Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Belgium
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Belgium, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, fiscal policy, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 601 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Belgium {SWD(2024) 600 final} - {SWD(2024) 601 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of Belgium 

THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to Council Regulation (EU) 2024/1263 of the European Parliament and of the 
Council  of  29  April  2024  on  the  effective  coordination  of  economic  policies  and  on 
multilateral budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and 
in particular Article 3(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

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

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

(2) 

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Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council2,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic  and  social  recovery  and  implement  sustainable  reforms  and  investment,  in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights. 
The  REPowerEU  Regulation3,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 
security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 

the  Recovery  and  Resilience  Facility 

OJ L 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
(OJ  L  57,  18.2.2021,  p.  17),  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1), ELI: http://data.europa.eu/eli/reg/2023/435/oj. 

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(3) 

(4) 

(5) 

renewables,  energy  storage  capacities  and  energy  efficiency.  Belgium  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’4, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market  emerge  as  paramount  policy  priorities  for  reform  and  investment  to  address 
current productivity challenges as well as to build up the long-term competitiveness of 
the EU and  its Member  States.  On 14 February  2024, the Commission  followed this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report5.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified.  

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey6, marking the start of the 2024 cycle of the European Semester for economic 
policy  coordination.  The  European  Council  endorsed  the  priorities  of  the  survey 
around  the  four  dimensions  of  competitive  sustainability  on  22  March  2024.  On  21 
November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also 
adopted the 2024 Alert Mechanism Report, in which it did not identify Belgium as one 
of  the  Member  States  that  may  be  affected  or  may  be  at  risk  of  being  affected  by 
imbalances, and for which an in-depth review would be needed. On the same date, the 
Commission  also  adopted  an  opinion  on  the  2024  draft  budgetary  plan  of  Belgium. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the economic policy of the euro area, which the Council adopted on 12 April 2024, as 
well  as  the  proposal  for  the  2024  Joint  Employment  Report  analysing  the 
implementation  of  the  Employment  Guidelines  and  the  principles  of  the  European 
Pillar of Social Rights, which the Council adopted on 11 March 2024. 

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States7.  The  objectives  of  the 
new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual fiscal consolidation  as well as  reforms  and investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 

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COM(2023) 168 final. 
COM(2024) 77 final. 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 
29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 

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commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 
depending on the regular length of the national legislature. The net expenditure8 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) No 2024/1263, including the requirements to put or 
keep  general  government  debt  on  a  plausibly  downward  path  by  the  end  of  the 
adjustment period at the latest, or for it to remain at prudent levels below 60% of GDP, 
and to bring and/or maintain the government deficit below the 3% of GDP reference 
value  over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of 
reforms and investments in accordance with the criteria set out in Regulation (EU) No 
2024/1263, the adjustment period may be extended by 3 years at most. For the purpose 
of supporting the preparation of those plans, on [21 June] 2024, the Commission is set 
to  provide  Member  States  with  guidance  on  the  content  of  the  plans  and  the 
subsequent  annual  progress  reports  that  they  will  need  to  submit  and,  in  accordance 
with  Article  5  of  Regulation  (EU)  No  2024/1263,  will  transmit  to  them  technical 
guidance  on  the  fiscal  adjustments  (reference  trajectories  and  technical  information, 
where  applicable).  Member  States  should  submit  their  medium-term  fiscal-structural 
plans by 20 September 2024, unless the Member State and the Commission agree to 
extend the deadline by a reasonable period of time. Member States should ensure the 
involvement  of  their  national  parliaments,  and  the  consultation  of  independent  fiscal 
institutions, of social partners and other national stakeholders, as appropriate. 

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  country-
specific  recommendations  remain  equally  relevant  also  for  recovery  and  resilience 
plans  revised,  updated  or  amended  in  accordance  with  Articles  14,  18  and  21  of 
Regulation (EU) 2021/241. 

