Belgium

Belgium is often considered a deeply divided society. Flanders is more affluent and productive than Wallonia, and the economic and political gap between Dutch-speaking and French-speaking Belgians keeps widening. This creates significant tension and may lead to the disintegration of the country – not through war, but through the dismantling of social security links, growing disparities in public service provision, and increasing barriers to mobility. Elections will be held in 2024, and it is worth noting that traditional parties representing the historical segments of society (Liberals, Christian Democrats, and Social-Democrats) are losing ground to far-right (Vlaams Belang), far-left (PTB-PVDA), and regionalist (N-VA) parties. The far-right might win the election in Flanders and become the largest party in the Chamber of Representatives, while the far-left is making significant gains in Wallonia and Brussels. This ideological polarization between the regions will make coalition-building increasingly difficult, and finding common ground will be a key challenge for Belgium.

Another challenge is to improve the socioeconomic performance of the country as a whole. This requires a systematic evaluation of each policy and taking immediate corrective, sometimes radical, measures when needed – contrary to the current practice of sluggish adaptation through compromise. The multiparty government coalition, encompassing a wide range of political ideologies, complicates decision-making and makes cohesive reforms challenging to implement. Belgium has one of the highest public deficits in the euro area, reminiscent of the 1980s when corrective measures were taken. The next government will need to replicate this success. With the second-largest government budget in Europe, expenses must be cut. This will be unpopular since a significant portion of the budget goes to social transfers, healthcare, and tax expenditures. However, freeing up resources is necessary to achieve the digital and green transformation of the country. Currently, Belgium is a weak performer in CO2 emissions per capita, energy efficiency, and modern infrastructure. The tax system requires comprehensive reform and simplification. The current system, riddled with exemptions, benefits those who can navigate its complexities more than those who focus on their core jobs. A simplified and equitable tax system can promote compliance, enhance revenue, and reduce distortions. The incumbent government is the third in a row to fail at comprehensive tax reform. The next one must succeed.

Given its size and central location in Europe, Belgium should not undertake these reforms alone. It should build a coalition of willing eurozone countries to align social and fiscal rules. This coalition can work toward harmonizing exemptions and tax bases to combat fiscal injustice and money laundering. At home, Belgium faces growing mismatches between the skills employers require and those possessed by workers. This weighs down on jobs and wages and hinders the greening of the economy, as new skills and different enterprises are in high demand. Resolving such mismatches requires a more adaptable education system that emphasizes problem-solving and other general skills. The education system also fails non-native speakers, who underperform in both PISA tests and the labor market. Bridging these gaps is essential to tackle political tensions, including racism, and to improve the economy’s dynamism.

Clearer signals to the youth about high-demand skills can guide their educational choices, ensuring they are well-prepared for the labor market. Another important issue is ageism. Facilitating mid-career retraining can help workers adapt to changing job requirements, enhancing their employability.

Finally, the current institutional setting must mature toward efficiency. The model of federalism does not provide sufficient authority to the federal level over its federate entities. This often leads to uncoordinated, sometimes contradictory, measures being implemented in each region. Business conditions also differ across regions. For instance, emission standards for mobile phone masts differ in Brussels and its periphery. Belgium needs simpler and leaner administration, which will not materialize without some form of institutional rationalization. This can only happen through the recentralization of some devolved competencies, though regionalists will claim the opposite.

Amid the challenges posed by external factors such as geopolitical tensions and global warming and internal factors like public debt and population aging, improvements must be assessed based on their capacity to unlock resources aimed at resolving these issues. The required amounts are substantial: Belgium must reinforce public transport, modernize its car fleet, make real estate more energy-efficient, modernize its electricity grid, transform electricity generation, and provide incentives for fuel and energy economy.

In short, Belgium has proven resilient but slow to adapt. Now, it must accelerate its efforts to become more nimble and fit for the future.

Caluwaerts, D., and K. Deschouwer. 2014. “Building Bridges Across Political Divides: Experiments on Deliberative Democracy in Deeply Divided Belgium.” European Political Science Review 6 (3): 427-450.