The short-term economic figures still look good in Belgium, but tensions are piling up below the waterline, says the FEB. ‘We are already missing investments because the wage handicap is increasing.’
Pieter Timmermans, CEO of the Federation of Enterprises in Belgium (VBO), compared the situation of the Belgian economy in the presentation of his half-yearly business survey to an iceberg. An iceberg with a small, beautiful white-looking part above the water, and a dangerously large part under water, which we threaten to collide with, just like with the Titanic. What sticks out above the waterline is what is still going well in the Belgian economy. Real purchasing power will increase by 3.5 to 4 percent this year, jobs will be created, inflation will drop and economic growth will be higher in Belgium than in other countries. But that’s the short term. Politicians seem to reason that nothing is wrong. As a result, this government continues to postpone any serious reform. That is dangerous. The current growth has been doped by purchasing power measures that cost the government money.’
Timmermans therefore refers to what is below the waterline. “Government debt continues to rise, while interest rates rise. For every 100 people who leave the labor market due to retirement, only 82 newcomers are available. And because of our automatic wage indexation, the difference in wage costs between Belgium and the neighboring countries has risen from 10 to 15 percent.’ According to Timmermans, a year before the elections, the current government does not seem to be making any preparations for a serious labor market, pension or tax reform. “And when they do something, it goes in the wrong direction. She extinguishes the fire with gasoline. The tax reform should increase purchasing power, which is already increasing considerably. The reform is financed by weakening competitiveness (eg by scrapping certain favorable measures for companies, ed.), while it is already deteriorating.’ He fears that Vivaldi also wants to award each party a trophy, which will further increase the budget deficit.
Not back to the 1970s
According to Timmermans, the consequences are already being felt. ‘Relocating activities from Belgium is no longer taboo for companies. I hear from international companies that an investment in Belgium is becoming less of an option. Our trade balance is also negative, which means we are transferring wealth to foreign countries.’
He warns that Belgium risks falling into the crosshairs of the financial markets in the absence of reforms, especially if we enter a difficult post-electoral period. ‘Companies absolutely do not want to go back to the 1970s, when there was great immobility in politics during a very difficult economic period. In that decade, the national debt rose from 30 to 130 percent.’
8.5 percent less new construction this year
The new building will be hit harder than expected. In a new estimate, sector organization Embuild assumes that 8.5 percent fewer new houses will be built this year. For non-residential buildings (factories, offices), this is a drop of 3.3 percent. Embuild sees two reasons why new construction is declining so fast: the sharply increased interest rates on mortgage loans (from 1 percent to 3.5 percent), in addition to the prices of building materials, which are 35 percent higher than before corona. Yet it is not all doom and gloom. The renovation market would rise by 2.4 percent. Infrastructure works will increase in the year before the municipal elections and would increase by 4.7 percent. (sdc)
2023-06-27 13:35:28
#VBO #denounces #Vivaldis #immobility