On 30 April 2021, Belgium submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the  relevance, 
effectiveness,  efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in 
accordance with the assessment guidelines of Annex V to that Regulation. On 13 July 
2021,  the  Council  adopted  its  Decision  on  the  approval  of  the  assessment  of  the 
recovery and resilience plan for Belgium9, which was amended on 8 December 2023 
following Article 18(2) of Regulation (EU) 2021/241 to update the maximum financial 
contribution for non-repayable financial support, as well as to include the REPowerEU 
chapter10. The release of instalments is conditional on a decision by the Commission, 

Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024 (OJ L 
2024/1263,  30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).  Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 
Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Belgium (10161/2021). 
Council Implementing Decision of 8 December 2023 amending the Implementing Decision of 13 July 
2021 on the approval of the assessment of the recovery and resilience plan for Belgium (15570/2023). 

(6) 

(7) 

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(8) 

(9) 

taken in accordance with Article 24(5) of Regulation (EU) 2021/241, that Belgium has 
satisfactorily  fulfilled  the  relevant  milestones  and  targets  set  out  in  the  Council 
Implementing  Decision.  Satisfactory  fulfilment  presupposes  that  the  achievement  of 
preceding milestones and targets has not been reversed. 

On 30 April 2024, Belgium  submitted its  2024 National  Reform Programme, in  line 
with  Article  4(1)  of  Regulation  (EC)  No  1466/97.  In  accordance  with  Article  27  of 
Regulation  (EU)  2021/241,  the  2024  National  Reform  Programme  also  reflects 
Belgium’s  biannual  reporting  on  the  progress  made  in  achieving  its  recovery  and 
resilience plan. 
The Commission published the 2024 country report for Belgium11 on 19 June 2024. It 
assessed  Belgium’s  progress 
relevant  country-specific 
in  addressing 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
Belgium’s implementation of the recovery and resilience plan. Based on this analysis, 
the  country  report  identified  gaps  with  respect  to  those  challenges  that  are  not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  Belgium’s  progress  on  implementing 
the  European  Pillar  of  Social  Rights  and  on  achieving  the  EU  headline  targets  on 
employment, skills and poverty reduction, as well as progress in  achieving the UN’s 
Sustainable Development Goals. 

the 

(10)  Based on data validated by Eurostat12, Belgium’s general government deficit increased 
from a deficit of 3.6% of GDP in 2022 to a deficit of 4.4% in 2023, while the general 
government debt rose from 104.3% of GDP at the end of 2022 to 105.2% at the end of 
2023. As announced in the fiscal policy guidance for 202413, the Commission is taking 
the first step for the opening of deficit-based excessive deficit procedures on the basis 
of the outturn data for 2023, in line with existing legal  provisions. On 19 June 2024, 
the  Commission  adopted  a  report  under  Article  126(3)  of  the  TFEU14.  That  report 
assessed the budgetary situation of Belgium, as its general government deficit in 2023 
exceeded the reference value of 3% of GDP. The report concluded that in the light of 
this  assessment,  and  after  considering  the  opinion  of  the  Economic  and  Financial 
Committee  as  established  under  article  126(4)  TFEU,  the  Commission  intends  to 
propose  in  July  to  open  an  excessive  deficit  procedure,  by  recommending  to  the 
Council  to  adopt  a  Decision  under  Article  126(6)  establishing  the  existence  of  an 
excessive deficit, for Belgium. 

(11)  On 12 July 2022, the Council recommended15 that Belgium ensure in 2023 a prudent 
fiscal  policy,  in  particular  by  limiting  the  growth  of  nationally  financed  primary 
current expenditure below medium-term potential output growth16, taking into account 
continued temporary and targeted support to households and firms most vulnerable to 
energy price hikes and to people fleeing Ukraine. At the same time, Belgium was also 

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SWD(2024) 601 final. 
Eurostat-Euro Indicators, 22.4.2024 
COM(2023) 141 final. 
Report  from  the  Commission,  prepared  in  accordance  with  Article  126(3)  of  the  Treaty  on  the 
Functioning of the European Union, 19.6.2024, COM(2024)598 final. 
Council  Recommendation  of  12  July  2022  on  the  National  Reform  Programme  of  Belgium  and 
delivering a Council opinion on the 2022 Stability Programme of Belgium OJ C 334, 1.9.2022, p. 1. 
Based on the Commission 2024 spring forecast, the medium-term potential output growth of Belgium in 
2023 is estimated at 5.7% in nominal terms, based on the 10-year average real potential growth rate and 
the 2023 GDP deflator. 

