“The European economy is doing better than we expected last fall,” European Commissioner for the Economy Paolo Gentiloni said in a presentation on the spring outlook. “We have avoided a winter slump and are on track for moderate growth this year and next.”
What a contrast to the fall of last year, when we were still heading into recession after the Russian invasion of Ukraine and the sharp rise in energy prices. But Europe has shown that it has managed to turn around very quickly and reduce its dependence on Russian gas.
As a result, the European Commission sees a rather rosy future. The euro countries’ GDP is expected to grow by 1.1% this year. In the winter, the commission was still assuming growth of just 0.9 percent. Ireland (5.5%), Malta (3.9%) and Greece (2.4%) lead the group.
The outlook for Belgium was revised from 0.8 to 1.2 percent, which is a significant improvement. Next year, the Belgian economy should grow by 1.4 percent. The committee assumes that the indexation of automatic wages and social benefits will help maintain purchasing power, but also notes that higher wages and tightening financial conditions are affecting the business climate.
“We are quite stable in this regard within the eurozone, as expected,” says economist Gert Noelz (Econopolis). But this is at the expense of exports and investments. This is one trade off This is confirmed by the commission for the first time.”
It is also remarkable that nowhere in the eurozone will real wages rise more this year than in Belgium, by 5.3 per cent. Luxembourg comes closest, at 3.8 percent. Due to automatic indexation, our wages track inflation. Real wages will decline slightly this year in Germany and France. Inflation in the eurozone is expected to reach 5.8 percent this year, and Belgium fares much better here at just 3.4 percent.
The debt mountain is growing again
But the sore spot for our country remains the budget deficit. The Commission estimates that this increase will rise from 3.9 percent last year to 5 percent this year due to increased spending, due in part to the index of civil servants’ wages, social benefits and higher interest costs. In the eurozone, only Slovakia and Malta are worse. Thus, the debt of the Belgian government will increase from 105.1 percent to 106 percent this year.
Only in Greece, Italy, Spain, France and Portugal is the debt mountain even higher. But the debt in those countries will decrease to a greater or lesser extent next year, while the Belgian debt will increase to 107.3 percent. Nowels: “We underestimate the budget issue. And it is unlikely that it will be resolved anytime soon with the next elections.”
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