Belgium

major macro economic indicators

(e): Estimate (f): Forecast

Last updated Economic indicators : February 2024

RISK ASSESSMENT

Durably robust growth

In contrast to many other European countries, the Belgian economy showed resilience in 2023 thanks to private consumption. The reason for this stronger consumption is the automatic indexation of Belgian wages to the cost of living, which was originally a public scheme, but has traditionally been copied by most unions and employers. A time lag of several quarters (wages are adapted once or twice a year in these cases) pushed gross wages up by between 10.4% year-on-year (services) and 7.6% year-on-year (industry) in 2023, after already strong increases in 2022 (between 12.6% year-on-year in services and 8.1% in trade). This ongoing robustness was the main growth driver, in contrast to neighbouring countries. In 2024, the Belgian economy will continue to benefit from this situation especially in light of the GDP tailwind from the previous year (statistical overhang). However, private consumption could be a bit more timorous. The inflation rate came down sharply towards the end of 2023, but went up again and will probably stabilise between 3.5% and 4% over 2024. Wage growth, however, is expected to be noticeably lower compared with that of the last two years, so that real wages, should rise only modestly in comparison. Corporate investment should also support economic growth, but within limits. The corporate labour costs skyrocketed over the last years due to the automatic indexation of wages and resulted in a noticeable reduction of corporate profits. Hence, their financial leeway is narrower. Lower interest rates should ease the pinch somewhat. On that score, the ECB is expected to embark on a cautious rate-cutting period as of June 2024. A total of up to three cuts are in the pipeline for 2024. However, the number and scope of these cuts will clearly depend on (core) inflation and nominal wage trends in Europe. At the same time, while the ECB will fully reinvest the principal payments from maturing securities purchased under the Pandemic Emergency Purchasing Programme (PEPP) during the first half of 2024, it intends to reduce reinvestments by €7.5 billion per month in the second half of the year and cease completely thereafter. Private residential investment could also benefit from lower interest rates. However, it is expected that banks will take some time to translate the ECB’s rate cuts into their loans. Therefore, a cautious turnaround in the construction sector is not expected until the last quarter of the year. Some support for growth should also come from government expenditures, especially in the first half of the year before the June elections. These investments should concentrate on infrastructure projects. Last, foreign trade was a drag on growth for most of 2023. In 2024, a timid improvement should be visible as recovering purchasing power in neighbouring countries would benefit the Belgian export business. Nevertheless, due to the loss of price-competitiveness of Belgian products, the recovery of original exports – 40% of Belgian exports to the rest of the European Union are re-exports – should be limited.

Noticeable public deficit keeps public debt level high

The public deficit is expected to remain high in 2024. While energy price support measures stopped in mid-2023 and are therefore not relevant for the budget of 2024, Belgium is maintaining its support for Ukraine, with military equipment purchases, humanitarian aid and reconstruction measures. The State will incur further costs from the automatic indexation of wages (even more so with pensions) and local government investments are expected to peak ahead of the election due at the start of the summer of 2024. However, following the elections, in the (probably long) process of building a government coalition, the caretaker government must comply with the current budget plan and cannot decide on additional expenditures. This will prevent the budget deficit from increasing further. Nevertheless, public debt will remain very high and far exceed the fiscal rules of the EU that have reapplied as of 2024, which would require a noticeable reduction in the public deficit.
Although the level of the current account deficit did not change much in 2023, its structure has. Exports and imports of goods both fell sharply, with the latter significantly more than the former, resulting in an improvement of the trade in goods deficit balance. This was levelled out by a noticeable deterioration of the trade in services deficit. Similar patterns were visible in the balance of income. While the primary income surplus (the balance on investments) improved, the deficit on secondary income (the transfer of money for example from from foreigners to their families abroad) increased. In 2024, the trade in goods’ balance should improve further thanks to higher exports, while the balance on services should decrease due to higher prices for tourism activities abroad. The balance of income, however, should remain roughly unchanged.

Repetition of the Vivaldi coalition, with possible Christian-Democratic addition

Prime Minister Alexander De Croo, a Flemish Liberal, leads a large-scale coalition with 87 out of 150 seats in the House of Representatives. The coalition is known as the “Vivaldi” coalition due to its four-group composition: socialists, liberals, environmentalists, and Christian Democrats. It includes seven parties: the French-speaking Socialist Party (PS), with 19 seats and the Dutch-speaking socialists, Vooruit (with 9), the French-speaking green Ecolo (13) and the Dutch-speaking environmentalists Groen (8), the French-speaking liberals of MR (14) and the Dutch-speaking liberals Open VLD (12), as well as the Flemish Christian Democrats, CD&V (12). The parties’ ideologies are not aligned, but the government has managed to hold on to power. One reason for this resistance is the fear of extremist parties coming to power after the far-right Flemish nationalists (VB) registered their sharpest gain in votes at the last election in 2019.
Looking at the next election in June 2024, the overall direction of the next Parliament is very difficult to predict as the already fragmented political landscape has drifted even wider. According to the latest polls, Flanders is and will remain firmly in the hands of the nationalists and right-wing conservatives. The Flemish Nationalists Vlaams Belang (VB, 26% share in the Flemish polls) and the New Flemish Alliance (NVA, 20%) have together a huge majority in their province. However, in Wallonia, the political landscape is the complete opposite. In that part of the country the PS is in the lead (23% in the Walloon polls), followed by the MR (20%). Holding a share of around 18% of both local polls, the Marxist Worker’s Party of Belgium (PTB/PVDA) is another important force. In Brussels, the MR is in the lead (23% of the regional polls). Due to this polar opposition in regional preferences, it is certain that it will take again a long time to build a coalition after the election. The last time it took 494 days between the election and the swearing-in of the cabinet. The most probable result from the current polls would be that the Vivaldi coalition could carry on, which would mean keeping the far right and far left out of government. If the current coalition parties failed to secure a majority, the Walloon centrist and former Christian-democratic party LE (17% in the Walloon polls) could join the coalition.