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recommended  to  stand  ready  to  adjust  current  spending  to  the  evolving  situation. 
Belgium was also recommended to expand public investment for the green and digital 
transitions,  and  for  energy  security  taking  into  account  the  REPowerEU  initiative, 
including  by  making  use  of  the  Recovery  and  Resilience  Facility  and  other  Union 
funds.  In  2023,  according  to  the  Commission  estimates,  the  fiscal  stance17  was 
expansionary, by 0.7% of GDP, in a context of high inflation. The growth in nationally 
financed primary current expenditure (net of discretionary revenue measures) in 2023 
provided  an  expansionary  contribution  to  the  fiscal  stance  of  0.4%  of  GDP.  This 
includes the reduced  cost  of the targeted  emergency  support measures to households 
and  firms  most  vulnerable  to  energy  price  hikes  by  0.1%  of  GDP.  The  growth  of 
nationally  financed  primary  current  expenditure  in  excess  of  medium-term  potential 
output growth  was  therefore not  due to  the targeted support to  households and firms 
most vulnerable to energy price hikes. The expansionary growth in nationally financed 
primary  current  expenditure  (net  of  discretionary  revenue  measures)  was  driven  by 
permanent  increases  in  public  sector  wages  and  social  benefits  resulting  from  the 
mechanism  of  automatic  indexation,  a  temporary  reduction  in  employers’  social 
contributions  in  2023,  and  rising  budgetary  costs  related  to  demographic  ageing.  In 
sum, the growth of nationally financed primary current expenditure in 2023 was not in 
line  with  the  Council  recommendation.  Expenditure  financed  by  Recovery  and 
Resilience  Facility  grants  and  other  EU  funds  amounted  to  0.3%  of  GDP  in  2023. 
Nationally  financed  investment  amounted  to  2.8%  of  GDP  in  2023,  representing  an 
increase  of  0.1  percentage  points  as  compared  to  2022.  Belgium  financed  additional 
investment  through  the  Recovery  and  Resilience  Facility  and  other  EU  funds.  It 
financed  public  investment  for  the  green  and  digital  transitions,  and  for  energy 
security,  such  as  investment  in  rail  and  cycling  infrastructures,  renovation  of  public 
buildings, and hydrogen infrastructure, which are partly funded by the Recovery and 
Resilience Facility and other EU funds.  

(12)  The key projections in the 2024 Stability Programme can be summarised as follows. 
The  macroeconomic  scenario  underpinning  the  budgetary  projections  foresees  real 
GDP growth at 1.4% in 2024 and 1.3% in 2025, while it projects CPI inflation at 2.8% 
in 2024 and 1.8% in 2025. The general government deficit is expected to increase to 
4.6%  of  GDP  in  2024  and  decrease  to  3.6%  of  GDP  in  2025,  while  the  general 
government  debt-to-GDP  ratio  is  set  to  increase  to  106.2%  by  the  end  of  2024  and 
106.8% by the end of 2025. After 2025, the general government balance is projected 
to  decrease  to  2.9%  of  GDP  in  2026  and  2.3%  in  2027.  Therefore,  the  general 
government  deficit is  planned to  go below  the 3% of GDP deficit  reference value  in 
2026.  In  turn,  after  2025,  the  general  government  debt-to-GDP  ratio  is  projected  to 
decrease gradually to 106.6% in 2026, and 106% in 2027. 

(13)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  1.3%  in  2024 
and 1.4% in 2025, and HICP inflation to stand at 4% in 2024 and 2.3% in 2025. 

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The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from the Recovery and Resilience Facility and other Union funds. 

