While governments in Belgium are doing their utmost to help citizens stay safe and businesses afloat during the COVID-19 pandemic, the current health crisis has exposed core weaknesses in the country’s governance model, including its inefficient and complex division of competences and decision-making processes.
Belgium’s political and administrative structure, which has grown more complex over the years due to regionalization, is difficult to understand and discourages investors and businesses. It results in administrative burdens, inefficient public services and policy inconsistencies between different levels of government. In the World Economic Forum’s (WEF) Global Competitiveness Index, Belgium ranks 53 of 141 countries for public sector performance and 94th for the burden of government regulation. Belgium is a small but complex country, and that has real consequences for citizens and companies alike.
This is also reflected, for example, in government spending which, standing at 52.2% of GDP, is among the highest in the EU. While the multiple administrative layers in Belgium add to the costs, other federal states, such as Germany and Switzerland, are nonetheless more efficient. This suggests that there is room for improvement in Belgium, and that regionalization does not necessarily equate to less efficiency or higher spending. Measures to boost competitiveness are possible and can also be seen through the lens of public finances – creating jobs and reducing unemployment will decrease social security costs while increasing economic output and tax revenue.
The enormous budgetary impact of the COVID-19 crisis also clearly indicates that a “business as usual” approach to government spending is no longer sustainable. The government deficit will balloon to 11.2% of GDP in 2020 and public debt is expected to reach 118.6% of GDP by 2022, according to the European Commission’s latest forecast. Clear budgetary choices will need to be made. Focus should go to the efficiency and affordability of spending.
Our ambition is for Belgium to achieve a top ten position in the WEF’s Global Competitiveness Index by 2030, up from 22nd today. To climb the ranks, Belgium’s governance structure will need to become simpler and more efficient. In today’s context, simplicity is key to attract foreign investment and achieve sustainable economic growth, which is needed to successfully jump over the stumbling block created by the COVID-19 pandemic.
As we recommend in our 2020 Priorities for a Prosperous Belgium, urgent, thorough and comprehensive remediation of malfunctioning state structures and administrations is required. To manage upcoming challenges and put the state at the service of citizens and companies, we need to simplify the way the country is organized and governed. This, in turn, will result in a more efficient and prosperous Belgium.
AmCham Belgium recommends
Simplify the way Belgium is organized and governed
- Manage the country more efficiently by avoiding fragmentation of competences and by introducing homogenous packages at the appropriate government level.
- Manage government spending more efficiently by focusing on core competences and by making clear budgetary choices that promote economic recovery and growth.
- Cut administrative burdens by simplifying and digitalizing administrative processes (e.g. permits), including judicial procedures, further building on good (and sometimes new) practices learned during the COVID-19 crisis.
About the author
Optimistic and always willing to discuss legal and economic developments, Gauthier translates expertise from our members to new policy opportunities for the Chamber. He gets his energy from either sports or breakfast.