855-333-7,877-   As a % of electricity available for final consumption 25.3%7.4%7.2%20.6%-2.2%-0.4%-9.4%-Electricity Interconnection (%)----18.30%14.20%16.08%14.83%20152016201720182019202020212022Gas Consumption (in bcm)16.81717.818.318.418.218.315.7Gas Imports - by type (in bcm)21.319.219.022.330.026.325.6-Gas imports - pipeline18.818.217.919.823.221.721.4-Gas imports - LNG2.51.01.12.56.74.74.2-Gas Imports - by main source supplier (in bcm)* **Norway5.55.710.110.49.111.112.2-Qatar5.02.02.34.09.05.05.1-Russia0.00.01.42.85.84.43.9-Netherlands7.68.33.73.83.83.03.2-Others3.23.21.51.22.32.71.2-2019202020212022LNG TerminalsNumber of LNG Terminals (FSRU1)1111LNG Storage capacity (m3 LNG)566,000566,000566,000566,000Underground StorageNumber of storage facilities1111Operational Storage Capacity (bcm)0.80.80.80.82019202020212022VC investments in climate tech start-ups and scale-ups (EUR Mln)16.1045.3423.68n.a.as a % of total VC investments in Belgium0.010.040.02n.a.Research & Innovation spending in Energy Union R&i priorites (2)Public R&I (EUR mln)249.0304.1265.8n.a.Public R&I (% GDP)0.052%0.066%0.053%n.a.Private R&I (EUR mln)254.1n.a.n.a.n.a.Private R&I (% GDP)0.05%n.a.n.a.n.a.Source: Eurostat, JRC elaboration based on PitchBook data (06/2022)Note*: The ranking of the main supliers is based on the latest available figures (for 2021)Note*: Information about 2021 LNG imports from Norway, Netherlands, United Kingdom, Germany and France are unavailable.CLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIES    Footnote: Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for companies that have previously been part of the portfolio of a VC investment firm).ELECTRICITYBELGIUMEUENERGY DEPENDENCE 
 
 
 
 
     
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

This  Annex  monitors  Belgium’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable  situations.  In  2021-22,  the  number 
of  jobs  in  the  green  economy  rose  in  Belgium. 
Green  skills  are  key  to  support  the  fair  green 
transition, 
Council 
Recommendation (63),  and  the  implementation  of 
REPowerEU. Belgium’s recovery and resilience plan 
(RRP)  as  well  as  the  European  Social  Fund  Plus 
(ESF+), outline important reforms and investments 
for  a  fair  green  transition (64).  The  RRP  supports 
training  and  labour  market  reforms  aimed  at 
increasing 
the  unemployed  and 
improving efficiency in activating jobseekers. 

training  for 

with 

line 

the 

in 

in 

is  expanding, 
While  the  green  economy 
employment 
in  Belgium’s  sectors  most 
affected  by  the  green  transition  remains 
stable,  but  workers  in  declining  activities 
need  active  support.  The  employment  rate  in 
Belgium is at 71.9% in 2022, well below its 2030 
(GHG) 
target  of  80%.  The  greenhouse  gas 
emissions 
intensity  of  Belgium’s  workforce 
declined  from  19.2  to  16.6  tonnes  per  worker 
between  2015  and  2021,  still  above  the  EU 
(see  Graph  A8.1). 
tonnes 
average  of  13.7 
Employment 
energy-intensive 
Belgium’s 
industries (EII) represented a stable share of 2.6% 
of  total  employment  in  2021  (in  2020:  2.6%  vs 
in  the 
3.0% 
manufacture  of  fabricated  metal  products.  Total 
jobs  in  the  environmental  goods  and  services 
sector grew by 17.1% (to 48 000) during 2015-19 
(EU:  +8.3%),  reaching  1%  of  total  employment 
(the  EU  average is  2.2%, see  Annex  9  for  circular 
jobs  specifically).  The 
in 
construction,  which  is  a  key  sector  for  the  green 
transition,  stands  at  5.9%,  above  the  EU  average 
(4.0%) (65), indicating a tight labour market in this 
sector that risks creating bottlenecks in the green 
transition. To respond to those challenges, 16% of 
the  ESF+  funding  contributes  to  green  skills  and 
jobs, including support for self-employment in the 
green economy. 

in  the  EU),  with  44 300 

job  vacancy 

jobs 

rate 

(63)  Council Recommendation of 16 June 2022 on ensuring a fair 
transition towards climate neutrality, 2022/C 243/04 covers 
employment, skills, tax/benefit and social protection systems, 
essential services and housing. 

(64)  See 2022 Country Report (Annex 6) and Annex 3 for an 

overview. 

(65)  Eurostat (JVS_A_RATE_R2) 

Upskilling  and  reskilling  in  declining  and 
transforming  sectors  slightly  increased,  but 
skills  mismatches  remain 
important.  An 
increasing  job  vacancy  rate  coupled  with  low 
employment and high inactivity rates suggest that 
there are substantial skills mismatches including in 
sectors  requiring  low-  to  middle-levels  of  skills. 
Skills are key for smooth labour market transitions 
and  preserving  jobs  in  transforming  sectors.  In 
energy-intensive  industries,  workers’  participation 
in  education  and  training  increased  from  6.1%  in 
2015 to 8.5% in 2022 (EU: 10.4%), while 40% of 
citizens  believe  they  do  not  have  the  necessary 
skills  to  contribute  to  the  green  transition  (EU: 
38%) (66).  To  address  this  challenge,  the  RRP 
invests  in  training  infrastructure  related  to  the 
green transition (in Wallonia). 

Graph A8.1: Fair transition challenges in Belgium 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database. 

level  of  5.1% 

Energy  poverty  indicators  have  improved  in 
recent  years,  but  the  spike  in  energy  prices 
reversed  this  positive  trend.  The  share  of  the 
population unable to keep their homes adequately 
warm  declined  to  3.5%  in  2021,  before  returning 
In 
to  pre-crisis 
particular, 12% of the population at risk of poverty 
were  affected  in  2022  (EU:  16.4%  in  2021),  and 
3.2%  of  lower  middle-income  households  (in 
deciles  4-5)  in  2021  (EU:  8.2%  in  2021).  Before 
the energy price hikes, an estimated 23.2% of the 
total  population  and  57.9%  of  the  (expenditure-
based)  at-risk-of-poverty  (AROP)  population  had 
on 
residential 

in  2022 (67). 

expenditure 

budget 

shares 

(66)  Special Eurobarometer 527. Fairness perceptions of the 

green transition (May – June 2022). 

(67)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

40 

00.20.40.60.811.21.4GHG per workerEmployment EIIEducation &training EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestBE Latest (vs EU Latest)BE 2015 (vs EU Latest) 
 
                                                 
  
                                                 
 
low  and 

expenditure  shares  of 
lower-middle 
income groups would have increased the most, in 
line with EU-wide effects, as shown in Graph A8.2. 
Among  the  (expenditure-based)  AROP  population, 
the  share  of  individuals  living  in  households  with 
budget shares for private transport fuels (71) above 
6%  would  have  increased  more  than  the  EU 
average (8.8 pps vs 5.3 pps in the EU) to 37.1% in 
January 2023 due to the increase in transport fuel 
prices.  According  to  Special  Eurobarometer  527, 
almost  all  citizens  (96%)  consider  rising  energy 
prices  to  be  a  serious  problem (72).  Looking  to 
promote  energy  efficiency,  the  RRP  aims  to 
renovate 200 000 residential and social dwellings 
across regions. 

Access to public transport displays an urban-
rural  divide.  Overall,  citizens  perceive  public 
transport to be fairly available (53% vs 55% in the 
EU),  affordable  (52%  vs  54%  in  the  EU)  and  of 
good  quality  (54% vs  60%  in  the  EU).  As  regards 
these perceptions,  rural  areas  in  Belgium  perform 
worse  than  urban  areas,  on  average  at  the  same 
level as rural areas in the EU overall. The share of 
employees  in  the  private  sector  with  a  company 
car  is  high  (22%)  and  continues  to  increase 
(+26.1% as compared to 2016) (73). This limits the 
attractiveness  of  public  transport.  The  average 
carbon  footprint  of  the  top  10%  of  emitters 
among  the  population  in  Belgium  is  4.8  times 
higher  than  that  of  the  bottom  50%,  in  line  with 
the  EU  average  (5.0  times  higher).  The  average 
levels of air pollution in 2020 stood below the EU 
average  (9.4  vs  11.2  µg/m  PM2.5),  with  38%  of 
the population living in regions exposed to critical 
levels  of  air  pollution (74),  leading  to  significant 
health impacts, in particular on vulnerable groups, 
and 3 927 premature deaths annually (75). 

electricity,  gas,  and  other  fuels (68)  above  10%  of 
their  household  budget  (in  comparison  with  the 
estimated  EU  average  of  26.9%  and  48.2%, 
respectively). 

Graph A8.2: Distributional impacts of energy prices 
due to rising energy expenditure (2021-2023) 

Mean change of energy expenditure as a percentage (%) of 
total expenditure per income decile (D) due to observed price 
changes (August 2021 – January 2023 relative to the 18 
months prior), excl. policy support and behavioural responses. 
Source: EMPL-JRC GD-AMEDI/AMEDI+ projects, based on 
Household Budget Survey 2015 and Eurostat inflation data 
for CP0451 and CP0452. 

by 

the 

impact 

is  not  even  across  the 

The  impact  of  rising  energy  prices  in  2021-
23,  linked  to  Russia’s  war  against  Ukraine, 
on purchasing power of households has been 
largely  mitigated 
automatic 
indexation  of  wages  and  benefits.  However, 
income 
the 
distribution,  benefitting  in  particular  households 
with  a  high  income (69).  On  the  other  hand,  low-
income households benefitted proportionally more 
from  targeted  government  support.  As  a  result  of 
energy  price  changes  during  the  August  2021  to 
January  2023  period  relative  to  the  18  months 
prior  (see  Annex  7),  in  the  absence  of  policy 
support and behavioural responses, the fraction of 
individuals  living  in  households  spending  more 
than  10%  of  their  budget  on  energy  would  have 
increased  by  35.2 pps  for  the  whole  population 
and  by  32.5 pps  among  the  (expenditure-based) 
AROP population (16.4 pps and 19.1 pps in the EU, 
respectively) (70). 
gas, 

electricity 

and 

For 

(68) Products defined according to the European Classification of 
Individual Consumption according to Purpose (ECOICOP): 
CP045. 

(69)  Capéau et al. (2022) 

(70)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

(71)  ECOICOP: CP0722. 

(72)  Special Eurobarometer 527. 

(73)  Acerta (2022) 

(74)  Two times higher than the recommendations in the WHO Air 

Quality Guidelines (annual exposure of 5µg/m3). 

technical brief.  

(75)  EEA- Air Quality Health Risk Assessment. 

41 

0,0%1,0%2,0%3,0%4,0%5,0%6,0%ElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasD1D2D3D4D5D6D7D8D9D10BE GasBE ElectricityEU GasEU Electricity 
   
                                                 
                                                 
Table A8.1: Key indicators for a Fair Transition 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

42 

IndicatorDescriptionBE 2015BE LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes19,216.6 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %2,82.6 (2020)3 (2020)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries - %6,18.5 (2022)10.4 (2022)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %5,23.5 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %28,437.1 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters4,74.8 (2020)5 (2020) 
 
   
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
socio-economic  benefits. It  spurs  job  growth, 
innovation  and  competitiveness  and 
fosters 
resilience  and  resource  security.  The  circularity 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

Belgium is on track to meet the EU’s circular 
economy goals. The EU’s 2020 circular economy 
action  plan  (CEAP)  aims  at  doubling  the  circular 
material  use  rate  between  2020  and  2030. 
Belgium’s use of circular materials increased from 
17.6% in 2016 to 20.5% in 2021, well above the 
EU  2020  average  of  11.7%.  In  2020,  Belgium’s 
material  footprint  was  below  the  2020  EU-27 
average. The labour market benefits of the circular 
transition  are  not  being  realised,  despite  its 
potential (76);  direct  circular  jobs  only  account  for 
1%  of  employment  and  have  decreased  since 
2015  (see  Table  A.9.1).  Belgium  lagged  behind 
other  EU  countries  for  socioeconomic  outcomes 
from  eco-innovation  in  2019  (e.g.  exports  of 
products from eco-industries). 

Belgium  recently  adopted  new  policies  to 
address circular economy challenges and has 
made  progress  in  strengthening  its  circular 
economy policy framework. In 2021 the federal 
government adopted a comprehensive action plan 
for the circular economy 2021-2024; the ‘Circular 
Wallonia’  regional  strategy (77)  was  adopted  in 
2021;  the  Brussels  Capital  Region  adopted  its 
regional  strategy  for  the  economic  transition 
‘Shifting Economy’ with a five-year action plan  in 
2022  and  Flanders  set  out  the  ‘Vision  2050’ 
strategy in 2016. Circular economy is also included 
in  the  Flemish  ‘Energy  and  Climate  Plan  (VEKP) 
‘For  circular 
2021-2030’,  policy  programme 
construction  2022-2030’,  ‘Action  Plan  Circular 
Food  Loss  and  Biomass  Flows  2021-2025’, 

‘Bioeconomy  policy  plan’  and  the  ‘Action  Plan  on 
Plastics  2020-2025’. 
In  2021  a  new  2050 
roadmap and an updated governance structure for 
‘Circular  Flanders’  were  put  in  place  to  accelerate 
the circular transition (78) with its Circular Economy 
Monitor to keep track of progress. The federal plan 
aims  to  boost  research  and 
job 
creation  and  competitiveness,  via  policies  for 
product, consumers, public procurement, taxes. 

innovation, 

Graph A9.1: Trend in material use 

Source: Eurostat 

in 

(EU 

2021 

Changes  in  statistical  methodology  have 
altered  Belgium’s  top  position  in  the  EU  in 
terms of  volumes  of  waste produced.  Indeed, 
Belgium has one of the highest rates of municipal 
waste  generation  per  head  in  the  EU,  with  759 
kg/year/head 
average 
530 kg/year/head);  it  is  also  overly  reliant  on 
waste 
its 
municipal waste being incinerated (47.5% in 2021) 
compared  to  the  EU  average  of  26%  (2019).  It 
met  the  EU’s  2020  target  to  recycle  50%  of 
municipal  waste,  reaching  52.8%  in  2021,  of 
which  21%  is  composted.  Further  efforts  are 
needed to meet the ambitious recycling targets by 
2035,  reducing  municipal  waste  incineration (79), 
via  prevention  and  improvements  in  separate 

incineration,  with  almost  half  of 

(76)  King Baudouin Foundation’s study (2019): 262 000 jobs in 
Belgium can be related to the circular economy (Flanders 
148 000 or 7% of the regional total, Brussels 58 000 or 
8.1%, Wallonia 56 000 or 6.8%).  