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(14)  The Commission Spring 2024 Forecast projects a government deficit of 4.4% of GDP 
in 2024, while the general government debt-to-GDP ratio is set to remain at 105% in 
2024. The stabilisation of the debt-to-GDP ratio in 2024 mainly reflects a temporary 
excess of cash buffer accumulated end-2023 as a result of an emission of state bonds. 
Based  on  the  Commission’s  estimates,  the  fiscal  stance  is  projected  to  be 
contractionary by 0.1% of GDP in 2024. 

(15)  Expenditure amounting to 0.2% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.1%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast. 
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of Belgium. 

(16)  On  14  July  2023,  the  Council  recommended18  that  Belgium  ensure  a  prudent  fiscal 
policy,  in  particular  by  limiting  the  nominal  increase  in  net  nationally  financed 
primary  expenditure19  in  2024  to  not  more  than  2%.  When  executing  their  2023 
budgets  and  preparing  their  Draft  Budgetary  Plans  for  2024,  Member  States  were 
invited  to  take  into  account  that  the  Commission  would  propose  to  the  Council  the 
opening  of  deficit-based  excessive  deficit  procedures  based  on  the  outturn  data  for 
2023.  According  to  the  Commission  Spring  2024  Forecast,  Belgium’s  net  nationally 
financed primary expenditure is projected to increase by 4% in 2024, which is above 
the recommended maximum growth rate. This excess spending over the recommended 
maximum growth  rate in  net  nationally financed  primary expenditure  corresponds  to 
1% of GDP in 2024. This risks being not in line with what was recommended by the 
Council. 

(17)  Moreover,  the  Council  recommended  that  Belgium  take  action  to  wind  down  the 
emergency energy support measures in  force, using the related savings to  reduce the 
government  deficit,  as  soon  as  possible  in  2023  and  2024.  The  Council  further 
specified  that,  should  renewed  energy  price  increases  necessitate  new  or  continued 
support  measures,  Belgium  should  ensure  that  these  were  targeted  at  protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings. According to the Commission Spring 2024 Forecast, the net budgetary 
cost20 of emergency energy support measures is estimated at 0.4% of GDP in 2023 and 
projected at 0% of GDP in 2024 and 2025. If the related savings were used to reduce 
the  government  deficit,  as  recommended  by  the  Council,  these  projections  would 
imply  a  fiscal  adjustment  of  0.4%  of  GDP  in  2024,  whereas  net  nationally  financed 
primary  expenditure21  provides  a  contractionary contribution  to  the  fiscal  stance  of 
0.1% of GDP in that year. The emergency energy support measures are projected to be 

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Council  Recommendation of 14  July  2023  on  the  2023  National  Reform  Programme  of Belgium  and 
delivering a Council opinion on the 2023 Stability Programme of Belgium, OJ C 312, 1.9.2023, p. 12. 
Net primary expenditure is defined as nationally financed expenditure net of  (i) discretionary revenue 
measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and 
other temporary measures. 
The figure represents the level of the annual budgetary cost of those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 
This contribution is measured as the change in general government primary expenditure, net of (i) the 
incremental  budgetary 
impact  of  discretionary  revenue  measures,  (i)  one-offs,  (iii)  cyclical 
unemployment  expenditure  and  (iv)  expenditure  financed by  non-repayable  support  (grants)  from  the 
Recovery  and  Resilience  Facility  and  other  EU  funds,  relative  to  the  medium-term  (10-year)  average 
potential nominal GDP growth rate, expressed as a ratio to nominal GDP. 

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(18) 

wound  down  as  soon  as  possible  in  2023  and  2024.  This  is  in  line  with  what  was 
recommended  by  the  Council.  However,  the  related  savings  are  not  projected  to  be 
fully  used  to  reduce  the  government  deficit.  This  risks  being  not  in  line  with  the 
Council recommendation. 

