Political crisis will hurt economy

13 September 2007

BRUSSELS – There will be an economic price to pay for the political crisis in the country, warns governor Guy Quaden of the National Bank. Measures needed for the budget, competitive strength and employment are on hold.

The longer the political crisis lasts, the smaller the change that Belgium will be able to realise the budget surpluses in 2007 and 2008 that are necessary for the stability programme. Moreover, 2009 is an election year once again, Quaden says.

“The budget targets are not there to please Europe, but to be able to pay the costs of the ageing society in future,” he stresses.

Necessary decisions on competitive strength and employment are also being postponed. “That comes at a price,” Quaden warns.

Quaden says that the euro is responsible for the fact that the crisis has not yet had an impact on the Belgian economy. If the country still had its own currency then it would undoubtedly be under heavy pressure on the currency markets, with all the negative effects that come with that.

Quaden is concerned about the credibility of Belgium on the international stage. He fears that the crisis will have negative effects on Belgian influence in Europe.

The governor expects the recent financial unrest surrounding the credit crisis to have limited economic effect.

Subject: Belgian news