(77)  The Wallonia circular economy strategy aims to increase 

Walloon jobs directly and indirectly linked to the CE by 20% 
by 2025, i.e. an increase from 6.8 % (2017) to 8.2% (2025) 

(78)  Circular Flanders aims to decouple the material footprint of 

Flemish consumption from economic growth and reduce that 
footprint by 30% by 2030. 

(79)  Defined in the National Plan for Energy and Climate 2021-
2030, and in the basic regional political documents: (e.g. 
Déclaration de politique régionale pour la Wallonie (2019-
2024), Langetermijnvisie eindverwerking for Flanders, etc.) 

43 

0,050,0100,0150,0200,0250,0300,00,02,04,06,08,010,012,014,016,0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Belgium (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Belgium (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita) 
 
 
                                                 
      
                                                 
 
waste  collection  and  treatment  for  reuse  and 
recycling. 

Graph A9.2: Treatment of municipal waste 

Source: Eurostat 

is 

The  Belgian  industrial  system’s  circularity 
transition 
relatively  static.  Business 
dynamism  in  the  innovation  ecosystem  remains 
low  (see  Annex  11).  The  economy,  particularly 
industry,  was  more  efficient  at  using  materials 
than the EU average in 2021, in terms of resource 
productivity,  consumption  footprint  and  material 
input  dependency  further  increasing  Belgium’s 

resilience.  The  market  for  recycled  products  is 
limited.  A  financing  gap  of  EUR  568  million  per 
year (2014-2020) remains in the circular economy 
(see Annex 6). 

The  built  environment  system  in  Belgium  is 
on  the  way  to  integrating  circular  economy 
principles.  The  recovery  rate  of  construction  and 
demolition waste (CDW) has increased since 2016 
and  remains  well  above  the  EU  average  (99%  vs 
89% in 2020). This mainly involves downcycling in 
road and building foundations, metals and wood to 
a lesser extent, largely sorted on site or in sorting 
centres.  Backfilling  was  a  small  share  at  274 
kg/cap, whereas the EU average was 603 kg/cap in 
2021.  There  is  scope  for  renovating  existing 
buildings  and  improving  their  use  instead  of 
building  new  ones, 
increasing  the  share  of 
secondary  raw  materials  used  in  construction 
taking  into  account  the  Level(s)  framework  for 
sustainable  buildings.  Brussels  Capital  Region 
supports  reuse  of  CDW  through  the  development 
of tools (Opalis), support for pilot projects, training. 

The agri-food system has scope for reducing 
pollution from nutrients and managing water 
resources more efficiently. Nutrient losses and 
water pollution by nitrates from agriculture remain 
a major cause of concern (see Annex 6). 

Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use, 
including composting and digestion;  (3) the recovery rate of construction and demolition waste includes waste which is prepared 
for reuse, recycled or subject to material recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 
2015 data; (5) food waste includes primary production, processing and manufacturing, retail and distribution, restaurants and 
food services, and households. 
Source: Eurostat, European Environment Agency 

44 

419411409416729759-1000100200300400500600700800900201620172018201920202021Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)13,112,614,714,413,0-13,72020YoY growth in persons employed in the circular economy (%)1-4,3-0,92,7-10,6--2,92019Water exploitation index plus (WEI+) (%)3,85,83,95,8--3,62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)2,52,52,72,72,82,82,32021Circular material use rate (%)217,618,519,923,521,520,511,72021Recycling rate (% of municipal waste)53,553,954,454,751,453,349,62021Built environmentRecovery rate from construction and demolition waste (%)395,0-97,0-99,0-89,02020Soil sealing index (base year = 2006)4102,7-106,5---108,32018Agri-foodFood waste (kg per capita)5----250,0-131,02020Composting and digestion (kg per capita)85,081,082,086,0137,0163,0100,02021 
      
 
                     
 
ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes  Belgium’s  performance  on  digital  skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP).  Belgium  allocates  27%  of  its  total  RRP 
budget to digital (EUR 1.6 billion) (80). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (81).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (82). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (83). 

Overall, Belgium has a mixed performance on 
digital 
significant 
challenges  remaining.  Although  the  share  of 

skills,  with 

some 

(80)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(81)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(82)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

(83)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

low. 

graduates 

individuals  employed  as  ICT  specialists  is  above 
ICT  specialists 
the  EU  average,  demand  for 
remains  high  –  the  share  of  enterprises  reporting 
difficulties in recruiting ICT specialists is above the 
EU average (69% vs 63%). However, the share of 
Furthermore, 
remains 
ICT 
increasing  the  share  of  women  among 
ICT 
specialists  remains  a  challenge  for  Belgium, 
although  their  share  is  slightly  above  the  EU 
average.  To  address  this  challenge,  Belgium  has 
set  up  an  inter-federal  strategy  on  women  in 
digital (84).  The  proportion  of  people  with  at  least 
basic  digital  skills  matches  the  EU  average. 
However,  it  is  below  the  EU  average  for  young 
people (aged 16-24), in particular for those with a 
low level of education. 

(VHCN)  coverage 

Belgium  presents  mixed  results  in  terms  of 
digital  infrastructure/connectivity.  It  scores 
higher than the EU average in terms of very high-
(78%  of 
capacity  network 
households  were  covered  in  2022,  compared  to 
the  EU  average  of  73%),  thanks  to  its  extensive 
cable  network.  However,  it  still  lags  significantly 
behind  in  terms  of  fibre  deployment  (17%  of 
households  were  covered  with  fibre  to  the 
premises  (FTTP)  in  2022  compared  to  the  EU 
average  of  56%).  The  RRP  includes  measures  to 
fibre.  Belgium’s 
support 
performance  is  also  far  below  the  EU  average 
when  it  comes  to  overall  5G  deployment  with  a 
30%  coverage  compared  to  the  EU  average  of 
81%.  5G  coverage  on  the  3.4-3.8  GHz  spectrum 
band is at 6% compared to the European average 
of 41%. This is expected to improve following the 
in  the  multiband 
allocation  of  5G  spectrum 
spectrum auction which took place in July 2022. 

roll-out 

the 

of 

in  all  the 

Belgium  performs  most  solidly  on  the 
digitalisation of businesses. It scores above the 
EU  average 
indicators  and  fares 
particularly  well  with  regard  to  the  share  of 
enterprises using big data and cloud (8, 9 and 13 
the  EU  average 
percentage  points  above 
respectively). 

Belgium  performs  moderately  well  in  relation  to 
digital  public  services,  both  in  public  services  for 
businesses  and  for  citizens.  The  large  share  of 
digital  investment  dedicated  to  this  dimension  in 

(84)  ‘Women in Digital National and Intersectoral Strategy’ for 

2020-2025 https://news.belgium.be/fr/plan-interfederal-et-
intersectoriel-women-digital  

45 

 
 
                                                 
                                                 
 
the  Belgian  RRP  provides  an  opportunity  to 
improve these results. When it comes to electronic 
identification  (eID),  three  schemes  are  notified  to 
the  European  Commission  under 
the  eIDAS 
Regulation.  One  of  those  schemes  (itsme)  that  is 
widely  used  is  issued  by  a  private  entity  in 
collaboration  with  the  government.  On  access  to 
electronic  health  records,  Belgium  performs  well 
with a score of 84 compared to an EU average of 
71. 

Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.   

Source: Digital Economy and Society Index 

46 

EUDigital Decade target by 2030 DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA54%54%54%80%% individuals2021202120212030ICT specialists (1)5.0%5.6%5.6%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage68%69%78%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)7%10%17%56%-% households20202021202220222030Overall 5G coverage4%4%30%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA6%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA77%69%90%% SMEs202220222030Big data (3)23%23%23%14%75%% enterprises20202020202020202030Cloud (3)NA47%47%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA10%10%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA728177100Score (0 to 100)2021202220222030Digital public services for businessesNA818884100Score (0 to 100)2021202220222030Access to e-health recordsNANA8471100Score (0 to 100)202320232030Belgium 
 
  
 
 
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
performance of Belgium’s research and innovation 
system,  which  is  essential  for  delivering  the  twin 
green and digital transition. 

‘innovation 

Innovation  Scoreboard (85). 

Thanks to a very strong R&D system, Belgium 
is  among  Europe’s 
leaders’ 
according  to  the  2022  edition  of  the 
Its 
European 
innovation performance relative to the EU average 
has  steadily  risen  over  the  last  decade,  as  did its 
total  R&D  intensity (86),  which  reached  3.22%  of 
GDP in 2021 (compared with just 2.06% in 2010), 
well above the EU average of 2.26%. This growth 
has  mainly  been  achieved  thanks  to  a  very 
substantial increase of the business R&D intensity, 
now  the  highest  in  the  EU  (2.42%  in  2021).  As 
shown  in  a  recent  study (87),  the  R&D  tax  credit 
and  the  tax  deduction  of  patent  income  are 
questionable,  while  other R&D  public  support  was 
found to be more efficient. 

The very good science base is a major asset, 
with  world-class  universities  well-connected 
internationally  and  to  the  business  sector. 
The  share  of  the  country’s  international  co-
publications in its total number of publications has 
gradually increased, from 55.8% in 2010 to 70.2% 
in 2021, well above the EU average of 55.4%. The 
share  of  joint  public-private  publications  has  also 
increased  over  the  last  decade  (10.8%  in  2021 
compared  to  9.3%  in  2010)  and  Belgium  scores 
second in the EU in terms of public R&D financed 
by businesses as a percentage of GDP. 

There  is  potential  for  strengthening  the 
contribution  of  the  Belgian  research  and 
innovation  (R&I)  system  to  environmental 
sustainability.  While  the  Belgian  public  science 
base  has  a  good  position  in  green  research  (as 
shown by the share of highly-cited publications in 
this  field),  the  share  of  environment-related 

patents  in  total  Belgian  patent  applications  is 
lower  than  the  EU  average (88).  Complementing 
various  initiatives  taken  in  recent  years  by  the 
Belgian authorities at all levels of governance (89), 
the Belgian recovery and resilience plan (RRP) will 
enable  further  R&I  mobilisation  for  the  green 
transition.  R&I investments  in  green-related  areas 
(notably  bio-economy,  hydrogen  and  the  circular 
economy) account for almost 60% of the total R&I 
investments under the plan. 

Shortages of skilled human resources hinder 
the  Belgian  economy’s  green  and  digital 
transitions.  While  the  proportion  of  tertiary 
education  graduates  is  high  in  Belgium,  the 
proportion of graduates in science and technology 
is  still  below  the  EU  average.  The  share  of 
computing higher education graduates is also well 
below the EU average. Skills shortages, including in 
relation  to  the  green  and  digital  transitions,  is  a 
Belgium’s 
significant 
competitiveness  and  position  as 
innovation 
leader (90).  The  Belgian  RRP  contains  several 
measures aimed at developing digital skills. 

challenge 

for 

in 

the 

Business  dynamism 
innovation 
ecosystem  remains  low.  The  business  creation 
rate  is  still  among  the  lowest  in  the  EU  and  is 
accompanied  by  a  low  destruction  rate.  In  2019, 
high-growth businesses accounted for just 7.3% of 
employment  in  Belgium  –  far  below  the  EU 
average  of  15.9%.  Also,  fast-growing  companies’ 
share  of  employment  in  the  most  innovative 
sectors  is  less  than  half  of  the  EU  average.  This 
points  to  some  weaknesses 
in  the  Belgian 
economy  in  generating  new  growing  businesses 
that  can  accelerate  the  renewal  of  its  economic 
fabric  towards  new  growth  areas.  While  all  three 
regions  have  a  variety  of  measures  in  place  to 

(85)  2022 European Innovation Scoreboard, Country profile: 

Belgium. Web page: 
https://ec.europa.eu/assets/rtd/eis/2022/ec_rtd_eis-country-
profile-be.pdf. The EIS provides a comparative analysis of 
innovation performance in EU countries, including the relative 
strengths and weaknesses of their national innovation 
systems (also compared to the EU average). 

(86)  R&D intensity is R&D expenditure as a percentage of GDP 

(87)  Bureau fédéral du Plan (2022) Nouvelle évaluation de l’aide 
publique en faveur de la recherche et du développement en 
Belgique 

(88)  OECD (2021) Environmental Performance Reviews: Belgium 
2021. Web page: https://www.oecd.org/belgium/oecd-
environmental-performance-reviews-belgium-2021-
738553c5-en.htm. 

(89)  Belgian Report on Science Technology and Innovation 

(BRISTI) 2021, pages 193-194. Web page: 
FWB_rapport_2021_en.pdf (belspo.be) 

(90)  COM(2022) 783 final. 2023 European Semester: Proposal 
for a Joint Employment Report; From the Commission and 
the Council. Web page: 
https://commission.europa.eu/publications/2023-european-
semester-proposal-joint-employment-report_en . 