In addition, the Council also recommended that Belgium preserve nationally financed 
public  investment  and  ensure  the  effective  absorption  of  Recovery  and  Resilience 
Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and  digital 
transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally  financed 
public investment is projected to increase to 2.9% of GDP in 2024 from 2.8% of GDP 
in  2023.  This  is  in  line with  what  was  recommended  by  the  Council.  In  turn,  public 
expenditure  financed  from  revenues  from  EU  funds,  including  Recovery  and 
Resilience Facility grants, is expected to remain stable at 0.3% of GDP in 2024.  

(19)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects  a  government 
deficit of 4.7% of GDP in 2025. The general government debt-to-GDP ratio is set to 
increase to 106.6% by the end of 2025. The increase of the deficit and of the debt-to-
GDP  ratio  in  2025  mainly  reflects  structurally  rising  current  expenditure,  driven  in 
particular by costs related to demographic ageing, and by higher interest payments on 
public debt.  

(20)  Long-term  fiscal  sustainability  risks  are  high  in  Belgium.  Beyond  the  unfavourable 
initial budgetary position, the driving factor behind the assessment of high risks is the 
impact  of  the  projected  increase  in  age-related  expenditure  on  public  finances  given 
the  country’s  rapidly  ageing  population.  In  the  Commission's  2024  Ageing  Report22, 
ageing-related  expenditure  is  projected  to  steadily  increase  from  26.8  percentage 
points of GDP in 2022 to 31.9 percentage points of GDP in 2070. The increase of 5.1 
percentage  points  of  GDP  by  2070  is  mostly  due  to  pension  and  long-term  care 
expenditure. Pension expenditure is projected to increase by 3.5 percentage points of 
GDP  over  2022-2070,  compared  to  0.4  percentage  points  of  GDP  on  average  in  the 
EU. Belgium's recovery and resilience plan includes a pension reform that aims to help 
address  this  challenge,  alongside  other  objectives  such  as  improving  the  social 
sustainability of the system, incentivising people to remain active in the labour market 
after  meeting  early  retirement  conditions  and  ensuring  greater  convergence  between 
and within pension systems. On long-term care, public spending amounted to 2.3% of 
GDP in 2022 (EU average 1.7%), which made Belgium one of the countries with the 
highest spending on long-term care in the EU. By 2070, long-term care expenditure is 
projected to increase by 1.7 percentage points of GDP, against an average increase of 
0.8  percentage  points  in  the  EU.  In  2022,  spending  on  institutional  care  at  1.4 
percentage points of GDP in Belgium was substantially higher than on average in the 
EU  (0.8  percentage  points  of  GDP).  Available  data  suggest  that  the  share  of  older 
people  placed  unnecessarily  or  at  least  prematurely  in  a  residential  care  facility 
remains  high,  although it has been decreasing  over the last  decade.  In particular, the 
data pointed out that the share of individuals who are independent or mildly dependent 
on care and living in residential care facilities was high in Brussels and Wallonia. The 
federated  entities  have  started  reforms  to  make  the  use  of  the  different  care  settings 
more  cost-efficient,  particularly  to  avoid  and  delay  unnecessary  or  premature 

22 

European  Commission  and  Economic  Policy  Committee,  2024  Ageing  report,  available  at: 
https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-
projections-eu-member-states-2022-2070_en 

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institutionalisation.  However,  the  level  of  progress  made  on  addressing  the  fiscal 
sustainability challenge needs to be improved. 

(21)  Belgium belongs to the countries that have the highest tax and spending levels in the 
EU.  Total  spending  includes  a  high  level  of  tax  expenditure  and  wage  subsidies. 
Moreover,  the  design  of  its  tax  system  and  social  benefits  creates  financial 
disincentives  to  work  and  contributes  to  the  low  labour  market  participation  rate  in 
Belgium  (76.1%  vs  the  EU  average  of  80.0%  in  2023  (20-64  age  group)).  Labour 
taxes  (personal  income  taxes  and  social  contributions)  are  the  highest  in  the  EU  for 
low  wage  and  average  wage  earners,  while  revenues  from  consumption  taxes, 
including  energy  taxes,  are  below  the  EU  average.  For  second  earners,  specific  tax 
features like the ‘marital quotient’23 create strong disincentives to work. Moreover, the 
design  of  social  benefits  discourages  people  from  taking  up  work  or  working  more 
hours. Many social benefits are status-dependent and not means-tested, hampering the 
efficiency  of  the  benefits  system.  Unemployment  benefits  are  unlimited  in  time  and 
not means-tested for the long-term unemployed, which worsen existing unemployment 
traps. Shifting the tax burden away from labour to other tax bases and improving the 
efficiency of the tax and benefit system could help increase employment. 

