Belgium forges budget compromise, aims to shave €9.2 billion from deficit by 2029

Belgium’s government reached agreement on next year’s budget after marathon negotiations that stretched overnight into Monday, Prime Minister Bart De Wever said on November 24. The five party coalition approved a package that pairs spending restraint with new revenue measures, including higher taxes on share purchases, airplane tickets, natural gas and a new levy on banks. Reuters reported the deal aims to reduce the deficit by roughly €9.2 billion by 2029.

The compromise closes a politically sensitive chapter for a coalition that has struggled to hold together on fiscal priorities since taking office. De Wever had set an internal deadline to finalize the budget, and the settlement means the government will present a concrete plan to Brussels as it seeks to stay in line with European Union fiscal rules. Compliance with the EU Stability and Growth Pact has been a central objective for ministers and market observers, who have watched Belgium’s large public debt load for years.

Economically the package is a calibrated mix of austerity and revenue raising. Higher levies on financial transactions and on banks are intended to capture revenue from the financial sector and curb volatility in short term trading. Levies on airplane tickets and natural gas are projected to raise receipts while also nudging behavior in sectors that have generated political attention over emissions and energy consumption. The government’s stated deficit reduction target of €9.2 billion by 2029 implies a multi year consolidation path that will be closely watched by investors assessing sovereign risk.

The budget will carry near term costs. Households could face higher costs for air travel and energy bills, and companies in the finance and aviation sectors will confront increased taxes that could be passed through to consumers or weigh on investment. Labor unions have warned that the package, coupled with planned pension changes, crosses red lines. A national three day strike has been planned in protest, and officials expect travel disruptions and public service interruptions as unions mobilize.

For markets the deal reduces some uncertainty about Belgium’s fiscal trajectory, but it also leaves open questions about growth and debt dynamics. Sovereign bond investors typically price both consolidation credibility and economic momentum. If the measures succeed in narrowing projected deficits without substantially slowing growth, Belgian yields could benefit. If the measures trigger protracted industrial action or damp private demand, the consolidation could be more costly and investor sentiment could sour.

Longer term, the agreement reflects broader European tensions between fiscal responsibility and social stability. Many EU governments face aging populations, costly energy transitions and the need to maintain public services while meeting debt targets. How Belgium balances tax changes, spending discipline and structural reforms will matter for its growth prospects and for its ability to finance a large public sector without recurring political crises. For now the government has met its deadline, but the coming weeks of protests and the economic responses they provoke will determine whether the budget delivers the fiscal gains it promises.