47 

 
 
                                                 
                                                 
 
Table A11.1: Key innovation indicators 

(1) EU average for the latest available year or the year with the highest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

(SMEs).  Still,  Wallonia  seems  at  risk  of  losing  its 
edge (compared to the EU average) in terms of the 
excellence  of  its  public  science  base  (see  Graph 
A11.1). 

Graph A11.1: Innovation indicators Wallonia 

support entrepreneurship, there is less emphasis in 
their policies on scale-up and growth (91). 

to 

regions  according 

In  addition,  differences  persist  across 
regions  in  terms  of  innovation  performance. 
While Brussels and Flanders are among ‘innovation 
the  Regional 
leader’ 
Innovation Scoreboard 2021, Wallonia is classified 
as  a  ‘strong  innovator’.  A  major  difference  in  the 
innovation ecosystem of the three regions is public 
in  Wallonia 
research 
(0.61%)  than  in  the  two  other  regions  (Brussels: 
0.77%,  Flanders:  0.85%) (92).  However,  Wallonia’s 
performance  is  clearly  improving;  the  Regional 
Innovation Index shows a strong increase between 
2014  and  2021,  in  line  with  the  other  regions.  A 
driver  of  this  increasing  performance  has  been  a 
widening  of  the 
innovation  base,  with  more 
innovative  small  and  medium-sized  enterprises 

intensity,  much  weaker 

(91)  Report on Science Technology and Innovation (BRISTI) 2021, 

page 192. Web page: FWB_rapport_2021_en.pdf 
(belspo.be). 

(92)  2021 Regional Innovation Scoreboard, Country profile: 

Belgium 2021.  

Source: Regional Innovation Scoreboard database 

48 

9010011012013014015016017020142015201620172018201920202021Summary Innovation IndexScientific publications among the top 10% most cited (Regional)Employment in innovative enterprises (Regional)R&D intensity (GERD as % of GDP)2.062.433.163.353.222.26Public expenditure on R&D as % of GDP0.660.720.80.850.770.76Business enterprise expenditure on R&D (BERD) as % of GDP1.381.72.332.482.421.49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 13.113.712.08::9.8PCT patent applications per billion GDP (in PPS)3.83.33::3.3Public-private scientific co-publications as % of total publications9.310.410.910.710.87.1Public expenditure on R&D financed by business enterprise (national) as % of GDP0.0610.0770.008::0.054New graduates in science & engineering per thousand pop. aged 25-3411.912.111.913.1:16Total public sector support for BERD as % of GDP0.2270.2630.335::0.194Business enterprise expenditure on R&D (BERD) financed by the public sector (national and abroad) as % of GDP0.1180.120.126::0.104Green innovation Share of environment-related patents in total patent applications filed under the Patent Cooperation Treaty (%)13.91210.6::13.3Venture capital (market statistics) as % of GDP0.0350.0280.0610.0730.0770.074Employment in fast-growing enterprises in 50% most innovative sectors2.42.72.2::5.52021EU average (1)Finance for innovation and economic renewal2020Belgium 201020152019Key indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD) 
                                                 
   
 
  
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

largest 

While  the  openness  of  the  Belgian  economy 
is  an  asset,  the  current  world  economic 
context  highlights  some  of  its  structural 
weak  points:  its  high  dependencies  in  the 
energy  field  and  its  rigid  labour  market  and 
business  environment.  On  average,  intra-EU 
imports  and  intra-EU  exports  make  up  62.5%  of 
Belgium’s  GDP,  one  of  the  highest  shares  in  the 
imports  from  non-EU 
EU .  Belgium’s 
countries  are  mainly  fossil  fuels  and  gas.  Being 
one  of  the  most  energy-dependent  European 
countries (93),  the  rise in  energy prices  has hit  the 
Belgian economy hard. Driven by the energy price 
increases,  it  experienced  an  inflation  rate  well 
above  Euro  area  average (94) 
in  2022.  The 
industrial  sector,  having  a  comparatively  high 
share of energy intensive industries, shows one of 
top  three  increases  in  prices  since  2015 (95).  Food 
products,  electrical  equipment  and  chemicals 
products  were  also  particularly  impacted  by  the 
increase in energy prices (96). 

Graph A12.1: Producer prices in industry 

Source: Eurostat, monthly data 

The disruptions in supply chains shed light on 
the  Belgian  economy's  critical  dependencies 
on  strategic  products.  A  study  by  the  Belgian 
ministry  of  economy (97)  identified  158  strategic 
dependent  products.  The  strategic  products  are 

(93)  Analyse : Dépendance énergétique de la Belgique (gaz 
naturel et mix énergétique) | SPF Economie (fgov.be)  

(94)  Spring forecast 2023.. 

(95)  Producer prices in industry, total - monthly data 
[STS_INPP_M__custom_5216060] Eurostat 

(96)  Producer prices in industry, total - monthly data 

[STS_INPP_M__custom_4382559] 

(97)  Carrefour de l'Économie 2022 28 | SPF Economie (fgov.be)   

the  products  mainly  from 

defined  as 
the 
chemicals  and  metals,  mainly  in  the  health, 
defence, digital and green sectors. In quantity, the 
US,  the  UK  and  China  are  the  main  partners  for 
these  products.  By  value,  Singapore (98)  and  the 
United  States  are  the  top  partners,  with  Russia 
playing a major role in third place. 

The vacancy rate in Belgium is one of the highest 
in the EU (99), despite a low employment rate  (100). 
While  energy  costs  in  2022  were  quoted  by  83% 
of  firms  as  long-term  barriers  to  investment,  the 
top  concern  for  91%  of  firms  remains  the 
availability  of  skilled  staff (101).  People  have 
moved away from low-skilled jobs in sectors such 
as  horeca,  manufacturing,  health,  considered 
badly  paid  and/or  with  bad  working  conditions 
towards  other  occupations (102).  In  addition,  there 
remain disincentives to work stemming for the tax 
and  benefit  system.  Belgium  has  one  of  the 
highest  EU  unemployment  traps  (91.60%)  (see 
Annex 14). 

its  neighbouring  countries  and  a 

High inflation has also triggered an unprecedented 
increase in the cost of labour via automatic wage 
indexation. In Belgium, the wage setting system is 
governed  by  the  “Wage  Law”.  This  law  obliged 
social  partners  to  negotiate  salary  increases  over 
a  two-year  period  within  the  bounds  of  an  upper 
limit set by anticipated hourly wage developments 
in 
floor 
determined  by  expected  inflation  in  Belgium.  In 
addition,  wages  in  Belgium  are  adjusted  for 
inflation in a mechanical way to the “health index” 
through  indexation  clauses  in  sectoral  collective 
bargaining 
strong 
agreements.  With 
increases 
inflationary  surge,  nominal  wage 
following  automatic  indexation  in  Belgium  are 
expected  to  substantially  outpace  those  in  the 
three  main  neighbouring  countries  in  2022  and 
2023 (103). This may lead to a competitiveness loss 

the 

(98)  Singapore here, most probably, playing the role of a hub.  

(99)  Job vacancy rate by NACE Rev. 2 activity - annual data 

[JVS_A_RATE_R2__custom_4188223] Eurostat 

(100) Employment and activity by sex and age - annual data 

[LFSI_EMP_A] 

(101) EIB Investment Survey 2022: European Union overview 

(102) Conseil supérieur de l'emploi - Rapport de juillet 2022 État 
des lieux du marché du travail en Belgique et dans les 
régions 

(103) National Bank of Belgium, Economic projections for Belgium, 

December 2022. 

49 

80100120140160180200EU 27BEDEFRITLUNL 
 
     
 
                                                 
                                                 
   
 
for  Belgian  companies  and  increases  the  need  to 
be vigilant for a so-called wage/price spiral (104). 

While  the  Belgian  wage-setting  system  did  not 
lead  to  excessive  wage  growth  in  past  years 
compared  to  its  neighbour  countries,  it  may  raise 
concerns in times of high inflation. While the high 
corporate  profit  margins  in  some  sectors  have 
helped  absorbing  higher  labour  costs,  the  profit 
margins  in  many  industries  have  decreased  in 
2022  although  heterogeneously (105).  Moreover, 
high 
the  scope  for 
adjustment through real wages in the medium run, 
adding  to  the  rigidities  of  the  Belgian  labour 
market, which is characterised by a high regulatory 
complexity and low job mobility. 

inflation  further 

limits 

Graph A12.2: Business environment and 
productivity drivers 

Source: 1) % of GDP, 2021 Eurostat;  
2) composite indicator, 2021 European Investment Fund 
access to finance index;  
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey;  
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

lags  behind  on 

Access  to  finance  in  Belgium  is  above  the  EU 
average,  but  Belgium 
late 
payments  by  public  bodies.  Access  to  finance 
remains  easier  in  Belgium  than  the  EU  average 
and venture capital investment shares to GDP are 
high in Belgium. Moreover, Belgium has one of the 
shortest  payment  delays between  businesses,  but 

it could perform better regarding late payments by 
public  bodies,  particularly  those  in  Wallonia.  The 
share  of  SMEs  experiencing  late  payments  in  the 
past six months was 50 %, slightly worse than the 
EU average (43%). 

Despite  some  progress  in  recent  years,  Belgium 
remains  a  regulated  market.  The  percentage  of 
firms  reporting  an  impact  of  regulation  on  long-
term  investment  is  below  EU  average  (19.4%  vs 
28%).  However,  the  ratio  between  business 
registration  and  bankruptcies,  shows  one  of  the 
lowest  low churn rates of the EU,  which points to 
low  business  dynamism.  The  RRP  proposes  a 
reform  aiming  to  simplify  the  administrative 
burden  on  businesses  by  fully  digitalising  the 
procedure  for  creating,  modifying  and  dissolving 
legal  persons (106). 
further 
digitalisation  of  government  administration  to 
allow authorities to access data directly based on 
the  ‘Once  only  principle’ (107).  Completing  these 
measures  could  lower  Belgium’s  score  on  the 
OECD’s 
(PMR) 
indicators (108). 

It  also  proposes 

product  market 

regulation 

Other  weaknesses  regarding  retail  distribution, 
retail sales of medicines, telecommunications and 
professions  have  not  yet  been  addressed.  The 
retail  sector  remains  highly  regulated (109).  While 
the entry of new players on the market may have 
had  a  positive  effect  on  competition  in  the 
supermarket  segment,  retail  remains  one  of  the 
sectors  with  an  increased  risk  of  competition 
distortions (110).  Labour  market  regulations  add  to 
a complex operational environment and may result 
in  an  uneven  playing  field  between  retailers. 
Regional  supply  constraints  continue  to  affect 
consumer  choice  and  prices.  In  2021,  Belgium 
its  share  of  single  market-related 
doubled 
law. 
directives  not 
Belgium faces more infringement procedures than 
the EU average. 

into  national 

transposed 

(106) Reform R-2.01. 

(107) Investment I – 2.05-S10 – Single Digital Gateway. 

(108) Assessment of the links between the European National 

Recovery and Resilience Plans and the OECD Product Market 
Regulation Indicators 

(109) Retail Restrictiveness Indicator, European Commission 2022. 

(104) International Monetary Fund (2023) Belgium: 2022 Article IV 

Consultation Staff Report 

(105) National Bank of Belgium, Rapport 2022, March 2023. 

(110) Observatoire des prix : Fonctionnement du marché en 

Belgique : un screening horizontal des secteurs marchands 
(2020).  

50 

1) Businessinvestments2) EIFaccess tofinanceindex3) Paymentgap - G2B3) Paymentgap - B2B4) Materialshortage4) Labourshortage5) SinglebidsEuropean UnionBelgium 
     
                                                 
                                                 
Table A12.1: Industry and the Single Market 

(*) Last available year 
Source: (1) AMECO, (2) Eurostat, (3) ECFIN BCS, (4) Eurostat, (5) COMEXT and Commission calculations, (6) Eurostat, (7) Eurostat, 
(8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: (12) Intrum, (13) SAFE Survey, (14) EIF SME Access to 
Finance Index. 

potential  of  this  sector  to  innovate  and  roll  out 
digital solutions and new business models. 

in 

the 

pointed 

As regards regulated professions, most regulatory 
burdens 
2021 
out 
Communication (111)  remain.  Lawyers,  architects, 
accountants, real estate agents and tourist guides 
(in  Wallonia)  are  more  regulated  than  the  EU 
average. Restrictions such as the proportionality of 
shareholding or voting rights for real estate agents 
and  architects  remain.  Lawyers  in  Belgium  are 
subject 
and 
incompatibility 
multidisciplinary  restrictions  that  could  affect  the 

rules 

to 

(111) Communication on updating the reform recommendations 
for regulation in professional services, COM(2021)385 

51 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)4.55.23.74.23.83.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)0.40.40.40.50.40.4Real labour productivity per person in industry (% yoy)(2)-1.93.7-2.40.6-1.51.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)3-1.5-15.3n.a.2.9Material shortage (industry), firms facing constraints, % (3)1179193447Labour shortage using survey data (industry), firms facing constraints, % (3)121112162428Vacancy rate (business economy)(4)4.54.23.65.25.93.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.210.180.170.170.190.18Installed renewables electricity capacity, % of total electricity produced (6)27.129.732.934.4n.a.50.9Single Market integrationEU trade integration, % (7)54.253.451.356.762.545.8RestrictionsEEA Services Trade Restrictiveness Index (8)0.060.060.060.060.060.05Public procurement Single bids, % of total contractors (9)222121222429Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)27.325.525.719.424.529.6Bankruptcies, Index (2015=100)(11)101.6108.273.566.694.786.8Business registrations, Index (2015=100) (11)112.3126.3123.4138.5122.8121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)973121113Payment gap - public sector, difference in days between offered and actual payment (12)21226121615Share of SMEs experiencing late payments in past 6 months, % (13)n.a.43.84242.45043EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.790.730.60.67n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.220.140.290.27n.a.0.23BUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeHEADLINE INDICATORSEconomic StructureRESILIENCEShortagesStrategic dependenciesSINGLE MARKET 
                                                 
