Home News 2006 ushers in host of changes, expectations

2006 ushers in host of changes, expectations

Published on 02/01/2006

2 January 2006

BRUSSELS — Various new regulations and expectations accompanied the start of 2006 over the weekend, such as domestic workplace anti-smoking laws and a forecast decline in the global economic growth rate.
The International Monetary Fund (IMF) has predicted the globe’s economy will continue to grow this year — but at 4.3 percent, the same rate as that recorded in 2005.

Analysts widely agree a growth rate of about 3 percent will be recorded in the US, with a forecast decline in the second half of the year, newspaper ‘Het Nieuwsblad’ reported.

That will in turn strengthen the euro, leading to reduced European economic growth. Nevertheless, the IMF has forecast eurozone economic growth of 1.9 percent.

Interest rates are also set to increase this year, with the long-term rate in the US rising from 4.25 to 4.75 percent and rates expected to rise in Europe to a maximum of 2.75 percent. However, the interest rate rises are expected to stop mid-2006.

The global price of oil will fall to EUR 53 per barrel, down from the EUR 55 recorded this year. Oil prices are expected to fall to EUR 47 in 2007. The current capacity shortfall is expected to become a surplus by the end of this year.

The Belgian National Bank expects domestic economic growth of 2.2 percent in 2006. Analysis firm Graydon expects fewer bankruptcies in the second half of the year, but the rapid-bankruptcy of start-up companies will limit the overall impact.

In regards new regulations, the ban on smoking in the workplace will come into force this year, meaning smokers may only light up in designated smoking rooms or outside, broadcaster VRT reported.

House rents may be increased by 2.33 percent, but this will only apply to contracts that ended on 1 January and contracts drawn up before 1981. All other rents may only be raised when the rental contract’s timeframe ends.

Restaurant expenses will become 75 percent tax deductible (up from 50 percent) and people who buy their first car this year save EUR 31 euros with the abolition of licence plate costs. The cost of getting married will be reduced by EUR 50.

A 15 percent tax on obligations comes into effect on Monday and a tax of 1.1 percent is being imposed on life insurance premiums (pension savings plans are exempt).

A fiscal amnesty on illegal savings abroad will continue until 1 July 2006. Those who report their investments on time will need to pay tax, but escape being fined.

The private use of company cars will become more expensive in 2006 and pre-marriage savings plans will be converted to pre-co-habitation savings schemes.
It is already known that 17,680 jobs will be lost this year, most of which will take place at the Belgian Post, with 6,640 jobs to be cut by 2010.

Additionally, Belgacom will sack 2,500 workers, DHL 1,700 by 2008, Arcelor (Cockerill) 700, ING 700, Fortis 600, Bekaert Textiles 450, Inbev 306 and Pioneer 280.

Shares will yield on average 10 percent in Europe, but savings schemes and obligations will yield just 2.5 to 3.35 percent. Many analysts expect reduced growth or even a decline in shares in the second half of the year.
Shares from Asia and Central Europe are expected to perform best. Belgian bank KBC expects the best sector to be the software industry, where firms Oracle, Microsoft, SAP and IBM will perform well.

In Belgium, many analysts expect bank shares such as Dexia to grow. Telecoms shares such as France Télécom and even Belgacom are also tipped to perform well.

[Copyright Expatica News 2006]

Subject: Belgian news