Charles Michel To Lead New Belgian Federal Government

Belgium has a new federal government agreement. The future ruling coalition concluded a 28-hour marathon talk to settle the budget and come to a governmental agreement five months after the federal elections. The coalition parties of the federal government, ranked according to number of seats in Parliament, will consist of: the Flemish nationalists (N-VA – 33 seats), the Walloon liberals (MR – 20 seats), the Flemish Christian-Democrats (CD&V – 18 seats) and the Flemish liberals (OpenVLD – 14 seats).

Walloon liberal Charles Michel (son of MEP Louis Michel) will become Belgium’s youngest prime minister at 38 years old, and will be sworn in on Saturday, October 11. He will also be the first French-speaking liberal leader of the country since 1938.

One of the principal aims of the new center-right government is to cut Belgium’s debt, currently among the highest in the eurozone at over 100% of GDP, and achieve a balanced budget by 2018. Detailed budgetary plans will emerge today, but these are expected to include more spending cuts than tax hikes.

Here is a summarized overview of the first details of the agreement.

PENSIONS

One certain measure is that the four coalition parties agreed to raise the state pension age to 67 from 65 from 2030 onwards. 65 remains the legal pension age until 2024; in 2025, it increases to 66 and to 67 in 2030. It will also become easier for retired citizens to be professionally active; they will be allowed unlimited income from 65 years of age  or earlier in case of 45 years of professional career.

EMPLOYMENT

Unemployment benefits will not be limited in time, contrary to earlier ideas floated. However, long-time unemployed will need to perform community services two half days per week. The automatic indexation of salaries (annual adjustment of salaries to inflation) remains, despite pressure from the European Commission and attempts of some of the coalition parties to remove it. We are likely to see the annual indexation skipped for one year, however. Finally a jobs plan will be activated, paying attention to factors such as reduction of costs, work experience, youth unemployment, longer & more varied careers and gender equality. An integration project will also help people with a handicap on the job market.

BUDGET

As mentioned, the coaltion will look at serious (around €8 billion) spending cuts. Taxation is expected to be decreased by €400 million, although a ‘tax shift’ will be enacted with income from specific areas (tbc which ones). €3.6 billion will be injected in the competitiveness of companies. It is also likely that some income will be collected through the taxation of big fortunes, although it is not clear yet how that will happen specifically.

ENERGY

Nuclear power plants Doel 1 & 2 will be kept open 10 years longer until 2025, if the damaged reactors in Doel and Tihange remain non-operational. The coalition also opens the door for the possible building of a new nuclear power plant.

Analysis provided by Christophe Diercxsens, Director, FTI Consulting. Originally posted on AmCham Belgium

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