(22) 

In a context of structural consolidation needs, a labour tax reduction would need to be 
fully  financed,  including  by  reducing  tax  expenditure  and  by  gradually  phasing  out 
fossil  fuel  tax  subsidies.  The  heavy  tax  burden  on  labour  is  offset  by  many  wage 
subsidies  and  tax  deductions  are  extensively  used  in  Belgium.  Analysis  by  the  High 
Council  of  Finance24  found  that  tax  expenditures  are  costly  for  the  budget,  tend  to 
favour high-income earners and create inefficiencies. Tax expenditure with the highest 
budgetary cost include the company car scheme and the withholding tax exemption for 
R&D  and  shift  work.  Wage  subsidies  and  other  tax  expenditure  also  make  the  tax 
system  complex, adding to  the high  regulatory burden and  weighing on the business 
environment. Moreover, R&D tax support is not targeted towards companies with the 
highest  growth  potential25.  Some  features  of  the  tax  system  also  distort  investment 
choices and risk leading to overinvestment in certain assets. In 2021, Belgium’s direct 
fossil fuel subsidies were estimated to amount to EUR 12 billion (2.4% of GDP) and 
indirect subsidies to more than EUR 2.6 billion26. Direct fossil fuel subsidies include 
low  excise  duties  on  gas  and  heating  oil  as  compared  to  electricity.  In  combination 
with  high  electricity network costs, this creates  high  price differences between fossil 
fuels and electricity, hindering the switch to greener heating systems27. Moreover, this 
persistent support for heating oil and natural gas contradicts Belgium’s commitments 
to reduce greenhouse gas emissions and improve air quality. Transport and pollution 
taxes are underused (e.g. smart road pricing only applies to heavy-duty vehicles) and 
could  also  help  generate  additional  revenue.  In  a  context  of  increasing  traffic 
congestion and air pollution, tax expenditure, like the partial refund of excise duties on 
diesel  for  professional  road  transporters,  are  particularly  costly  and  harmful  to  the 
environment. 

23 

24 
25 
26 
27 

Belgium applies an income-splitting system ('marital quotient') which allows attributing a proportion of 
the professional income of the earning partner to the non-earning partner. 
High Council of Finance, 2020, Reducing the tax burden on labour and financing options. 
Schoonackers, R., 2020, Tax incentives for R&D: Are they effective? NBB Economic Review. 
FPS Finance, 2024, Inventory of federal fossil fuel subsidies. 
FPS Health and Finance, 2023, The landscape of carbon and energy pricing and taxation in Belgium. 

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(23) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant  country-specific  recommendations.  Within  this  tight  timeframe,  proceeding 
swiftly  with  the  effective  implementation  of  the  plan,  including  the  REPowerEU 
chapter  is  essential  to  boost  Belgium’s  long-term  competitiveness  through  the  green 
and digital transition, while ensuring social fairness. To deliver on the commitments of 
the  plan  by  August  2026,  it  is  essential  for  Belgium  to  significantly  accelerate  the 
implementation  of  reforms  and  investments,  by  ensuring  effective  governance.  The 
systematic involvement of local and regional authorities, social partners, civil society 
and  other  relevant  stakeholders  remains  essential  to  ensure  broad  ownership  for  the 
successful implementation of the recovery and resilience plan. 

