Belgian premier-to-be sets out way ahead

Belgium’s new premier-to-be Elio Di Rupo sets out the way ahead Sunday after ending 19 months of political deadlock with an 11th-hour budget deal that met EU requirements hours after a brutal downgrade.

Refreshed after 18-hour breakthrough negotiations wrapped up Saturday, Di Rupo and the other five party leaders in the deal are due to meet the media at 3.30pm (1430 GMT) in the national parliament in Brussels to lay out his government timetable.

The big absence will be Bart De Wever, the nationalist leader of the Flemish N-VA, the biggest vote-grabber in elections, who controls the biggest bloc of seats in the parliament and whose supporters demand ever-greater autonomy.

Right now, though, a delighted King Albert II, who only last week refused Di Rupo’s offer to quit, has invited Di Rupo “to finalise a government as quickly as possible,” which Belgian media says could be completed within days.

Reports Sunday said Di Rupo will outline new taxes on windfalls and stocks as well as reforms to early-retirement and unemployment benefits underpinning the new budget deal, which envisages a return to balanced national books in 2015.

The Belgian state expects to rake in nearly an extra billion euros per year by taxing high income from property, targeting those who pull in more than 20,000 euros per year from rentals, RTL television said on its website.

Di Rupo is also believed to want to target profits made by companies on stocks investments, daily Le Soir said, while an increase in the age at which workers can take early retirement, from 58 to 60, enters force early, in 2016.

Unions, though, stuck Sunday to their pre-agreement call for a national protest on December 2, amid plans to shorten the length of time workers can claim unemployment benefit based on previous incomes.

The Belgian employers federation, for their part, said the deal had still not addressed index-linked salary increases, which they pinned as one of the main liberal reforms demanded by the European Union.

More than 500 days into the national struggle to craft a workable government, the 2012 budget, crucially, will see Belgium’s public deficit fall to 2.8 percent of gross domestic product (GDP) if respected.

That is enough to avoid the ignominy, repeatedly threatened for the middle of next month, of punishment leading to a possible hefty fine from the EU’s new ‘euro’ commissioner Olli Rehn.

In the end, though, it was a lashing from one of the world’s top three credit rating agencies — Standard & Poor’s — that led squabbling Flemish and French-speaking parties to bury the hatchet and find a middle ground.

Negotiators for the six parties said in their statement that their agreement “meets Belgium’s commitments to the European Union.”

With Belgium’s national debt worth almost one year’s economic output, outgoing Prime Minister Yves Leterme had made it clear he feared a rout when markets reopen on Monday if a way forward was not settled.