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Tuesday 5/2/2019
Johan Van Gompel

Over the last three years, Belgium's public debt has fallen by more than 4 percentage points of GDP, after having risen sharply during the financial crisis. This reversal is good news and was mainly due to stronger economic growth and fiscal consolidation. However, at 103.4% of GDP, the debt ratio remained among the highest in the euro area in 2017. To further reduce the debt to a sufficient extent, the primary budget surplus should continue to build up in the short term to above 2% of GDP, in line with the target set in the Stability Programme. In the longer term, new savings should -preferably be made at the same time to offset the costs of an ageing population. Otherwise, a declining primary surplus threatens to ultimately increase the debt without it having sufficiently fallen towards the 60% level. To reduce the debt ratio structurally in the context of a normalisation of the current historically low interest rate, the growth potential of the economy will also have to be increased. Despite the still high debt, Belgium is maintaining market confidence. This is related to the relatively healthy position of the private sector, as a result of which the Belgian economy as a whole is in a very positive net asset position vis-à-vis the rest of the world.

Thursday 30/3/2017
Jan Van Hove & Lieven Noppe

In this research report we discuss the main fiscal policy proposals that have so far been put forward by the new US President Trump, starting with a brief overview of recent evolutions in US public finances and related projections under current policies. Our main conclusion is that Trump’s proposals are not well designed for spurring economic growth significantly, but are likely to further deteriorate the already worrisome fiscal position of the US economy. Notwithstanding the Republican majority in Congress, Trump will have to compromise on his ideas, which will temper sustainability risks of government finances. At the same time, such compromises are likely to lead to disappointment in financial markets that are currently anticipating a strong economic boost.