Belgium – Broad Coalition Formed
In early October, some 21 months after the collapse of Charles Michel’s center-right government in December 2018, and more than 16 months on from a general election held in May 2019, the Parliament confirmed a new majority government made up of the liberal, socialist, and green parties representing the Dutch- and French-speaking sections of the country, along with the Flemish Christian democrats. Prime Minister Alexander De Croo will have his work cut out for him maintaining harmony within a governing alliance dubbed the “Vivaldi Coalition” (a reference to the composer’s “Four Seasons”) in a nod to the ideological diversity of its constituent parts.
Positively, the coalition includes neither of the Flemish nationalist parties nor the leftist PvdA-PTB whose comparatively radical policy demands might have created a distraction from the immediate and daunting task of addressing the threat to public health and the economic damage created by the COVID-19 pandemic. Belgium has reported the fastest rate of spreading infection among EU countries amid a region-wide surge in new COVID-19 cases, forcing the government to impose a second national lockdown that is scheduled to continue at least until mid-December.
The healthcare system is overstretched—Belgium is already sending some non-COVID patients to Germany for treatment—and Belgians are bracing for a bleak winter. Public support for the government could plummet as the death toll rises, undermining the basis for cohesion within the coalition.
The coalition agreement includes anti-crisis stimulus measures such as a hike in the minimum wage and increased spending on public services, and also commits the government to achieving the EU’s carbon-reduction target and phasing out nuclear power by 2025. How policy makers intend to achieve those objectives without jeopardizing longer-term fiscal stability is not at all clear, especially when one factors in plans to boost public investment to 4% of GDP and maintain high levels of spending on education, healthcare, and security.
In the near term, the general government deficit is forecast to approach 10% of GDP, pushing the gross public-sector debt burden up from 98.1% of GDP last year to more than 117% of GDP by the end of 2020. Even assuming a robust economic rebound as soon as next year, the deficit is forecast to average close to 6% of GDP in 2021–2022, necessitating heavy borrowing that will continue to push the debt burden higher.
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