 
   
 
ANNEX 13: PUBLIC ADMINISTRATION 

on 

overall 

This  Annex  outlines  the  performance  of 
Belgium’s  public  administration,  which  is 
essential for providing services and carrying 
out  reforms.  Belgium  scores  above  the  EU 
average (112) 
administrative 
effectiveness.  However,  coordination  between  the 
different levels of government poses a significant 
challenge to making more progress on government 
efficiency.  The  main  priority  of  the  federal 
government  is  to  advance  in  digitalising  the 
administration’s  work  and  the  public  services  it 
provides.  This  is  reflected  in  the  recovery  and 
resilience  plan  (RRP),  which  aims  to  reinforce 
cybersecurity  and  the  provision  of  digital  public 
services. The RRP will also help improve the energy 
efficiency  of  public  buildings  and  support  federal 
and regional government spending reviews. 

levels 

increases 

The  institutional  structure  of  Belgium  where 
policy  action  is  distributed  across  several 
the 
governmental 
importance  of  effective  coordination.  Several 
waves  of  regionalisation  have  notably  posed 
significant  challenges  for  public  sector  efficiency 
and  policy  consistency.  Avoiding  duplication  of 
structures  and  looking  for  synergies,  notably  for 
ensuring  cost-efficiency  of  policies,  requires  close 
coordination  between  the  competent  authorities 
(federal,  regional/community  and 
level). 
Different sets of territorial legislation can also add 
to  the  complexity  of  the  business  environment 
(see Annex 12). 

local 

regulatory 

burden.  While 

Effective  evaluation  in  the  policy-making 
process could help reduce the administrative 
impact 
and 
assessments  are  done  for  all  primary  and  some 
secondary  legislation,  these  do  not  systematically 
consider  policy  alternatives.  The  very  detailed 
coalition  agreements  drawn  up  by  parties  often 
contain pre-defined policy solutions. Consultations 
and stakeholder engagement take place on an ad 
hoc  basis.  The  consultation  process  is  made  less 
transparent  because  relevant  documents  are 
published  on  the  websites  of  different  ministries. 
In its report on the Federal evaluation capacity, the 
integrating 
Court  of  Auditors 
evaluations  as  an  essential  part  in  the  policy 
cycle (113).  Evaluations  facilitate  evidence-based 
increase  accountability  by 
policy  design  and 

recommended 

(112) Worldwide governance indicators, 2021 data. 

(113) Court of Auditors, 2018.  

assessing  policy  performance.  The  social  partners 
have  jointly  urged  the  federal  authorities  to 
introduce a comprehensive strategy to improve the 
policy  evaluation  framework  and  the  quality  of 
regulation  to  reduce  the  administrative  and 
regulatory burden in Belgium (114). 

Public  employment  in  Belgium  is  high  (see 
Graph  A13.1a)  and  the  cost  of  public  employees’ 
pay is increasing (115). As for the age structure, the 
Belgian  public  administration  has  a  relatively 
young  workforce  (see  Table  A13.1).  The  share  of 
staff with tertiary education is also relatively high 
and  increased  in  2022.  The  participation  of  civil 
servants  in  adult  learning,  however,  is  lower  than 
the  EU  average.  The  gender  gap  in  senior  civil 
service  positions  has  been  closing  but  remains 
among the largest in the EU (see Graph A13.1b). 

Belgium is one of EU’s good performers in e-
Government.  The  share  of  citizens  interacting 
with  the  government  online  is  also  very  high  and 
has been increasing since 2018 (see Table A13.1). 
The  RRP  is  expected  to  further  digitalise  public 
services and reinforce cybersecurity. 

from 

benefit 

The  lack  of  human  and  financial  resources 
remains  a  challenge  for  the  justice  system, 
improved 
which  would 
digitalisation (116).  The  RRP 
investments  are 
aimed  at  increasing  the  level  of  digitalisation.  By 
2026,  these  initiatives  should  result  in:  (i)  the 
introduction  of  a  single  online  justice  portal  for 
citizens  and  businesses; 
(ii)  a  single  case 
management system for the courts, facilitating the 
digital  submission  of  cases  and  consultation  of 
files; (iii) publication of most case law online; and 
(iv)  resource  management  based  on  real-time 
data.  The  2021  data  show  that  administrative 
cases  are  being  resolved  more  quickly  at  first 
instance  (235  days  compared  to  399  days  in 
2020), but a persistent lack of data prevents a full 
overview  of  the  efficiency  of  the  system.  No 
systemic  deficiencies  have  been  reported  on 
judicial independence. 

(114) Central Economic Council, 2020. 

(115) OECD (2022), OECD Economic Surveys: Belgium 2022, OECD 
Publishing, Paris, https://doi.org/10.1787/01c0a8f0-en, page 
38, figure 1.17. 

(116) For a more detailed analysis of the performance of the 
justice system in Belgium, see the 2023 EU Justice 
coreboard (forthcoming) and the country chapter for Belgium 
in the 2023 Rule of Law Report (forthcoming. 

52 

 
 
                                                 
                                                 
 
Graph A13.1: a) Share of the working age population who are public sector workers; b) share of women 
and men in senior positions; c) open government data maturity indicator: 2022 scores (% of the total 
maximum score) (left side); country ranking, overall score (right side) 

(1) chart c), right-hand chart: low values denote a good performance 
Source: Eurostat; b) European Institute for Gender Equality; c) Open Data Maturity | data.europa.eu 

including open data. 

Despite recent improvements, Belgium scores 
below the EU average on open data maturity. 
(see Graph A13.1c). The measures on open data in 
Belgium’s  RRP  relate  to  a  target  to  train  regional 
and  local  managers  and  elected  officials  in  the 
Walloon  Region  by  Q4-2024  on  digital  issues, 

Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability.  
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10). 

53 

BE201720182019202020212022EU-27(2)162.162.864.166.1 (u)74.4n/a64.82n/an/an/a71.774.177.572.93n/a0.70.60.60.60.70.8445.4 (b)45.346.648.053.0 (b)55.552.059.8 (b)9.58.57.811.4 (b)11.416.9662.861.257.255.249.448.611.071.8 (b)1.71.61.71.7 (b)1.71.580.70.70.70.70.7n/a0.791.21.21.21.21.2n/a1.5101.93n/an/an/a1.82n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance0%1%2%3%4%5%6%7%8%9%10%LUCYHUSEDESKELBEFRNLPTBGLVATEUCZLTEEPLSIMTHRESDKIEFIROITa) Share of public sector workers (NACE O) 0102030405060708090100BEEU-27b) Gender balance in senior positionsMenWomen0510152025300%10%20%30%40%50%60%70%80%90%PolicyQualityPortalImpactTotal20182019202020212022Open data 2022Open data rankingc) Open government data maturityBE2022EU-27BE2022 scores (lhs)Countryranking (rhs) 
 
 
   
 
   
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Belgium’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction.  

Table A14.1: Social scoreboard for Belgium 

overall  low  activity  rate  (76.0%  vs  EU  79.4%  in 
2022).  Amid  regional  disparities,  there  are  high 
for  specific 
activity  and  employment  gaps 
disadvantaged  groups.  And,  although  declining  to 
11.5% in 2022, the share of those living in a very 
low  work  intensity  household  remained  high  at 
11.9%  in  2021,  well  above  the  EU  average  of 
8.9%.  The  2022  Belgium  labour  market  deal  set 
out  measures  to  boost  employment,  such  as  by 
increasing flexibility on night work in e-commerce 
and introducing activating measures for dismissed 
workers.  This  deal  also  included  measures  to 
improve  work-life  balance,  such  as  the  possibility 
to request a 4-day working week or an alternating 
work  schedule  and  the  right  to  disconnect. 
Nevertheless, there remains scope for greater and 
more  targeted  policy  action,  notably  to  tackle  the 
existing  tax  and  benefits  disincentives  to  work  as 
Belgium  still  having  some  of 
the  highest 
unemployment and low-wage traps in the EU (see 
Annex 12). 

the 

2030 

improve 

Belgian 

Further  increasing  the  employment  rate  of 
disadvantaged  groups  will  be  needed  to 
achieve 
national 
employment  target  of  80%  (HRW,  2022).  The 
employment  gap  between  persons  with  and 
without disabilities is one of the highest in the EU 
and  continues  to  increase  (38  percentage  points 
(pps)  in  2021  vs  32  pps  in  2018).  There  was  a 
large  increase  in  the  number  of  workers  on  long-
term  sick  leave  from  4.5%  of  the  working  age 
population  (20-64  age  group) in  2013  to  6.7%  in 
2021  (national  statistics).  Several  measures  were 
recently  announced 
reintegrating 
to 
workers on long-term sick leave, including making 
it  more  difficult  to  dismiss  them  and  using 
financial penalties on employers and employees to 
place  greater 
responsibility  on  both.  The 
employment  rate  of  older  workers  (60-64  years) 
improved, but the gap with the EU average is still 
high 
the 
in  Q4-2022). 
employment rate of low-educated people (46.2%) 
and non-EU-born people (57.3%) was significantly 
in 
lower  than  the  overall  employment  rate, 
particular among non-EU-born women (47.0%). In 
addition,  for  people  born  in  Belgium  with  non-EU 
born parents, the employment rate remains lower 
than  for  those  with  Belgium-born  parents  (FOD 
WASO  &  Unia,  2022).  To  address  this  issue,  the 
Belgian recovery and resilience plan (RRP) includes 
reforms  to  strengthen  discrimination  tests  and 

In  2022, 

(9.7  pps 

Update of 27 April 2023. 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 2023. 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: Eurostat 

The  Belgian  economy  and  labour  market 
proved to be resilient in 2022, but significant 
challenges  remain,  including  high  levels  of 
inactivity,  growing  labour  shortages  and  big 
regional  disparities.  Despite  a  record  high 
vacancy  rate  and  a  historic  low  unemployment 
rate, the employment rate (20-64 age group) only 
reached 71.9% in 2022, below the EU average of 
74.6%.  Employment  growth  was  held  back  by  an 

54 

6,454,239,27,63,4271,95,62,3105,2518,820,553,31387,551,71,7Critical situationTo watchWeak but improvingGood but to monitorOn averagePolicy areaHeadline indicatorEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2022)Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Youth NEET rate(% of population aged 15-29, 2022)Gender employment gap(percentage points, 2022)Income quintile ratio(S80/S20, 2021)Dynamic labour markets and fair working conditionsEmployment rate(% of population aged 20-64, 2022)Unemployment rate(% of active population aged 15-74, 2022)Long term unemployment(% of active population aged 15-74, 2022)GDHI per capita growth                                                              (2008=100, 2021)Social protection and inclusionAt risk of poverty or social exclusion rate                                            (% of total population, 2021)At risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Disability employment gap(percentage points, 2021)Housing cost overburden(% of total population, 2021)Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)Better than averageBest performers 
 
 
 
   
 
 
focus  on  active 

support  a  sector-based  discrimination  policy  (in 
Flanders).  The  European  Social  Fund  Plus  (ESF+) 
will 
inclusion  of 
rolling  out  more 
disadvantaged  groups  by 
integrated 
for 
including 
persons with disabilities.  

itineraries, 

insertion 

social 

conditions, 

insufficient 

The  COVID-19  crisis  has  exacerbated  the 
existing  high  labour  shortages  and  skills 
mismatches  in  the  Belgian  labour  market.  In 
Q4-2022, more than 29% of Belgian employers in 
the  services  sector  reported  labour  shortages. 
Labour  shortages  in  both  low-  and  high-skilled 
occupations  continue  to  increase  in  all  regions. 
Depending  on  occupation,  shortages  can  reflect 
insufficient 
unattractive  working 
skills.  Significant 
graduates  or 
shortages  are  linked  to  the  low  number  of 
graduates  in  science,  technology,  engineering  and 
mathematics,  and  there  are  concerns  over  the 
attractiveness  and  labour  market  relevance  of 
vocational education and training. To tackle labour 
bodies  have 
shortages,  Belgium’s 
introduced 
to  encourage 
people to take up jobs in shortage professions. In 
addition,  under 
the  country  has 
implemented  a  reform  that  allows  long-term 
unemployed people to combine the first 3 months 
of  employment  in  a  job  in  a  shortage  profession 
with a partial unemployment benefit. 

federal 
incentives 

the  RRP, 

financial 

Low  skills  levels  are  a  major  barrier  to 
employment,  and  limited  participation  of 
low-educated  people  in  adult  learning  poses 
a  serious  issue  for  up-  and  reskilling.  The 
share  of  adults  (aged  25-64)  participating  in 
learning  activities  over  the  past  4  weeks  was 
10.3% in 2022, below the EU average of 11.9%. It 
was  particularly  low  among  low-qualified  people 
(3.9% vs 4.7% in the EU). The RRP includes several 
reforms  to  boost  participation  in  adult  learning, 
including introducing an individual  right of 5 days 
of training per year for employees and setting up 
individual learning accounts. Furthermore, the plan 
provides  for  a  major 
in  training 
infrastructure  to  support  the  green  and  digital 
transitions.  For  example,  Flanders  will  invest  in 
‘Digibanks’, a digital training project for vulnerable 
groups.  The  ESF+  boosts  the  RRPs’  reforms  and 
investments  by  strongly  supporting 
training 
activities  targeted  at  disadvantaged  groups  in 
every region. These measures are expected to help 
Belgium  meet  its  2030  national  target  on  adult 
learning of 60.9%. 

investment 

55 

The  effectiveness  of  social  transfers  in 
reducing  poverty  and  income  inequality  is 
comparatively high in Belgium. The widespread 
use of the job retention scheme during the COVID-
impact  on  household 
19  crisis  softened  the 
incomes,  although  with  diverse  effects  (Coppens, 
et al. 2021). The share of people at risk of poverty 
or social exclusion (AROPE) fell in 2021 to 18.8%, 
below  the  EU  average  of  21.7%,  and  stands  in 
2022  at  18.7%.  Nevertheless,  significant  regional 
disparities  remain,  mirroring  those 
labour 
in 
market  outcomes.  During 
the  energy  crisis, 
indexation  of  wages  and  benefits 
automatic 
protected  households’  purchasing  power  relatively 
well  (Capeau et al., 2022).  

