Belgian deficit to be contained at 2.15% in 2014

Belgium’s federal government agreed about a minimal stimulus package as part of a 2014 budget deal that relies on an economic recovery to boost tax revenue and meet the deficit goals agreed with the European Commission, writes Bloomberg’s John Martens. The budget assumes fiscal takings will rise by more than 5% next year as the Belgian economy recovers, compensating for lower revenue from financial institutions and an increase in welfare spending. Balanced regional budgets and a small surplus at the level of municipalities should help contain Belgium’s nominal deficit to about 2.15% of GDP in 2014, prime minister Elio Di Rupo said. “We continue to apply the Belgian prescription, which consists of a mix of savings and supporting businesses and the purchasing power of consumers,” Di Rupo told reporters in Brussels yesterday. He said the government couldn’t reach an agreement to apply a reduced VAT rate for electricity. Di Rupo said the government will continue talks about toughening the Competition Act, designed in 1996 to keep Belgian labour costs from rising faster than those in neighbouring countries. The 2014 budget is based on a forecast for economic growth of 1.1% next year after stagnating this year.