What the budget crisis means for the Treasury: higher interest, possible provisional twelfths and a 26 billion deficit
While the King keeps De Wever's resignation under consideration, economists point to rising interest costs, although a ULB economist expects no major shock to the economy.
The collapse of the federal government's budget talks comes at a time when the Belgian state is already paying more to borrow. Yields on Belgian government bonds have risen sharply in recent months, writes Reuters, citing De Tijd. The five parties failed to agree on a package of around 10 billion euros in savings and taxes for the 2027 budget. Prime Minister Bart De Wever warned, according to Reuters, of a vicious circle in which rising debt and interest costs force the government to borrow to pay the interest on existing loans.
Business AM sets out the practical consequences. Without a breakthrough, the state may have to operate on provisional twelfths, releasing spending month by month on the basis of the previous budget. Even with a quick deal, getting the budget through parliament on time remains a challenge. The dispute centres on a larger contribution from the broadest shoulders, which CD&V, Les Engagés and Vooruit are calling for and N-VA and MR reject. A year ago, a similar deadlock was resolved with a 9.2 billion euro savings plan.
Maxime Fontaine, a public finance specialist at ULB, puts things in perspective in L'Avenir. In his view the crisis mainly adds a layer of uncertainty without really disrupting the economy, and the 10 billion effort being sought is rather modest compared with the deficit. The Federal Debt Agency estimates that deficit at 26.37 billion euros for 2026, with federal debt of 581.5 billion. With a borrowing cost of 4 to 4.5 percent, Fontaine does expect difficult years for public finances. He considers a credit rating downgrade unlikely, pointing to France, whose rating held despite a worse situation.