Table A14.2: 2030 National targets for Belgium 

(1) Adult Education Survey, adults in training in the past 12 
months. (2) Number of persons at risk of poverty or social 
exclusion (AROPE), reference year 2019. 
Source: Eurostat, DG EMPL 

for 

and 

low-income  groups 

Belgium’s overall good performance on social 
outcomes  hides  an  uneven  distribution  of 
economic opportunities. Significant disparities in 
social  outcomes  exist  across  groups  based  on 
socio-economic, 
parental 
migrant 
backgrounds. There are still major poverty risks for 
those  groups  who  are  under-represented  in  the 
labour market, and upward income mobility is very 
low 
(OECD,  2022). 
Inequalities  of  opportunities  for  young  people  are 
reflected  in  the  large  gap  in  the  AROPE  rates  of 
children  of  high-  and  low-educated  parents  (63.8 
pps  vs  52.7  pps  in  the  EU  in  2021)  and  high 
inequalities  in  educational  outcomes  linked  to 
socio-economic background (see Annex 13). These 
factors  limit  opportunities  for  intergenerational 
economic  and  social  mobility.  Better  support  for 
active  social  inclusion  and  inclusive  education, 
helped by the RRP and ESF+, are expected to help 
Belgium  achieve  its  national  target  of  279 000 
fewer people at risk of poverty or social exclusion 
by  2030  (compared  to  2019),  including  93 000 
children.  

IndicatorsLatest dataTrend            (2015-2022)National target by 2030EU target by 203071.9(2022)39.4(2016)-116(2022)Adult learning1 (%)60.960Employment (%)8078Poverty reduction² (thousands)-279-15 000 
 
  
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Belgium’s three education and training systems in 
light  of  the  EU-level  targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Graph A15.1: Underachievers in reading, maths and 
science (combined) by socio-economic status, 
PISA 2018 

losses 

leading  to  future 

important  and 
lives, 

Belgium  performs  above  the  EU  average  on 
most  EU-level  targets,  but  its  education 
systems  fail  to  provide  equal  opportunities 
for  all 
(see  Graph  A15.1).  Socio-economic 
disadvantage,  often  mediated  through  education, 
long-lasting  effects  on 
has 
children's 
in 
employment,  earnings  and  health (117).  Belgium  is 
among  the  best  performers 
in  the  EU  on 
participation in early childhood education and care 
(ECEC), but participation of disadvantaged children 
lags  behind (118).  15-year-old 
under  3  years 
students of low socio-economic status are 8 times 
(EU  5.6  times)  more  likely  to  underachieve  in 
reading,  maths  and  science  (combined)  in  school 
education  than  students  of  high  socio-economic 
status  (see  Table  A15.1).  Parental  education  also 
has  a  high  impact  on  the  risk  of  leaving  school 
early.  Young  people  whose  parents  have  a  low 
level  of  education  leave  prematurely  10.5  times 
more  often  than  those  with  highly  educated 
parents  (EU  average  9.1  times,  2021).  More  than 
one  in  three  young  adults  with  disabilities  do  not 
finish  secondary  education  and  their 
limited 
participation  in  higher  education  is  one  of  the 
reasons for their low employment rate (119).  There 
are  also  concerns  about  the  quality  of  vocational 
education (120)  and  training  and  participation  of 
low-skilled  in  adult  education  (see  Annex  14). 
Modernisation of VET and VET infrastructure under 
the  Flemish  Recovery  plan  aims  to  improve  the 
quality and attractiveness of the programmes. The 
communities are taking some measures to  

(117) Clarke, C., et al. (2022), "The economic costs of childhood 

socio-economic disadvantage in European OECD 
countries", OECD Papers on Well-being and Inequalities, No. 
9, OECD Publishing, Paris 

(118) European Commission (2022), Education and Training 

Monitor 2022, Country report Belgium. 

(119) European Commission (2022b), ‘2022 Country Report – 
Belgium’, Staff Working Document (2022) 602 final, 
European Commission, Brussels. 
https://ec.europa.eu/info/sites/default/files/2022-european-
semester-country-report-belgium_en.pdf. 

(120) European Commission (2022), Education and Training 

Monitor 2022, Country report Belgium. 

56 

Source: JRC’s calculation on OECD (PISA 2018). Note: Figures 
on top of each bar denote the ratio between the two values. 

inequalities 
address 
through systemic school reforms.  

in  education, 

including 

teacher  shortage  and 

The shortage of well-qualified teachers risks 
further  challenging  the  performance  and 
equity  of  the  Belgian  education  systems. 
Disadvantaged  students  have 
less  access  to 
experienced  teachers  than  on  average  in  the 
EU (BEfl -13 pps; BE -10 pps; EU-23 -4.7 pps) (121). 
The  current 
teacher 
absenteeism  affect  the  educational  outcomes  of 
all  students.  Recent  research (122)  shows  that  the 
best-performing  students  experienced  the  highest 
learning  loss  in  primary  education  as  a  result  of 
the pandemic disruptions; and the deterioration of 
results was more pronounced in schools with high 
levels of teacher shortage. Primary schools with a 
high number of disadvantaged students also have 
greater  teacher  shortages  than  schools  with 
advantaged  students.  Faced  with  a  general  tight 
labour  market,  an  increasing  and  more  diverse 
student population, and rising difficulties to recruit 
qualified  teachers,  stakeholders  question  if  the 
recent  and  planned  measures  to  improve  the 
teaching profession by the respective communities 
will  be  sufficient.  Finding  additional  well-qualified 

(121) OECD (2022a), Mending the Education Divide: Getting Strong 
Teachers to the Schools That Need Them Most, TALIS, OECD 
Publishing, Paris, https://doi.org/10.1787/92b75874-en. 

(122) Gambi, L. & De Witte, K. (2023). The uphill battle: The 

amplifying effects of negative trends in test scores, COVID-
19 school closures and teacher shortages. Discussion Paper 
Series, KU Leuven Department of Economics (forthcoming). 

4.6 8.0 5.6 3.5 0%10%20%30%40%50%60%RomaniaBelgiumEUEstoniaCombined underachievement in reading, maths and scienceLow socio-economic statusCountryaverageHigh socio-economic status 
 
                                                 
   
                                                 
 
teachers  in  the  French  Community  for  the  new 
differentiation  practices  and  earlier  second-
language  courses 
in  primary  education  from 
2023/2024  (Pact  for  excellence  in  education)  will 
also  be  a  challenge,  due  to  the  shortage  of 
qualified  candidates.  The  French  Community  will 
reform its initial teacher training from 2023/2024. 
The  Flemish  Community  will  roll  out  induction 
programmes for new teachers. 

Strengthening digital education is high on the 
policy  agenda,  but  teacher  training  will  be 
key  for  success.  The  Belgian  recovery  and 
resilience  plan 
focuses  strongly  on  digital 
infrastructure  and  equipment,  digital  education 
and  skills  at  all  levels  of  education.  In  2021,  one 
third of 16- to 19-year-olds reported not having at 
least  basic  overall  digital  skills,  which  is  close  to 
the  EU  average  (see  Annex  10).  Teachers  are 
encouraged to take part in training, but it remains 
important  to  convince  them  also  to  use  ICT  in 
class,  as  shown  by  TALIS  2018  data  Belgian 
teachers  reported  the  lowest  use  of  ICT  for 
projects or class work (BE 28.9%; BEfl 37.8%; BEfr 
2018). 
46.9%) 
18.8%; 
Comprehensive  action  plans  to  improve  the  ICT 

EU-22 

(TALIS 

skills  of  pupils  and  teachers,  such  as  the 
Digisprong  (BEfl),  are  expected  to  accelerate  the 
digital transformation in education. 

and  mathematics 

While  participation  in  tertiary  education  is 
high,  the  number  of  science,  technology, 
engineering 
(STEM) 
graduates  falls  short  in  meeting  labour 
market  needs.  More  than  half  of  the  young 
people  aged  25-34  (51.4%;  EU  42%)  held  a 
tertiary education degree in 2022. But only one in 
four  secondary  vocational  graduates  (25.4%;  EU 
36.9%) and less than one in five tertiary graduates 
(17.6%;  EU  24.9%)  are  STEM  graduates.  Their 
share  is  increasing  only  slowly  despite  dedicated 
STEM  action  plans.  The  particularly  low  share  of 
female  STEM  graduates  (4.6%;  EU:  8.1%)  is  a 
major challenge. The share of ICT higher education 
graduates  is  the  second  lowest  in  the  EU  (2.2%; 
EU:  3.9%).  Shortages  of  skilled  human  resources 
hinder  the  green  and  digital  transitions  of  the 
Belgian economy (see Annex 11).  

Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1,3,4,5,7,8,9,10,11) = Eurostat; 2 = OECD (PISA); 6 = European Commission (Joint Research Centre). Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

57 

96%98.2%d91.9%98.5%202093.0%2020Reading< 15%19.5% 20.0%21.3%201822.5%2018Mathematics< 15%20.1% 22.3%19.7%201822.9%2018Science< 15%19.8% 21.1%20.0%201822.3%2018< 9 %10.1%11.0%6.4% 9.6%Men11.6%12.5%8.0%11.1%Women8.6%9.4%4.8%8.0%Cities13.6%9.6%7.6%8.6%Rural areas9.5%12.2%4.8%10.0%Native9.0%10.0%5.6%8.3%EU-born16.6%20.7%6.5%u20.3%Non EU-born19.1%23.4%15.2%22.1%6Equity indicator (percentage points)::21.3201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : :49.0%60.1%45%43.1%36.5%51.4%42.0%Men37.1%31.2%44.1%36.5%Women49.2%41.8%58.6%47.6%Cities45.7%46.2%52.2%52.2%Rural areas39.1%26.9%46.5%30.2%Native45.3%37.7%53.3%43.0%EU-born46.3%32.7%55.3%39.5%Non EU-born27.6%27.0%37.4%35.7%27.8% 38.3%28.3%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetBelgiumEU27BelgiumEU27 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Belgium. 

the  Belgian  population,  public  expenditure  on 
health  is  projected  to  increase  by  0.6  percentage 
points (pps) of GDP by 2070 (compared to 0.9 pps 
for the EU overall) (see Graph A16.2). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

Life expectancy in Belgium is higher than the 
EU  average  and  has  rebounded  to  a  large 
extent  after  it  fell  in  2020  (see Graph  A16.1). 
This  rebound  reflects  the  decrease  in  COVID-19 
in  2021,  which  more  than  halved 
mortality 
fares 
compared 
Belgium 
comparatively  well 
in  avoiding  deaths  from 
treatable  causes  (see  Table  A16.1).  In  2020,  the 
leading causes of death were cancer and diseases 
(“cardiovascular 
circulatory 
of 
diseases”) followed by COVID-19. 

2020 (123). 

system 

the 

to 

Graph A16.1: Life expectancy at birth, years 

Source: Eurostat 

In  2020, 

Health  spending  relative  to  GDP  in  Belgium 
was  slightly  above  the  EU  average  in  2020. 
Spending per capita on inpatient care is above the 
EU  average,  whereas  spending  on  outpatient  care 
and  on  pharmaceuticals  and  medical  devices  is 
below. 
total  healthcare  spending 
increased to 11.1% of GDP. This is in line with the 
upward  trend  in  all  Member  States  in  2020.  In 
Belgium, this  increase is  entirely  explained  by the 
significant  GDP  contraction  observed  (by  around 
5.4%,  compared  to  5.6% in  the  EU  overall),  given 
that  nominal  spending  on  healthcare  actually 
dropped in 2020 compared to 2019. However, as a 
share  of  total  public  spending,  health  spending 
increased  slightly  in  2020  to  15.0%,  up  from 
14.6%  in  2019.  The  public  share  of  health 
expenditure in Belgium (79.2% in 2020) is slightly 
below the EU average. Based on the age profile of 

(123) Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023). 

