May 29, 2023

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Europe gives Belgium breathing room in the budget, but is also tapping our country's toes |  Capital

Europe gives Belgium breathing room in the budget, but is also tapping our country’s toes | Capital

The European Commission is giving Belgium and other EU member states some breathing room in the budget for a year longer. After the Corona pandemic, it is the war in Ukraine, high energy prices, and ongoing disruption in supply chains, that are prompting the Commission to end the strict financial rules in the freeze department. However, the day-to-day management of the European Union is sharp in its reporting on our country.

The commission presented its policy recommendations for 2022 and 2023 on Monday. Even more surprising is the decision to postpone the strict enforcement of fiscal rules (deficit less than 3% of GDP, debt less than 60%) for another year. This should also give member states room in the budget in 2023 to bear the costs of the energy crisis and the Ukraine crisis.

Belgium’s ‘prudent fiscal policy’

That is why the Belgian report stated that further work on debt reduction and sustainable fiscal policy should continue only “in the period after 2023”. However, this does not mean that there is an absolute mandate for the unlimited expenditures, according to the commission.

This is how you become Belgium “prudent fiscal policy” Essentially, this means that current spending should not increase faster than expected economic growth. According to the commission, this will be an average of 1.4 per cent in the coming years, although this analysis does not take into account after the reforms contained in the recovery plan introduced by Belgium last year.

Commission Vice President Valdis Dombrovskis does not want to talk about the suspension of financial rules. Dombrovskis said member states that frequently break the rules can still open the so-called excessive deficit measure next year, “based on the recommendations we make today.”

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There is still a lot of work to be done

Policy recommendations are more than just a budget. For example, the commission again asks a Tax reform and unemployment benefits reform “To discourage work less.” The Committee believes that there should be simplification in both areas and the burden on employment should be reduced.

what emergency measures In the context of the energy crisis and the war in Ukraine, the Commission requests that it be “temporary and purposeful”. For example, with the recent reduction in the special excise tax on diesel and gasoline and the reduction in value-added tax on gas and electricity, there is a risk that these measures will become permanent.

The Committee does not direct the same criticism to social averageBecause this is by definition goal oriented. However, Minister of State for Budget Eva de Bleecker (Open VLD) on Monday morning warned against a long extension of the measure. She said that would not be very wise given the state of public finances. at An interview with our newspaper last weekend The Secretary of State said he would do everything possible to achieve a budget deficit of less than 3 percent by 2024.

According to the commission, our country must work on the sustainability aging costs† Its impact on the Treasury risks increasing 3.6 percentage points by 2040 and 5.4 percentage points by 2070. The fact that there will be pension reform was already included in the recovery plan last year, but the Commission is now also insisting on measures for elderly care. You still see margin for efficiency gains in the use of the healthcare environment. More concrete thinking is needed for more home care, because at least one in four people living in a residential care center ends up being too early or not absolutely necessary.

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The Committee is remarkably keen on Education in Belgium† Whether a student successfully completes his or her educational career in our country has a lot to do with socioeconomic background and whether or not the student in question has an immigrant background. This finding is not new, but the gap has since grown to become one of the largest in the entire European Union, says the Commission. The teaching profession must also be made more attractive – Flanders in particular has a shortage – and more efforts must be made towards dual learning.

Separate attention in the recommendations goes to energy transmission† In the context of “REPowerEU”, a plan to help accelerate the transition, Belgium is also urged to take additional steps to accelerate the development of sustainable energy sources and ensure that they can become climate neutral by 2050.

For example, there is still much scope for solar and wind capacity, the commission quotes from a report provided by grid operator Elijah. However, the commission noted that large energy infrastructure projects could continue due to “numerous, repetitive and lengthy appeal procedures”.

Last week, when it proposed the “REPowerEU” scheme, the Commission said it wanted an additional €20 billion in support, which could be obtained from the sale of allowances currently placed in the Market Stability Reserve (ETS) of the Emissions Trading System. to be. If the Council and the European Parliament agree to this proposal, on the basis of the distribution key used by the Commission 300 million euros for Belgium set aside.

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