the Minister with tailwind and the Secretary of State in the corona storm

Under the Michel government, the budget could still benefit from a favorable tailwind, the De Croo government had to deal with a violent corona storm. ‘The Minister of Budget in this country does not have an overall picture of public finances.’

The liberals do not have such a good reputation when it comes to managing public finances’, says budget expert Wim Moesen (KU Leuven). Economist Etienne de Callataÿ puts it more sharply: ‘The governments of Verhofstadt, Michel and now De Croo did not pursue sound budgetary policies. Governments with a liberal prime minister are proving to be very bad for our public finances. ‘

Under the Swedish coalition and in the Vivaldi government, we not only had a liberal prime minister, but there were also liberals in the budget department. Under Charles Michel (MR), there was first his party colleague Hervé Jamar for a year, and when he was appointed governor of Liège, Sophie Wilmès became budget minister.

Under Alexander De Croo (Open VLD), his party colleague Eva De Bleeker did not become a minister, but became secretary of state for the budget. It is noteworthy that she was added to Justice Minister Vincent Van Quickenborne (Open VLD). ‘I do not know what the logic is,’ says public finance expert Herman Matthijs (VUB and UGent). “De Bleeker is also responsible for consumer policy, but what can you do about it if you are in charge of the budget? If she had been responsible for, for example, public office or administrative simplification, it would have been in line with the budget ‘.

Governments with a liberal prime minister turn out to be very bad for our public finances.

Etienne de Callataÿ, economist

What the specialists also continue to find strange is that in Belgium the power over budget and economy does not belong to one hand. ‘In a normal country, there is only one person who is responsible for budget, expenses and finances, income,’ says Moesen. Matthijs agrees: ‘The Minister of the Budget does not have a complete picture of our public finances and can therefore do much less.’

bicycle tourist

When the Michel government took office in 2014, it formulated a very clear objective: By the end of the term of office, the budget should be structurally balanced. Moesen: ‘The Michel government reduced the deficit from 3 percent to less than 1 percent in 2018, but used a trick: Companies had to pay more tax in advance. And then she still did not get the promised 0 percent. ‘ De Callataÿ: ‘Under the Michel government, we had relatively good years, but we did not take the opportunity to make our public finances structurally sound.’

André Decoster, professor of public finance at KU Leuven, also fuels budget policy under Michel: ‘The government inevitably came to a short time and pushed its self-defined goal back year after year.’ According to Decoster, the decline in the deficit was largely explained by the economic situation and not by government policy. ‘A cycling tourist who boasts of his average speed, but who had strong tailwinds the whole course, or who mainly had descents in front of his wheels: it was the Michel government. She deserves a seriously unsatisfactory budget ‘, is his conclusion.

Umbrella

The Croo government was confronted with the corona crisis, for which it had to set aside a lot of money: extra spending on the health sector, on purchasing power and on keeping the industrial substance liquid. ‘Therefore, it is difficult to compare that government with the Michel government in terms of budget,’ all the specialists believe. Due to the corona crisis, the budget deficit increased from 1.9 percent in 2019 to 9.1 percent of GDP in 2020. Last year, it was 5.5 percent, and a deficit of about 5 percent is expected this year.

Moesen: ‘The corona crisis has affected us a little less economically than other European countries, and we have also recovered a little faster. This was due to things like temporary unemployment and all sorts of additional government measures. But it costs money, 20 billion in 2020. In 2021, it was still 14 billion. We could still have reduced those measures more. And the government continues to spend money, for example with an energy check of 100 euros for everyone. In addition, it gets less money due to the reduction of VAT on energy from 21 to 6 percent. So the shortage will hardly be less ».

De Callataÿ: ‘The Croo government has been too generous with its support measures and also too little selective: why should everyone, for example, receive that energy check of 100 euros?’ Moesen points out that the De Croo government is making wise use of the flight clause that Europe is offering: ‘Europe suspended the budgetary rules. Member States ‘budget deficits should not fall below 3% in 2021 and 2022, and it has now been extended to 2023. That umbrella is being put to good use by the government.’

Everyone looks with a fearful heart at what will follow. ‘Aging costs are hitting now’, says economist Gert Peersman (UGent). ‘We have postponed it, but the budget deficit will increase in the coming years as a result.’ Matthijs: ‘High inflation is not good news either, because we have to pay more interest again if we borrow. The interest burden will again weigh on our public finances. ‘

Moesen: ‘I hope the De Croo government will establish a clear anchor point in the coming weeks on where it will hit with the budget. The most important principle remains that you only borrow for investments, not for current expenses such as paying civil servants. Whether the government will establish such an anchor point? I doubt. I think De Bleeker is interested in that, but does she weigh enough as Secretary of State? ‘

Next week

Pensions with Daniel Bacquelaine (MR) and Karine Lalieux (PS), and finance with Johan Van Overtveldt (N-VA) and Vincent Van Peteghem (Open VLD)

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