Belgium Targets €6.7B Savings by 2029 in New Budget Plan

The Belgian federal government, led by Prime Minister Bart De Wever, must find at least €6.7 billion in savings by 2029 to meet EU fiscal rules — a significantly higher target than the €4.9 billion previously estimated by the Monitoring Committee in March 2026. The revelation comes from an internal government note obtained by Het Laatste Nieuws, as the Arizona coalition prepares for what Budget Minister Vincent Van Peteghem has described as a “marathon” of negotiations.

Context: A Deepening Fiscal Challenge

Without intervention, the federal deficit is projected to reach €35.8 billion — 4.9% of GDP — by 2029. Even with the full €6.7 billion in savings, the deficit would still hover around 4% of GDP, or over €31 billion. The government has already cut €32 billion in previous budget rounds, making further reductions increasingly painful and likely to impact citizens directly.

A major driver of the deteriorating fiscal picture is defense spending. Belgium is pushing to meet NATO’s 2% GDP target, with defense expenditure rising from €8 billion to €13 billion. An EU exemption that temporarily shields these costs from deficit calculations expires in 2029, causing the shortfall to spike.

Key Measures in the Law-Program

The Chamber adopted the law-program (loi-programme) on the night of 28–29 May 2026 after months of political tensions and a chaotic parliamentary process, as reported by La Libre Belgique. The package includes several concrete changes affecting households and workers.

Salary Indexation Cap

Salaries below €4,000 gross per month will continue to be indexed normally. For salaries above that threshold, indexation is capped at 2% for the portion up to €4,000, while the portion above is frozen entirely. This measure applies twice between now and 2029. Social benefits and pensions face a similar cap with a threshold of €2,000 gross per month. The measure was initially projected to yield €883 million by 2029, though recent estimates suggest lower returns.

Pension Reform

The reform introduces a “malus” for early retirement: workers must have worked 156 days per year for at least 35 years, with five days of flexibility granted. Missing years reduce the pension amount. A “bonus” system rewards those born in 1973 or later who work beyond retirement age with a 5% increase per additional year. Military and railway workers’ retirement age will gradually rise to 67. The PTB (far-left) and FGTB (socialist union) have announced plans to challenge the reform at the Constitutional Court.

Energy Taxation

Gas excise duties will rise progressively from €8.23/MWh currently to €13.60/MWh by 2029. For an average household consuming 17,000 kWh per year, this means an extra €37 in 2026, rising to approximately €97 by 2029. Electricity excise duties for non-protected households will decrease slightly from €46/MWh to €38/MWh over the same period, signaling a policy shift away from fossil fuels and toward electrification.

Embarkation Tax and Author’s Rights

The embarkation tax on flights departing from Belgium will double from €5 to €10 per passenger, effective 1 January 2027, with the distinction between short and long-haul flights largely disappearing. Wallonia has expressed concern about the impact on Charleroi Airport’s competitiveness.

The favorable tax regime for author’s rights — used by IT workers, lawyers, and journalists — is being tightened. A worker earning €10,000 in author’s rights will lose approximately €750 net per year; at €30,000, the loss reaches roughly €1,900.

Political Dynamics and Timeline

The budget negotiations expose deep fault lines within the five-party Arizona coalition, which spans Flemish and French-speaking parties from the center-left to the right. N-VA insists on maintaining defense spending increases, while CD&V and Vooruit have questioned the pace of military expansion. MR, facing declining poll numbers, is sensitive to tax increases that could hurt its base.

Prime Minister De Wever initially targeted 21 July 2026 — Belgium’s National Day — for a budget agreement, but this is widely considered ambitious. The real deadline is mid-October 2026, when the budget must be submitted to the European Commission and De Wever delivers his State of the Union address to parliament.

Analysis and Outlook

The €6.7 billion target represents the minimum needed to satisfy EU expenditure rules, not a path to fiscal health. The Court of Audit (Rekenhof) has warned that the government may be overestimating “return effects” and that €15–20 billion in savings could ultimately be required. The cap on salary indexation remains the most controversial measure, opposed by both unions and employers alike.

As the coalition enters what Budget Minister Van Peteghem calls a “marathon,” the central question is whether the government can hold together through the July–October negotiations and avoid the kind of last-minute crisis that forced De Wever to threaten resignation to secure a deal last November. With the opposition using parliamentary tactics to delay legislation and social partners mobilizing against key reforms, the path to fiscal consolidation remains steep — and the destination uncertain.