AWG reference scenario 
Source: European Commission / EPC (2021) 

Spending on prevention in Belgium amounted 
to  2.0%  of  total  healthcare  spending  in 
2020,  compared  to  3.4%  for  the  EU  overall. 
Between  2019  and  2020,  spending  on  prevention 
in Belgium increased by 22%, compared to a 26% 
increase for the EU as a whole. Across the EU, this 
increase  was  primarily  driven  by  spending  on 
control  and 
disease  detection,  surveillance, 
response programmes as part of the public health 
response to COVID-19. In 2020, Belgium reported 
the  highest  proportional  increase  of  all  Member 
States  in  spending  on  information,  education  and 
counselling  programmes 
to  disease 
prevention. 

related 

There are concerns about possible shortages 
of health workers in the future. The number of 
3.2  practising  doctors  per  1  000  inhabitants  in 
Belgium in 2020 was below the EU average (3.9). 
The number of doctors in Belgium has increased at 
a slower pace than in most EU countries in the last 
decade.  This,  and  the  high  share  of  active 
physicians  over  the  age  of  55  (43.3%  in  Belgium 
compared  to  an  EU  unweighted  average  of 
35.9%), raise concerns about growing shortages in 
the  future  and  the  long-term  accessibility  of 
health services. In response, to increase the supply 
of  doctors,  the  number  of  students  admitted  to 
medical  schools  has  been  increased  in  recent 
years. As a result, in 2019, the number of medical 
than  doubled 
graduates 
compared  to  2009  (around  850).  The  number  of 
nurses has also increased over the past years and 
reached 11.1 per 1 000 inhabitants in 2018, well 
above the  EU  average  (8.3  in  2020). Despite this, 

(over  2 000)  more 

58 

81.581.681.782.180.881.980.980.981.081.380.480.1201620172018201920202021BelgiumEU6.65.70.90.602468EUBelgium% of GDP20192070increase 
 
             
                                                 
             
 
 
Table A16.1: Key health indicators 

Note: The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat; except: ** ECDC 

for 

In  its  current  recovery  and  resilience  plan, 
Belgium plans to invest EUR 83 million (1.4% 
of  the  plan’s  total  value)  in  healthcare.  The 
investments  relate  to  digital  health  services  and 
health  data,  nuclear  medicine 
cancer 
treatment,  and  health  research  and  innovation. 
More specifically, the investments in digital health 
and  health  data  include,  among  other  aspects, 
developing standardised care sets for patient data 
collection and storage, extending the e-prescription 
system, creating an integrated tracking system for 
operationalising 
medicine 
teleconsultations,  and  providing  digital  tools  for 
integrated care teams. Belgium also intends to set 
up  a  health  data  authority,  in  line  with  the 
European  Commission’s  proposal  for  a  European 
Health Data Space. 

consumption, 

to 

from 

Coronavirus 

the 
Initiative 

the  patient-to-nurse  ratio  in  hospitals  is  high  and 
there  are  difficulties  in  recruiting  nurses.  During 
the COVID-19 pandemic, Belgium faced shortages 
of  health  workers,  especially  of  intensive  care 
nurses.  Strategies  to  mitigate  these  shortages 
included  using  overtime, 
reallocating  nurses, 
providing  training  in  intensive  care,  and  recruiting 
temporary  nurses.  Additional  staff  was  recruited 
including  health 
‘health  reserve’ 
by  using  a 
professionals, 
retired  health 
students  and 
professionals.  Bonuses  were  also  introduced  for 
health  professionals  dealing  with  COVID-19  in 
hospitals.  In  relation  to  this,  Belgium  utilised 
Response 
support 
Investment 
the 
apprenticeship  premium  for  nursing  students.  The 
government  has  taken  measures  to  increase  the 
attractiveness  of  the  nursing  profession  and 
improve  the  working  conditions  of  nurses  and 
other  staff  in  acute  and  psychiatric  hospitals  and 
in  community  care.  Since  2020,  an  investment  of 
more  than  EUR  1  billion  has  been  directed  at 
increasing  the  remuneration  of  nurses  (especially 
in  hospitals)  and  creating  additional  jobs  via  a 
special  healthcare  staff  fund.  Part  of  this  fund 
aims at attracting individuals from other sectors to 
consider  a  career  as  a  nurse  or  healthcare 
assistant  by  providing  them  with  a  salary  during 
their  education.  A  first  evaluation 
in  2020 
demonstrated  that  the  healthcare  staff  fund 
resulted in an additional recruitment of 4 250 full-
time equivalents and 446 people starting nurse or 
health-care assistant education (124). 

increase 

(124) Health and care workforce in Europe: time to act. 

Copenhagen: WHO Regional Office for Europe; 2022.  

59 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)71.069.765.062.7NA91.7 (2020)Cancer mortality per 100 000 population238.5230.8229.0223.2NA242.2 (2020)Current expenditure on health, % GDP 10.810.810.711.1NA10.9 (2020)Public share of health expenditure, % of current health expenditure77.277.376.079.2NA81.2 (2020)Spending on prevention, % of current health expenditure 1.51.51.72.0NA3.4 (2020)Acute care beds per 100 000 population500497500496493387.4 (2019)Doctors per 1 000 population *3.13.13.23.2NA3.9 (2020)Nurses per 1 000 population *11.211.1NANANA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (toatl consumption for CY and CZ) **21.120.719.815.316.014.5 (2021) 
                                                 
 
 
 
      
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

This  Annex  showcases  the  economic  and 
social regional dynamics in Belgium, providing 
an  update  on  economic,  social  and  territorial 
cohesion 
in  and  among  the  Belgian  regions 
compared  with  the  EU  as  a  whole  and  the  main 
regional  economic  recovery  challenges.  Regional 
disparities  remain  high  in  Belgium  and  have  not 
fundamentally decreased in recent years. 

Differences in GDP per capita remain high in 
Belgium. In 2021, GDP per capita of the Brussels-
Capital  Region  was  204%  of  the  EU  average  – 
down  from  260%  in  2000.  The  GDP  of  several 
southern  provinces  is  lagging  behind,  particularly 
Hainaut  (76%)  and  Luxembourg  (75%).  Liege 
(86%), Namur (81%)  and Limburg (99%)  are also 
below  the  EU  average.  By  contrast,  Antwerp, 
Brabant-Wallon, 
West-
Vlaanderen en Oost-Vlaanderen have an economic 
performance  which  exceeds  the  EU  average  (see 
in  GDP  per  capita 
Table  A17.1).  Disparities 
between urban and rural areas also persist. 

Vlaams-Brabant, 

The  COVID-19  pandemic  and  the  associated 
lockdown  measures  sharply  reduced  GDP  by 
3.9% in 2020, as measured by purchasing power 
standard  (PPS)  per  capita.  West-Vlaanderen  and 
these 
Luxembourg  were  most  affected. 
provinces,  GDP  (PPS  per  capita)  dropped  by  over 
5%. Brabant-Wallon's GDP fell by only 1.9%.  

In 

Graph A17.1: GDP per capita (2010) and GDP 
growth (2010-2020) - Belgium 

Brabant-Wallon  has  been  the  fastest  growing 
province in Belgium with GDP growth per capita at 
1.86%,  which  is  well  above  the  EU  average.  The 
Brussels-Capital  Region  had  a  negative  GDP 
growth  per  capita 
to 
increasing population. 

(-0.86%),  partly  due 

in 

Belgium  performs  well 
terms  of 
innovation,  but  differences  persist  between 
Regions  in  terms  of  innovation  performance 
(see  Annex  11).  A  major  difference 
in  the 
innovation  ecosystem  of  the  three  Regions  is  the 
intensity  of  public  R&D,  which  is  weaker  in 
Wallonia  (0.61%)  than  in  the  two  other  Regions 
(Brussels:  0.77%,  Flanders:  0.85%).  Belgium 
invested  3.2%  of  its  GDP  in  R&D  in  2019  (1.2% 
more  than  the  EU  average).  This  growth  has 
mainly been achieved thanks to a very substantial 
increase in the intensity of business R&D, which is 
now  the  highest  in  the  EU  (2.42%  of  R&D 
expenditure  in  the  business  sector  in  2021).  R&D 
intensity appears to be among the factors that can 
explain  the  difference  in performance  in terms  of 
competitiveness  across  provinces  in  Belgium.  The 
three  most  competitive  Belgian  provinces  are 
Brussels-Capital,  Brabant-Wallon  and  Vlaams-
Brabant  followed  by  the  Flemish  provinces  (see 
Table A17.1). 

Graph A17.2: Unemployment in Belgium regions in 
the period 2019-2021 

(1) Bubble size corresponds to population size 
Source: Eurostat 

Source: Eurostat 

Variation in GDP growth per capita within the 
country remains high and disparities between 
regions  have  been  increasing 
(see  Graph 
A17.1). Average annual real GDP growth per capita 
in  Belgium  was  0.23%  over  the  period  2011-20, 
which is lower than the EU average (0.61%). In the 
Flemish  provinces,  real  GDP  growth  per  capita 
varied between 0.35% and 0.61%. Four provinces 
in  Wallonia  (Hainaut,  Liège,  Luxembourg,  Namur) 
recorded  negative  growth  per  capita.  In  contrast, 

Labour market outcomes are generally better 
in  Flanders  than  in  the  rest  of  Belgium.  The 
unemployment rate in Belgium was 6.3% in 2021. 
The  unemployment  rate  in  Flemish  provinces  is 
systematically  below 
the  national  average, 
whereas  it  is  higher  in  all  the  Walloon  provinces 
except  the  Belgian  province  of  Luxembourg  (see 
Graph  A17.2).  The  unemployment  rate  in  the 
Brussels-Capital Region is the highest at 12.3% in 
2021. 

60 

Région de Bruxelles-Capitale/ Brussels Hoofdstedelijk GewestProv. AntwerpenProv. Limburg (BE)Prov. Oost-VlaanderenProv. Vlaams-BrabantProv. West-VlaanderenProv. Brabant WallonProv. HainautProv. LiègeProv. Luxembourg (BE)Prov. Namur-1,0-0,50,00,51,01,52,02,56080100120140160180200220240Annual real GDP per head growth2011-2020 (average % change on the preceding year)GDP (PPS) per head in 2010 (EU = 100)Capital regionOther NUTS2 regionsNational averageEU272468101214Bruxelles/BrusselsAntwerpenLimburgOost-VlaanderenVlaams-BrabantWest-VlaanderenBrabant wallonHainautLiègeLuxembourgNamurUnemployment (%)201920202021 
 
  
  
 
 
Table A17.1: Selected indicators at regional level 

Source: EUROSTAT 

in 

Employment in knowledge-intensive and high 
technology  varies  across  provinces.  Brabant-
Wallon,  Vlaams-Brabant  and  the  province  of 
Namur  have  a  high  level  of  employment  in 
knowledge-intensive and high technology whereas 
West-Vlaanderen  and  Limburg  have 
lower 
The  good 
employment 
performance  of  Brabant-Walloon  and  Vlaams-
Brabant  can  be  explained  by  the  highly  educated 
work  force  and  the  existence  of  a  research-
intensive  university  to  which  a  science  park  is 
attached,  attracting  dynamic  start-ups  and  high-
tech  companies.  The  employment 
in  high 
technology  sectors  is  also  high  in  the  Brussels-
Capital Region. 

sectors. 

those 

Climate  transition  affects  Belgian  regions 
differently.  The  high  greenhouse  gas  emission 
intensity of the Hainaut province (see Map A17.1), 
is  due  to  its  high  industrial  emission  intensity 
(highest  of  all  provinces),  mainly  from  the 
production of cement, chemicals and electricity. In 
addition, Hainaut  once  depended  on  steel,  textiles 
and coal production. Its industrial transition is still 
underway,  which  poses  difficulties  in  terms  of 
economic  development  and  causes  a  relatively 
high 
carbon-
intensive  sectors  in  the  region  employ  more  than 
13 000 people. 

unemployment. 

Furthermore, 

Map A17.1:  Greenhouse gas emissions per capita 
in Belgium in 2021 

61 

NUTS 2 regionGDP per head(PPS)Productivity (GVA (PPS) per person employed)GDP per head growthUnemployment rateEmployment in knowledge-intensive servicesEmployment in high-technology sectorsRegional competitiveness index (RCI)EU-27 = 100, 2021EU-27 = 100, 2021Average % change on the preceding year, 2011-2020% of active population, 2021% of total employment, 2021% of total employment, 2021EU-27 = 100, 2022European Union100.0100.01.07.040.74.8100.0Belgique/België120.0129.00.26.351.45.7125.7Région de Bruxelles-Capitale204.0160.2-0.912.350.47.6136.3Prov. Antwerpen145.0145.00.65.248.55.9133.9Prov. Limburg (BE)99.0111.10.43.446.54.6125.8Prov. Oost-Vlaanderen112.0123.00.42.851.35.8134.6Prov. Vlaams-Brabant123.0135.00.54.058.17.5135.7Prov. West-Vlaanderen120.0121.10.53.643.63.3121.2Prov. Brabant Wallon143.0157.11.96.859.99.9136.3Prov. Hainaut76.0103.8-0.110.353.15.1107.6Prov. Liège86.0108.6-0.19.455.04.4111.7Prov. Luxembourg (BE)75.0100.1-0.45.653.04.3104.9Prov. Namur81.0104.5-0.37.658.96.3111.4 
 
 
 
 
 
  
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

The financial sector appears relatively sound 
and  moderately  profitable.  Bank  solvency  is 
satisfactory,  with  a  relatively  stable  average 
capital-adequacy  ratio  of  19.8%  in  Q3-2022  (vs 
18.6%  in  the  EU).  Credit  quality  is  strong,  with  a 
record  low  non-performing-loan  ratio  of  1.4%  in 
Q3-2022  (vs  1.8%  in  the  EU).  With  return-on-
equity  of  9.5%  in  the  first  nine  months  of  2022, 
Belgian  banks  are  quite  profitable,  and  perform 
better,  on  average,  than  their  EU  peers  (6.1%). 
Banks have ample liquidity, both from the ECB and 
depositors.  Funding 
is  still 
from 
substantial,  and  reached  7.6%  of  banks’  total 
liabilities  in  December  2022  (vs  4.3%  in  the  euro 
area),  up  from  2.1%  in  February  2020.  Funding 
from depositors remains comfortable, with a loan-
to-deposit  ratio  of  79.9%  in  September  2022  (vs 
88.6% in the EU). 

the  ECB 

Belgium’s financial system has withstood the 
immediate impact of the Russian invasion of 
Ukraine  and  the  related  sanctions.  Although 
Belgium’s  direct  exposure  to  Ukraine  and  Russia 
was  very  small  and  manageable,  the  impact  of 
lower  economic  growth  and  higher  inflation  could 
be  substantial.  These  indirect  effects  could  affect 
the  ability  of  financially  vulnerable  non-financial 
corporations and households to service their debts 
when  business  costs  or  living  costs  are  rising 
strongly.  Likewise,  rising  fiscal  deficits,  growing 
public  debt,  and  the  risk  of  political  instability 
could  combine  to  threaten  the  debt  sustainability 
and  credit  worthiness  of  some  public  entities. 
Fortunately,  Belgian  banks  have  large  capital 
buffers that could absorb unexpected losses while 
allowing  the  banks  to  continue  providing  key 
services 
economy.  However, 
real 
maintaining this  strong  financial  position  will  also 
require banks to continue to deal in an appropriate 
way with the structural challenges stemming from 
digitalisation  and  cost  effectiveness.  These 
challenges  could  put  pressure  on  the  profitability 
and  business  models  of  Belgian  banks  in  the 
future.  Finally, 
it  remains  a  weakness  that 
contributions  to  the  Belgian  Deposit  Guarantee 
Scheme  are  not  invested  into  a  segregated  and 
diversified portfolio of low-risk assets.  