(24)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article  18  of  Regulation  (EU)  2021/1060,  Belgium  is  required  to  review  each 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms  the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  Belgium  has  made  progress  in  implementing 
cohesion policy and the European Pillar of Social Rights, but challenges remain. Intra-
regional disparities in terms of economic and social development continue to be high 
in Belgium. It is crucial that the implementation of cohesion policy be stepped up. The 
priorities  agreed  in  the  programmes  remain  relevant.  It  is  particularly  important  that 
there be a quick implementation of the investments to help boost research, innovation 
and  digitalisation  as  well  as  those  related  to  the  green  transition,  climate  change 
adaptation  and  energy  efficiency.  Improving  access  to  employment  and  activation 
measures, particularly for vulnerable groups, long-term unemployed people and young 
people  remains  a  priority.  Continuing  support  to  lifelong  learning  to  improve  the 
mobility and adaptability of workers is of key importance. Furthermore,  encouraging 
active inclusion and employability of disadvantaged groups continues to be necessary. 
Belgium  could  also  make  use  of  the  Strategic  Technologies  for  Europe  Platform 
initiative to support industrial transformation, by further developing advanced digital 
technologies and services, circular and advanced materials as well as capacities related 
to sustainable clean energy, resilient housing and innovation for health. 

(25)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Belgium  faces  several  further  challenges  related  to  labour 
shortages  and  skills  mismatches,  the  integration  of  disadvantaged  groups  into  the 
labour  market,  the  performance  and  equity  of  the  education  system,  the  teaching 
profession  and  also  challenges  related  to  the  business  environment,  the  regulatory 
burden and complexity, as well as restrictions in the service sector. Addressing these 
challenges  could  help  improve the skills  of workers and educational  outcomes  of all 
students, resulting  in increasing  labour  productivity,  and bring employment  closer to 
the national 2030 target of 80%. 

(26)  The  high  job  vacancy  rate  points  to  persisting  labour  shortages,  more  pronounced 
among  technical  occupations  that  are  needed  to  accelerate  the  green  transition.  The 
integration  of  disadvantaged  groups,  including  people  who  attained  a  lower  level  of 
education,  come  from a  migrant  background or  with  disabilities,  continues  to  pose a 
concern.  The  number  of  graduates,  especially  women,  in  science,  technology, 
engineering  and  mathematics  (STEM)  remains  low  (16.4  per  1 000  inhabitants  aged 

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20-29  vs  21.9  in  the  EU).  In  addition,  the  transition  rate  from  unemployment  to 
employment  is  below  the  EU  average.  This  suggests  scope  to  increase  the 
effectiveness of activation policies, particularly by improving the efficiency of public 
employment  services,  better  targeting  measures  to  support  the  labour  market 
integration  of  disadvantaged  groups  and  of  workers  on  long-term  sick  leave. 
Increasing  the  number  of  STEM  graduates  and  the  labour  market  relevance  of 
vocational education and training (VET) in technical professions could further help to 
address  labour  shortages.  The  participation  of  adults  in  learning  is  low,  especially 
among people with lower level qualifications. While measures, such as an individual 
right  of  5  days  of  training  per  year  for  employees  and  individual  learning  accounts, 
have  been  implemented  to  increase  adult  learning,  their  impact  needs  time  to 
materialise and these measures warrant an evaluation. 

(27)  Despite  high  public  spending  on  education,  learning  outcomes  have  deteriorated  and 
there  remain  concerns  regarding  the  inclusiveness  and  equity  of  the  education  and 
training  systems.  The  2022  OECD  Programme  for  International  Student  Assessment 
results show a long-term deterioration in reading, mathematics and science among 15-
year-olds  (25%  underperformed  in  mathematics,  25.3%  in  reading  and  22.4%  in 
science). While Belgium had the highest share of top performers in mathematics in the 
EU in 2012 (19.5%), this sharply declined over the following 10 years (11.5% in 2022, 
Flemish Community: 15%, French Community: 6.9%, German-speaking Community: 
6.4%).  In  addition, 
in  underachievement  between  advantaged  and 
disadvantaged  students  has  widened  since  2018.  The  underachievement  rate  of 
disadvantaged  students  increased  by  9.2  percentage  points,  reaching  45.8%  in 
mathematics  (EU:  48%,  Flemish  Community:  41.4%,  French  Community:  51.1%, 
German-speaking Community: 35.6%). Improving the proficiency in basic skills of all 
students are crucial to favour labour market participation, including of disadvantaged 
groups.  Increasing  the  attractiveness  of  the  teaching  profession,  in  particular  by 
ensuring  job  stability  and  providing  continuous  training  adapted  to  evolving  needs, 
would  help  reduce  a  growing  shortage  of  qualified  teachers,  which  risks  further 
increasing educational inequalities28. 

