Belgium’s Federal Budget Talks Stall, Move to Working Groups
Belgium’s federal coalition negotiations broke up without agreement on Sunday evening, as the five parties of the so-called “Arizona” coalition remained too far apart on how to close a yawning budget gap. According to VRT NWS, the top-ministers meeting (kernkabinet) ended around 21:00 after reviewing Prime Minister Bart De Wever’s budget note, with talks now shifting into technical working groups. The core cabinet will reconvene on Wednesday.
The government is hunting for roughly 10 billion euros in savings to bring the federal deficit under control by 2029. The unofficial deadline is 13 October, when De Wever is due in parliament for his “State of the Union” address — and by which time the European Commission also expects Belgium’s budget plans.
The two sticking points
Two issues above all others prevented a deal. The first is a proposed VAT reform that would raise the highest rate from 21 to 22 percent while merging the lower 6 and 12 percent rates into a single tier. A more ambitious variant would harmonize those lower rates at 9 percent — effectively raising VAT on food and energy. As Business AM reported, the Francophone liberal MR party fiercely opposes the increase.
The second is planned savings in healthcare, which left-wing coalition partners and Les Engagés consider too far-reaching. Little concrete detail has been released about the exact measures.
‘Differences still too great’
Emerging from Sunday’s session, vice-premiers were candid about the gap. “The differences are still too great and we now have to clarify them further,” CD&V’s Vincent Van Peteghem said, adding that the task was “not to clash with each other, but to achieve results.” MR’s David Clarinval said the cabinet had “gone through everything in detail” and “established that there are still large differences.” Les Engagés’ Maxime Prévot confirmed that work would continue in working groups over the coming days.
N-VA’s Jan Jambon struck a measured tone: “I am not setting a deadline and nobody benefits from a crisis.” Yet pressure is mounting. As VRT NWS journalist Benedikte Coussement put it, the differences are too great to “go all the way to the finish,” while “pressure from Europe and the financial markets is increasing, because Belgium is one of the worst pupils in the European budgetary class.”
According to La Libre analyst Frédéric Chardon, all five parties have good reasons to avoid the coalition collapsing — none benefits from early elections at this stage. The public finances are drifting: revenues stagnate while social spending soars, expected growth hovers near zero, and debt interest costs are dizzying. De Morgen noted that the federal budget is projected to run a 30.3 billion euro deficit next year, rising to 38.3 billion — about 5.2 percent of GDP — by 2029.
A broad and fragile coalition
The government, formed on 31 January 2025 after 236 days of negotiations, spans an unusually wide ideological range: Flemish nationalists (N-VA), Flemish socialists (Vooruit), Francophone liberals (MR), and Christian democrats from both language communities (CD&V and Les Engagés). Nicknamed the “Arizona coalition” after the US state flag whose colors match the parties, it has struggled to reconcile Flemish demands for institutional reform with Francophone resistance to cuts seen as unbalanced.
The stakes carry an institutional dimension too. Flemish Budget Minister Ben Weyts (N-VA) renewed his push for greater autonomy, saying Flanders had balanced its own books. “If we can solve our own problems with our own money, we will move forward,” he told VRT NWS. “We occupy the Belgian fort now — temporarily — out of necessity. But I don’t want someone else’s fort, I want my own Flemish fort.”
Brussels strikes a deal
As federal talks faltered, the Brussels regional government reached an agreement on its 2027 budget after a two-day conclave. According to VRT NWS, the region committed to halving its deficit from more than 1.3 billion euros to 719 million. “Everyone had to make an effort,” said Brussels Minister-President Boris Dilliès (MR), who added that no linear tax increases would hit residents. The deal avoids MIVB public transport fare hikes, funds 92 new firefighters, and introduces a drugs commissioner, while trimming public-sector staffing and scrapping the Activa employment subsidy.
What to watch
The path to a federal deal runs through two unresolved files: the VAT reform and healthcare savings. With the Wednesday core-cabinet meeting looming and the 13 October deadline fixed, negotiators have little room for delay. Whether De Wever can convert his “choice menu” of measures into a package all five parties can sign remains the central question — and one that will define both his State of the Union and Belgium’s standing with its European partners.
One certainty, as Coussement observed, is that the pressure will not ease. Belgium’s creditors and its EU peers are watching, and the arithmetic of the deficit leaves little room for the kind of open-ended negotiation that produced this coalition in the first place.