Belgium competitiveness reforms seen supporting growth and public finances

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Belgium competitiveness reforms

Highlights

OECD projects Belgium GDP growth slowing from 0.9% in 2025 to 0.7% in 2026 before recovering to 1.0% in 2027, with inflation at 3.6% in 2026.
The OECD calls for spending restraint, reforming tax expenditures, and linking retirement age to life expectancy to address rising public debt and ageing costs.
Improved skills investment, wage-setting flexibility, and regulatory reforms are recommended to boost competitiveness, business performance, and decarbonisation in Belgium's industrial sector.

OECD outlook highlights reform priorities

As reported by OECD, its latest Economic Survey of Belgium projects GDP growth slowing from 0.9% in 2025 to 0.7% in 2026 before rising to 1.0% in 2027. Inflation is projected at 3.6% in 2026 and 3.4% in 2027, compared with 3.0% in 2025.

The report says Belgium's high and rising public debt makes spending restraint and the removal of ineffective tax expenditures central to fiscal consolidation. It adds that broader spending reviews, better public investment planning and pension reform, including linking the retirement age to life expectancy, would help limit ageing-related costs.

The OECD also says improving competitiveness will require more investment in skills tied to the digital and energy transitions, alongside a more flexible wage-setting framework. It adds that a stronger regulatory framework and more effective, efficient support for research and development would help lift business performance and growth potential.

Ageing and decarbonisation shape longer-term costs

By 2050, one-quarter of Belgium's population is expected to be aged 65 or older, increasing pressure on long-term care and public finances. The report says expanding home-based care could improve quality of life while helping contain costs, while better coordination among healthcare providers and healthier lifestyles would improve efficiency.

In the industrial sector, continued decarbonisation is presented as a way to strengthen resilience to future energy shocks. The OECD says better coordination of climate mitigation policies across federal and regional governments, the elimination of fossil fuel subsidies and energy tax reform would help Belgium meet climate targets at lower cost while accelerating emissions reductions.

In our earlier article on Mario Draghi’s warning about debt, inflation and investment, we explained how policymakers risk undermining long-term growth if debt control and inflation fighting squeeze the productive investment needed for resilience. We also noted his argument that central banks should prioritise price stability while keeping rates no higher than necessary, alongside broader EU-level measures to support innovation and productivity.

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