Last updated: June 2024

Payment

Bank transfers (SEPA & SWIFT) and electronic payments are the most frequently used methods of payment for businesses.

Cheques are seldom used and only in certain sectors (e.g. transport, fruit and vegetable wholesale). As cheques no longer benefit from a guarantee from the issuing bank, the cheque issuer’s account needs to contain sufficient funds in order to be for the cheque to be cashed. Issuing a cheque with insufficient funds is a criminal offence.

Bills of exchange are no longer used for payment in Belgium, except in certain sectors and in international transactions.

Payment defaults are no longer recorded in the Moniteur belge (MB, Belgian Official Journal), but they can be consulted on the National Chamber of Bailiffs’ website, where data is available to banks and professional organisations.

Debt Collection

Amicable phase

There are no special provisions for out-of-court debt recoveries between businesses. Creditors should attempt to gain payment from debtors by sending written reminders. Before beginning legal action against a debtor company, it is often worthwhile asking a lawyer to check the database of seizures.

Legal proceedings

Judgments are normally delivered within 30 days after closure of the hearings. A judgment is rendered by default in cases where debtors are neither present nor represented during the proceedings.

Fast track proceedings

This procedure is rarely used in business-to-business cases, and cannot be implemented when the debt is disputed. A 2016 law implemented a new set of procedural rules, creating an out-of-court administrative procedure for non-disputed debts. When an order of payment has been issued, the debtor has a month to pay the amount. If the debtor refuses, the creditor can request a bailiff to issue a writ of execution. Moreover, under the new rules, lodging an appeal against a judgment will no longer suspend the enforceability of this judgment. Consequently, even if the debtor starts appeal proceedings, the creditor will be able to pursue the recovery of the debt.

Retention of title clause

This is a contractual provision stipulating that the seller retains title of goods until receipt of full payment from the buyer. Unpaid creditors can make claims on goods in the debtor’s possession. It therefore follows that the retention of title clause is enforceable in all situations where creditors bear losses arising from insolvencies, whatever the nature of the underlying contract. When goods sold under retention of title are converted into a claim (after a sale), the seller-owner’s rights referring to this claim (the selling price) are known as real subrogation.

Ordinary proceedings before the commercial court

All disputes between companies can be tried by the Commercial Court in Belgium. In cases of cross-border claims using European legislation, a European execution for payment proceedings can be enabled. Claimants also have recourse to European small claims proceedings.

Summon on the merits

The bailiff assigns the debtor a court date for the introduction of the case. If discussions do not take place, judgement will follow within four to six weeks. If there are discussions pending, parties need to put their intentions in written conclusions. After judgement, there is a possibility to appeal – if no appeal is filed, the execution will follow through the bailiff.

Attachment procedure

This judicial proceeding is conducted for the benefit of only one party (ex parte). There are three essential conditions to proceed with an attachment:

• urgency of the measure;
• prior authorisation of the judge is required to lay a conservatory attachment;
• the debt must be certain, collectable and liquid.

A debtor may request the cancellation of the attachment if it has been unjustly imposed. However, once an attachment has been imposed, it remains valid for a period of three years. Subsequently, a conservatory attachment may be transformed into an execution order. 

Enforcement of a Legal Decision

A judgment becomes enforceable once all venues of have been exhausted. If the debtor refuses to execute payment, a bailiff can attach the debtor’s assets or obtain payment through a third party (Direct Action).

Foreign awards can be recognised and enforced in Belgium, provided that various criteria are met. The outcome will vary depending on whether the award is rendered in an EU country (in which case it will benefit from particularly advantageous enforcement conditions), or a non-EU country (for which normal exequatur procedures are applied).

Insolvency Proceedings

Bankruptcy proceedings

Debtors can file for bankruptcy when they have ceased making payments for some time, or when the creditor’s confidence has been lost. If bankruptcy is granted, creditors must register their claims within the time prescribed in the court’s insolvency declaration. Failure to do so on the part of a creditor will result in the cancellation of their priority rights. The court then appoints a trustee, or official receiver, to verify the claims. The retention of title clause can be cited by the creditor, in order to claim his property.

Since 2017, submissions of claims where bankruptcy procedures are involved must be made electronically, via the Central Solvency Register (www.regsol.be), which records all bankruptcies over the last 30 years.

Judicial restructuring process

The judicial restructuring process (reorganisation judiciaire), designed to reorganise a company’s debts with its creditors, can be granted by the court upon request of any debtor facing financial difficulties that threaten its continued business in the short- or medium-term. The debtor makes a reasoned application to the Registry of the Commercial Court in order to be granted an extended period to pay the debt. This extended period is normally set at six months, during which the debtor must propose a reorganisation plan to all of its creditors.

Outstanding creditors (those whose claims arose before the commencement of the extended period) cannot begin any execution procedure for the sale of real or personal property of the debtor, but can request enforcement of their retention of title clause. Nevertheless, the extended period does not prevent the debtor from making voluntary payments to any the outstanding creditors. In addition, the extended period does not benefit co-debtors and guarantors, who are still required to meet their commitments.