the  gap 

(28)  Belgium’s business  environment  is  impaired by  a high  regulatory burden and  a high 
level  of  complexity.  The  administrative  burden  on  firms  is  heavy,  particularly  in 
relation to tax and labour law. The costs that SMEs face in complying with labour and 
tax systems are comparatively high in Belgium, in particular for companies that need 
to manage multiple regional systems. Moreover, Belgium has one of the lowest levels 
of  business  dynamism  in  the  EU.  In  spite  of  a  recent  increase,  the  rate  of  new 
businesses  starting  up  remains  low,  notably  for  firms  with  employees.  The  share  of 
high-growth  firms  in  Belgium  is  significantly  below  the  EU  average.  High  trade 
restrictions  in  the  service  sector  may  play  a  role  in  weakening  business  dynamism. 
Lifting restrictions on regulated professions would also need to be addressed. 

(29) 

In view of the close interlinkages between the economies of euro area Member States 
and of their collective contribution to the functioning of the Economic and Monetary 
Union,  in  2024  the  Council  recommended  that  the  euro  area  Member  States  take 
action,  including  through  their  recovery  and  resilience  plans,  to  implement  the 
the  euro  area.  For  Belgium, 
recommendation  on 

the  economic  policy  of 

28 

European Commission, 2023, Education and Training Monitor: Belgium. 

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recommendations  (1),  (2),  (3)  and  (4)  help  implement  the  first,  second,  third  and 
fourth euro area recommendations. 

HEREBY RECOMMENDS that Belgium take action in 2024 and 2025 to:  

1. 

2. 

3. 

4. 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  In  line  with  the 
requirements  of  the  reformed  Stability  and  Growth  Pact,  limit  the  growth  in  net 
expenditure29 in 2025 to a rate consistent with putting the general government  debt 
on a plausibly downward trajectory over the medium term and reducing the general 
government  deficit  towards  the  3%  of  GDP  Treaty  reference  value.  Address  the 
expected increase in age-related expenditure, including by making the long-term care 
system  more  cost-effective.  Reform  the  tax  and  benefits  system  to  strengthen 
incentives to work by shifting the tax burden away from labour and by reviewing the 
design  of  benefits.  Finance  the  labour  tax  reduction,  including  by  reducing  tax 
expenditure. In particular, take steps to phase out fossil fuel subsidies, including by 
shifting excise duties from electricity to fossil fuels. 

Significantly  accelerate  the  implementation  of  the  recovery  and  resilience  plan, 
including the REPowerEU chapter, ensuring completion of reforms and investments 
by August 2026, by ensuring effective governance. Accelerate the implementation of 
cohesion  policy  programmes.  In  the  context  of  their  mid-term  review,  continue 
focusing on the agreed priorities, while considering the opportunities provided by the 
Strategic Technologies for Europe Platform initiative to improve competitiveness. 

Address  labour  shortages  and  skills  mismatches,  including  for  the  green  transition, 
and strengthen activation policies to further integrate disadvantaged groups into the 
labour  market.  Improve  the  performance  and  equity  of  the  education  and  training 
systems and continue reforms to strengthen the teaching profession. 

Improve  the  business  environment  and  business  dynamics  by  reducing  regulatory 
burden and complexity, and by easing the restrictions in the service sector. 

Done at Brussels, 

For the Council 
The President 

29 

According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  ‘net  expenditure’  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 
programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

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