the 

to 

The residential real-estate market is showing 
medium vulnerabilities that are mitigated by 
appropriate  and  sufficient  macroprudential 

(i) 

of 

signs 

policy  measures (125).  In  2022,  the  European 
Systemic  Risk  Board  (ESRB)  identified  several  key 
vulnerabilities: 
house-price 
overvaluation; (ii) elevated house-price growth; (iii) 
elevated  and  rising  household  indebtedness;  (iv) 
strong  growth  in  mortgage  credit;  and  (v)  loose  – 
albeit  gradually  tightening  –  credit  standards. 
According  to  the  ESRB,  the  current  policy  mix  in 
Belgium  can  be  considered  appropriate  and 
sufficient and has been instrumental in mitigating 
risks.  The  borrower-based  measures  introducing 
loan-to-value thresholds for various sub-segments 
of loans have led to a marked improvement in the 
quality  of  new  mortgage  loans.  Moreover,  the 
conversion of the current Article 458 CRR measure 
into  a  sectoral  systemic  risk  buffer  of  equivalent 
magnitude  will  continue  to  ensure  an  appropriate 
capital  buffer  against  unexpected  losses  on  the 
stock  of  loans.  Finally,  the  National  Bank  of 
Belgium (NBB) has been more reluctant than other 
supervisors  to  increase  its  counter-cyclical  risk 
buffer (CCyB). After having briefly contemplated in 
June  2022  a  possible  increase  of  the  CCyB  to 
0.5%, it eventually decided to maintain it at 0% in 
September 2022 (126). Indeed, given the worsening 
macroeconomic  context  and  the  deteriorating 
growth  forecasts,  the  NBB  wants  to  ‘ensure  that 
Belgian  banks  have  full  flexibility  to  use  their 
ample  free  capital  resources  to  support  the  real 
economy’. 

Belgian  banks  actively  finance  the  economy 
at 
In 
reasonably  attractive  conditions. 
December  2022,  year-on-year  credit  growth 
reached  6.6%  (vs  5.5%  in  the  euro  area)  for 
lending to non-financial corporations and 6.4% (vs 
3.7%  in  the euro  area)  for  lending to  households. 
Since February 2022, interest rates have increased 
across  the  board,  but  Belgian  banks  continue  to 
offer 
In 
November  2022,  mortgage 
loans  for  house 
purchases were slightly more expensive in Belgium 
than  the  euro-area  average  (3.16%  vs  2.93%  in 
November 2022), while corporate loans up to EUR 
1 million were slightly cheaper (3.20% vs 3.32%).  

relatively  attractive 

lending 

terms. 

https://www.esrb.europa.eu/pub/pdf/reports/esrb.report
220211_vulnerabilities_eea_countries~27e571112b.en.pdf?
cb8132dc3e0f0f53a4fce3292a690bd6.  

https ://www.nbb.be/doc/cp/eng/2023/20221216_buff

errate_2023q1_en.pdf.  

(125)

(126)

62 

 
 
 
                                                 
 
 
 
Table A18.1: Financial soundness indicators 

(1) Last data: Q3-2022. 
(2) Data is annualized. 
Source: ECB, Eurostat, S&P Global Capital IQ Pro. 

residences  are 

tax  deductible. 

The  tax  system  is  not  neutral  towards 
investment  choices.  Some  features  of  the  tax 
system  serve  to  distort  investment  choices  and 
lead to overinvestment in certain assets. Taxation 
of immovable property is a case in point, since the 
fictive  cadastral  value  often  underestimates  the 
actual  rental  income  and  interest  on  loans  for 
secondary 
In 
Wallonia,  homeowners  continue  to  benefit  from 
favourable  tax  treatment  for  their  mortgage 
payments  (‘chèque  habitat’).  Moreover,  some  tax 
incentives 
favour  specific  pension  schemes, 
creating  obstacles  to  the  better  allocation  of 
capital. Finally, the tax on securities accounts also 
introduces  a  bias  against 
into 
securities.  Belgium  is  one  of  the  few  Member 
States (CY, MT, IT, PL, PT) with a notional interest-
deduction  scheme  aimed  at  reducing  the  current 
bias  in  favour  of  debt  and  making  equity  more 
attractive,  but  the  magnitude  of  the  notional 
interest  rate  is  so  low  that  the  scheme  is  largely 
ineffective. 

investment 

though 

the  absolute  amounts 

Sustainable  finance  is  beginning  to  grow. 
remain 
Even 
modest,  issuance  of  private  ‘green’  bonds  have 
significantly  risen  in  recent  years.  Public  green 
bonds experienced exceptionally large issuance of 
EUR  11bn  in  2018,  but  issuance  activity  has 
sharply  fallen  since  then.  During  the  first  quarter 
of  2022,  investors  continued  to  invest  in  ESG 
funds  witnessed  net 
funds,  while  non-ESG 
outflows amounting to EUR 2.3 bn, which seems to 
indicate 
and 
participation in ESG funds. 

increasing 

investor 

interest 

quite 

robust 

overall, 

Solvency  in  the  insurance  sector  currently 
but 
appears 
vulnerabilities  can  exist  at  an  individual 
level.  The  overall  solvency  ratio  of  Belgian 
insurers slightly improved in 2021 and in the first 
half  of  2022,  rising  from  201.3%  in  2020  to 
227.1%  in  Q2-2022.  Insurers  (and  especially  life 
insurers) benefited from the rise in risk-free rates 
which  drove  down  the  value  of  liabilities,  but 
suffered (especially non-life insurers) from the rise 
in inflation and the severe floods that the country 
faced  in  July  2021.  However,  this  relatively  good 
performance  at  sector  level  differed  from  one 
company  to  another.  Companies  with  a  narrower 
scope  of  activities,  a  higher  duration  mismatch 
between assets and liabilities, or a less diversified 
investment  portfolio  generally  faced  greater 
volatility in terms of solvency. 

Like 

losses  for 

Inflation represents a considerable challenge 
elsewhere, 
insurance. 
for  non-life 
unexpectedly  high  inflation  is  likely  to  generate 
significant 
the  non-life  business, 
especially  for  long-tail  business.  The  fact  that 
wages are automatically indexed in Belgium is an 
aggravating  factor,  since  it  leads  to  a  faster 
increase  in  the  cost  of  claims.  Insurers  have  put 
measures in place to absorb this kind of shock as 
much  as  possible,  such  as:  (i)  indexation  of 
premiums (to compensate for inflation of claims); 
(ii)  targeted 
in 
inflation-linked bonds and/or inflation derivatives); 
and/or 
(iii)  reinsurance  treaties  to  cede  the 
inflation risk to third parties. 

inflation  hedges 

(investment 

63 

201720182019202020212022EUMedianTotal assets of the banking sector (% of GDP)229,2217,8215,2242,2231,2231,7276,8207,9Share (total assets) of the five largest banks (%)68,873,474,075,375,7--68,7Share (total assets) of domestic credit institutions (%)150,950,349,650,652,252,3-60,2NFC credit growth (year-on-year % change)6,49,57,52,02,86,6-9,1HH credit growth (year-on-year % change)5,25,77,04,76,66,4-5,4Financial soundness indicators:1        - non-performing loans (% of total loans)2,72,32,12,11,61,41,81,8- capital adequacy ratio (%)19,018,818,720,320,419,818,619,8- return on equity (%)28,88,28,65,99,99,56,16,6Cost-to-income ratio (%)158,261,259,556,756,357,160,651,8Loan-to-deposit ratio (%)190,293,293,479,079,379,988,678,0Central bank liquidity as % of liabilities2,92,72,28,48,64,5-2,9Private sector debt (% of GDP)185,5180,1178,3180,9169,0--120,7Long-term interest rate spread versus Bund (basis points)40,539,844,636,235,959,2-93,3Market funding ratio (%)65,063,762,662,361,0-50,840,0Green bonds issued to all bonds (%)-1,71,71,82,12,83,92,31-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
 
   
 
ANNEX 19: TAXATION  

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

information  on 

The overall tax burden in Belgium is high and 
the tax structure importantly relies on labour 
taxes.  Belgium’s  tax  revenue  as  a  percentage  of 
GDP  was  above  the  EU  aggregate  in  2021  (see 
Table A19.1). This should be viewed in the context 
of  a  high  public  deficit  and  large  public  debt-to-
GDP  ratio.  While  for  most  Member  States,  labour 
taxes  are  the  most  important  source  of  tax 
revenue,  they  are  particularly  high  in  Belgium 
when expressed as a percentage of GDP. This runs 
counter  the  objective  of  increasing  employment. 
On  the  other  hand,  revenues  from  consumption 
taxes,  recurrent  immovable  property  taxes  and 
environmental  taxes,  which  are  among  the  taxes 
least  detrimental  to  growth,  were  close  to  the  EU 
aggregate  (expressed  as  %  of  GDP).  Hence,  there 
seems  to  be  scope  to  shift  the  tax  burden  away 
from  labour  to  other  tax  bases.  In  a  context  of 
increasing  traffic  congestion  and  air  pollution 
issues, transport taxes and pollution taxes seem to 
be underused. While excise duties on transport fuel 
are  rather  high  for  diesel  and  average  for  petrol, 

Table A19.1: Taxation indicators 

professional  transporters  and  agriculture  benefit 
from  a  reduced  excise  rate  on  diesel.  Taxation  of 
immovable  property 
is  characterised  by  high 
transaction  tax  rates  in  Brussels  and  Wallonia, 
hampering  the  functioning  of  the  real  estate 
market and restricting labour mobility. Reliance on 
transaction  taxes  generates  a  more  volatile 
revenue  stream  compared  to  lower  transaction 
combined  with  higher  recurrent  property  taxes. 
Belgium announced the first step of a broader tax 
reform  to  reduce  labour  taxes.  This  reform  is 
currently under discussion.  

labour 

tax  burden 

Belgium’s 
is  more 
progressive than the EU average, but the tax 
brackets  are  narrow.  Graph  A19.1  shows  that, 
as  a  result  of  previous  reforms,  the  labour  tax 
wedge  for  Belgium  in  2022  was  close  to  the  EU 
average  for  single  people  earning  50%  of  the 
average  wage  but  much  higher  than  the  EU 
average  at  higher  levels  of  income.  For  a  single 
worker earning the average wage, the tax wedge is 
the  highest  in  the  EU.  Although  the  personal 
income tax system offers several tax brackets, the 
latter  are  rather  narrow.  As  a  consequence,  even 
average income earners are subject to the highest 
income  tax  rates  (45%  and  50%).  There  are  high 
marginal tax rates for lower middle wage earners, 
leading  to  significant  low-wage  traps.  Moreover, 
the tax wedge for second earners and specific tax 
features  like  the  ‘marital  quotient’  generate  high 
work disincentives for second earners. In 2021, the 

(1) Forward-looking effective tax rate (OECD) 
(2) A higher value indicates stronger redistributive impact of taxation 
(*) EU-27 simple average 
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 the VAT gap, 
see European Commission, Directorate-General for Taxation and Customs Union, ‘VAT gap in the EU: report 2022’, Publications 
Office, 2022, https://data.europa.eu/doi/10.2778/109823  
Source: European Commission, OECD. 

64 

2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)43,643,543,543,637,939,940,040,6Labour taxes (as % of GDP)23,722,022,922,020,020,721,320,9Consumption taxes (as % of GDP)10,910,810,410,910,811,110,711,2Capital taxes (as % of GDP)8,810,59,910,67,18,18,08,5Total property taxes (as % of GDP)3,13,53,53,71,92,22,22,2Recurrent taxes on immovable property (as % of GDP)1,31,31,31,21,11,21,21,1Environmental taxes as % of GDP2,42,62,52,52,42,42,22,2Tax wedge at 50% of average wage (Single person) (*)41,833,132,833,433,533,932,331,932,131,7Tax wedge at 100% of average wage (Single person) (*)55,952,352,252,453,041,040,139,939,639,7Corporate income tax - effective average tax rates (1) (*)23,823,323,319,519,419,1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)11,012,912,413,58,67,78,17,8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)15,516,631,640,7VAT Gap (% of VAT total tax liability, VTTL)13,114,011,09,1BelgiumEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
      
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
tax-and  benefit  system  performs  better  than  the 
income  inequality,  as 
EU  average  to  reduce 
measured by the Gini-coefficient (Table A19.1).  

Graph A19.1: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

Graph A19.2: VAT efficiency indicators, 2020 

Source: European Commission, VAT gap in the EU: report 
2022 

Consumption taxes are relatively low, due in 
part  to  the  limited  efficiency  of  the  VAT 
system.  Revenue  from  VAT  is  comparatively  low 
as compared to the EU on average (6.4 vs. 6.9% of 
GDP in 2020). While the standard VAT rate is close 
to  the  EU  average,  Belgium  applies  reduced  VAT 
rates more extensively  than  other Member  States 
(see  Graph  A19.2).  The  use  of  reduced  VAT  rates 
and  optional  VAT  exemptions  negatively  affects 
the  VAT  collection  efficiency  (45.5%  vs.  55.5%  in 
EU on average). Moreover, the VAT compliance gap 
(the gap  between  revenues  actually  collected  and 
the theoretical tax liability) is among the highest in 
the  EU  (14.0%  in  2020),  significantly  above  the 
EU-wide  VAT  compliance  gap  which  decreased  to 
9.1% in 2020. 

Second earner tax wedge assumes first earner at 100% of 
the average wage and no children. 
Source: European Commission 

Extensive use of tax expenditure hinders the 
business  environment  and  efficient  tax 
collection.  To  offset  the  heavy  tax  burden  on 
labour,  wage  subsidies  and  other  tax  expenditure 
have been broadly used. Special schemes, like the 
company  car  scheme  and  the  withholding  tax 
exemption for overtime, R&D  work and night/shift 
work, were introduced to compensate for the high 
tax burden on labour. Although these schemes are 
to 
costly 
inefficiencies,  their  use  has  been  increasing  over 
time.  The  complex  tax  system  weighs  on  the 
business environment, despite Belgium’s efforts in 
tax  administration.  Moreover, 
digitalising 
Belgium  was  found  to  have  a  comparatively  low 
share  of  successful  tax  audits (127),  pointing  to 
scope  to improve the efficiency and effectiveness 
of the tax administration. 

in  budgetary 

terms  and 

lead 

its 

(127) OECD Tax administration 2021 

https://doi.org/10.1787/cef472b9-en 

65 

33,546,553,059,157,02025303540455055606550100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - BESingle earner - EU averageSecond earner -  BESecond earner -  EU average0%10%20%30%40%50%60%VAT rate gapVAT 'compliance'gapVAT collectionefficiencyBelgiumEU average 
      
                                                 
   
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares.  
Source:  Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

66 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)3.00.71.6-5.46.33.21.21.4Potential growth (y-o-y)2.11.41.31.31.51.81.71.5Private consumption (y-o-y)1.61.51.6-8.35.54.12.61.7Public consumption (y-o-y)1.41.30.90.15.03.20.70.7Gross fixed capital formation (y-o-y)6.00.22.9-5.35.1-0.80.72.0Exports of goods and services (y-o-y)5.70.83.5-5.011.35.11.32.5Imports of goods and services (y-o-y) 5.91.33.7-5.610.74.91.62.7Contribution to GDP growth:Domestic demand (y-o-y)2.41.11.7-5.55.22.61.61.5Inventories (y-o-y)0.50.00.0-0.30.30.6-0.10.0Net exports (y-o-y)0.2-0.3-0.10.40.70.2-0.3-0.2Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.60.60.40.60.71.00.90.7Capital accumulation (y-o-y)0.60.50.60.50.60.50.50.5Total factor productivity (y-o-y)0.80.40.30.30.20.20.20.3Output gap1.2-0.50.1-5.4-1.00.50.0-0.2Unemployment rate8.37.77.55.86.35.65.85.7GDP deflator (y-o-y)2.01.61.51.52.85.93.82.3Harmonised index of consumer prices (HICP, y-o-y)2.12.51.40.43.210.33.43.5HICP excluding energy and unprocessed food (y-o-y)1.61.91.71.51.44.97.73.2Nominal compensation per employee (y-o-y)2.72.51.4-1.64.17.29.03.4Labour productivity (real, hours worked, y-o-y)1.80.00.73.2-1.1-0.80.1-0.1Unit labour costs (ULC, whole economy, y-o-y)0.92.60.84.1-0.25.98.32.9Real unit labour costs (y-o-y)-1.10.9-0.72.5-2.90.04.30.5Real effective exchange rate (ULC, y-o-y)-0.20.4-0.4-0.2-0.62.32.7-0.7Real effective exchange rate (HICP, y-o-y)0.60.10.60.70.70.6..Net savings rate of households (net saving as percentage of net disposable income)10.79.95.614.210.3...Private credit flow, consolidated (% of GDP)9.311.36.4-3.03.54.3..Private sector debt, consolidated (% of GDP)125.2174.9176.4182.0169.7158.6..of which household debt, consolidated (% of GDP)44.153.058.265.462.860.4..of which non-financial corporate debt, consolidated (% of GDP)81.1121.9118.1116.6106.998.2..Gross non-performing debt (% of total debt instruments and total loans and advances) (1)2.64.22.91.81.4...Corporations, net lending (+) or net borrowing (-) (% of GDP)1.31.51.53.52.20.10.91.1Corporations, gross operating surplus (% of GDP)24.223.625.026.227.427.625.725.5Households, net lending (+) or net borrowing (-) (% of GDP)3.63.81.36.54.01.22.41.9Deflated house price index (y-o-y)6.80.80.83.34.5-2.8..Residential investment (% of GDP)5.96.15.86.16.36.3..Current account balance (% of GDP), balance of payments2.30.10.51.10.4-3.6-2.4-2.5Trade balance (% of GDP), balance of payments2.5-0.20.61.71.1-3.9..Terms of trade of goods and services (y-o-y)-0.5-0.60.30.8-1.5-3.81.30.2Capital account balance (% of GDP)-0.20.00.0-0.10.20.1..Net international investment position (% of GDP)35.649.945.646.763.953.9..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2).58.447.134.437.625.4..IIP liabilities excluding non-defaultable instruments (% of GDP) (2).241.1194.0208.1202.4186.3..Export performance vs. advanced countries (% change over 5 years)-0.8-3.0-5.710.77.1...Export market share, goods and services (y-o-y)-2.5-3.30.04.7-0.51.1-1.3-1.3Net FDI flows (% of GDP)-2.0-3.01.81.13.64.6..General government balance (% of GDP)-0.7-3.9-2.1-9.0-5.5-3.9-5.0-4.7Structural budget balance (% of GDP)..-2.4-5.8-4.7-4.2-4.9-4.5General government gross debt (% of GDP)92.8100.4103.2112.0109.1105.1106.0107.3forecast 
 
 
 
   
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  Annex  assesses  fiscal  sustainability 
risks for Belgium over the short, medium and 
long term. It follows the same multi-dimensional 
approach  as  the  European  Commission’s  2022 
Debt Sustainability Monitor, updated based on the 
Commission 2023 spring forecast. 

1  -  Short-term  risks  to  fiscal  sustainability 
low  overall.  The  Commission’s  early-
are 
detection  indicator  (S0)  does  not  signal  major 
short-term  fiscal  risks  (Table  A21.2) (128).  Gross 
financing  needs  are  expected  to  remain  large  at 
around  19%  of  GDP  in  the  short  term  (2023-
2024), although below the peak in 2020 (Table 1 
of  A21.1).  Financial  markets’  perceptions  of 
sovereign  risk  are  positive,  as  confirmed  by  the 
ratings of the main agencies. 

2 - Medium-term risks to fiscal sustainability 
are high overall. 

The baseline DSA for Belgium shows that the 
government debt ratio is projected to remain 
at a high level over the medium term, with a 
continuous  increase  over  the  next  decade  to 
about 126% of GDP by 2033 (Graph 1) (129) (130). 
The assumed structural primary balance (a deficit 
of  2.5%  of  GDP)  contributes  to  these  develop-
ments.  It  appears  low  compared  with  past  fiscal 
performance, indicating that the country has room 

(128) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(129) The assumptions underlying the Commission’s ‘no-fiscal 
policy change’ baseline notably comprise: (i) a structural 
primary deficit, before ageing costs, of 2.5% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10 (as 
for all Member States); (iv) real GDP growth rates from the 
Commission 2023 spring forecast until 2024, followed by 
EPC/OGWG ‘T+10 methodology projections between T+3 and 
T+10, i.e. for 2025-2033 (on average 1.1%); (v) ageing costs 
in line with the 2021 Ageing Report (European Commission, 
Institutional Paper 148, May 2021). For information on the 
methodology, see the 2022 Debt Sustainability Monitor 
(European Commission, Institutional Paper 199, April 2023). 

for  corrective  action.  At  the  same  time,  the 
baseline  projections  up  to  2033  benefit  from  a 
favourable  (although  declining)  snowball  effect, 
with  real  GDP  growth  averaging  1.1%  in  2025-
2033.  Government  gross  financing  needs  are 
expected to remain high over the projection period, 
rising to about 24% of GDP in 2033, compared to 
19% forecast for 2024. 

The  baseline  projections  are  stress  tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph  1).  For  Belgium,  reverting  to  historical 
fiscal  trajectories  under  the  ‘historical  structural 
primary  balance  (SPB)’  scenario  would  lead  to  a 
lower government debt ratio. If the SPB gradually 
converged  to  a  deficit  of  0.1%  of  GDP  (its 
historical 15-year average), the projected debt-to-
GDP ratio would be around 15 pps. of GDP lower in 
2033  compared  with  the  baseline.  A  permanent 
worsening  of  the  macro-financial  conditions,  as 
reflected  under  the  ‘adverse  interest-growth  rate 
differential’  scenario  (i.e.  1  pp.  higher  than  the 
baseline)  would  result  in  a  higher  government 
debt-to-GDP  ratio,  by  around  9  pps.  of  GDP  by 
2033 as compared with the baseline. A temporary 
worsening  of  financial  conditions,  as  reflected  in 
the  ‘financial  stress’  scenario,  would  lead  to  a 
slightly  higher  public  debt-to-GDP  ratio  by  2033. 
The 
(SPB)’ 
‘lower  structural  primary  balance 
scenario  (i.e.  SPB  forecast  change  permanently 
reduced  by  half  of  the  cumulative  forecast 
change), would lead to a similar government debt-
to-GDP ratio by 2033 as the baseline. 

Additionally,  stochastic  debt  projections 
indicate  high  risks  (Graph  2) (131).  These 
stochastic  simulations  point  to  a  66%  probability 
of  the  debt  ratio  in  2027  being  greater  than  in 
2022, entailing high risk given the initial high level 
of debt In addition, such shocks point to significant 
uncertainty  (i.e.  the  difference  between  the  10th 
and 90th debt distribution percentiles) surrounding 
the government debt baseline projections. 

(130) Table 1 shows the baseline debt projections and its 

(131) These projections show the impact on debt of 2000 different 

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.  

shocks affecting the government’s primary balance, 
economic growth, interest rates and exchange rates. The 
cone covers 80% of all simulated debt paths, therefore 
excluding tail events. 

67 

 
 
                                                 
                                                 
 
 
entities 

federated 

Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  the 
one  hand,  risk-increasing  factors  relate  to  the 
recent  increase  of  interest  rates,  the  share  of 
short-term  debt,  high  gross  financing  needs,  the 
large share of government debt held by non-resi-
dents  and  the  lack  of  fiscal  coordination  among 
the  different  government  levels,  with  several  of 
specific 
the 
vulnerabilities.  On  the  other  hand,  risk-mitigating 
factors include the lengthening of debt maturity in 
recent  years,  relatively  stable  financing  sources 
large  investor  base), 
(with  a  diversified  and 
government  debt  being  fully denominated  in euro 
In 
and  historically  still 
addition, 
the 
NGEU/RRF,  if  fully  implemented,  could  have  a 
further  positive  impact  on  GDP  growth  in  the 
coming years, and therefore help to mitigate debt 
sustainability risks. 

low  borrowing  costs. 

reforms  under 

the  structural 

displaying 

3  -  Long-term  risks  to  fiscal  sustainability 
are high overall (132). 

The  S2  sustainability  gap  indicator  (at  6.6 
pps.  of  GDP)  points  to  high  risks,  suggesting 
that  Belgium  would  need  to  improve  its 
structural  primary  balance  substantially  to 
ensure debt stabilisation over the long term. 
initial 
from 
results 
This 
budgetary  position 
(3 pps.  of  GDP)  and  the 
projected increase in ageing costs, in particular for 
spending  on  pensions  (1.6 pps.)  and  long-term 
(Table  2).  Hence,  additional 
care 
measures may be required to further improve the 
efficiency  and  fiscal  sustainability  of  the  Belgian 
long-term care system. 

the  unfavourable 

(1.8 pps.) 

Combined  with  debt  vulnerabilities,  as 
highlighted by the S1 indicator, overall long-
term risks are assessed as high. Indeed, the S1 
sustainability  gap  indicator  signals  that  a  signifi-
cant consolidation effort of 5.9 pps. of GDP would 
be needed to reduce debt to 60% of GDP by 2070. 
This result is driven by the projected ageing costs 
(2.6 pps.)  the  unfavourable  initial  budgetary  posi-
tion  (2.3 pps.  of  GDP),  and  the  debt  requirement 
(1 pp. of GDP) (Table 2). 

(132) The S2 fiscal sustainability gap indicator measures the 

permanent fiscal effort (SPB adjustment) in 2024 that would 
be required to stabilise public debt over the long term. It is 
complemented by the S1 fiscal sustainability gap indicator, 
which measures the permanent fiscal effort required in 2024 
to bring the debt-to-GDP ratio to 60% in the long term (by 
2070). For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

68 

 
                                                 
Table A21.1: Debt sustainability analysis - Belgium 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Belgium 

Source: Commission services. 

69 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)112.0109.1105.1106.0107.3107.9109.0110.4112.3114.5116.9119.7122.7125.8Changes in the ratio14.4-2.9-4.00.81.40.61.11.41.92.22.42.83.03.2of whichPrimary deficit7.03.82.43.32.82.62.83.03.13.33.33.53.63.8Snowball effect6.0-7.8-7.8-3.3-1.8-2.0-1.7-1.5-1.2-1.1-0.9-0.7-0.6-0.6Stock-flow adjustments1.41.11.40.90.40.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)23.520.218.519.318.918.719.319.920.621.322.022.823.724.4S1S2Overall index  (pps. of GDP)5.96.6of which Initial budgetary position2.33.0Debt requirement1.0Ageing costs2.63.7of which    Pensions1.41.6     Health care0.40.5     Long-term care1.11.8Others-0.2-0.2Table 2. Breakdown of the S1 and S2 sustainability gap indicators6070809010011012013014020202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p9045556575859510511512513514520202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallHIGHHIGHHIGHHIGHHIGHHIGHDebt level (2033), % GDP125.8110.5125.9135.1127.3Debt peak year20332033203320332033Fiscal consolidation space93%87%93%93%93%Probability of debt ratio exceeding in 2027 its 2022 level66%Difference between 90th and 10th percentiles (pps. GDP)37.2(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)Thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWHIGHHIGHMEDIUMHIGH 
 
 
   
 
 
  
 
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