7th Jul 2022

Belgian bond costs soar after government talks fail

  • Belgian politics is worrying the markets (Photo: O Palsson)

The latest collapse in talks to form a government in Belgium has sent investors running, amid fears the core eurozone country could face similar problems to Greece.

The country’s cost of borrowing money soared over five percent on Tuesday (22 November) to an almost-10-year high, after would-be prime minister Elio Di Rupo handed in his resignation on Monday, marking a preliminary end to a-year-and-a-half-long attempts to reach a deal.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Belgian EU trade commissioner Karel De Gucht warned earlier this month that his country might be “next” on the markets' radars if it did not manage to agree and draw up a budget for 2012. Belgium's debt is almost at 100 percent of GDP - the third-highest in the eurozone.

The European Commission expects to receive the new budget by mid-December. Next year's spending programme will have to see cuts of more than €11bn to stay below the EU-imposed deficit ceiling of three percent.

Before the summer, the commission also told Belgium it had to introduce a series of austerity measures, including cutting spending on pensions and unemployment benefits to keep its debt down.

Government negotiations have been marred by disagreement on how to implement the commission's recommendations. Di Rupo’s Socialist Party sees them as “a source of inspiration”. The liberals, who are being blamed for the breakdown in talks, see them as obligations.

“I am not going to make a budget that will be rejected three weeks later. If the other parties declare that they are willing to translate the European requirements into a budget, then things can go quickly,” said Alexander De Croo, leader of the Flemish liberals on Monday evening.

The situation represents something of a turnaround in the eurozone crisis. While governments in Ireland, Portugal, Greece and Italy have been toppled by the eurozone woes, in Belgium the crisis is preventing a government being formed.

The king, recovering from surgery to his cheek, has once again called for “calm” and “a period of reflection”. He met the leaders of four negotiating parties on Tuesday. The liberals are expected to arrive at the castle of Ciergnon, in the Belgian Ardennes, on Wednesday morning.

EU commissioner: Belgium could become the next Greece

Belgian EU commissioner Karel De Gucht has warned that his country could be in line to suffer a Greek-and-Italian-type loss of market confidence if it does not quickly form a new government.

Belgium rescues troubled bank amid ratings warning

The Belgian state has said it will pay €4 billion to purchase Dexia, a Franco-Belgian-Luxembourg bank with high exposure to Greek debt. The move comes two days after Moody's warned it may downgrade Belgium's rating.

Germany no longer immune to crisis

Germany had significant trouble offloading its bonds on Thursday in a sign that the eurozone crisis has spread to the very heart of Europe.


'War on Women' needs forceful response, not glib statements

Some modest headway in recognising the unrelenting tide of discrimination and violence facing women worldwide was made at last week's largely self-congratulatory and mostly irrelevant G7 talk-fest. But no one mentioned abortion, just days after the Roe vs Wade decision.

News in Brief

  1. France to nationalise nuclear operator amid energy crisis
  2. Instant legal challenge after ok for 'green' gas and nuclear
  3. Alleged Copenhagen shooter tried calling helpline
  4. Socialist leader urges Czech PM to ratify Istanbul convention
  5. Scottish law chief casts doubt on referendum
  6. British PM faces mounting rebellion
  7. Russian military base near Finnish border emptied
  8. Euro slides to lowest level in two decades

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Legal action looms after MEPs back 'green' nuclear and gas
  2. EU readies for 'complete Russian gas cut-off', von der Leyen says
  3. Rising prices expose lack of coherent EU response
  4. Keeping gas as 'green' in taxonomy vote only helps Russia
  5. 'War on Women' needs forceful response, not glib statements
  6. Greece defends disputed media and migration track record
  7. MEPs adopt new digital 'rule book', amid surveillance doubts
  8. 'World is watching', as MEPs vote on green finance rules

Join EUobserver

Support quality EU news

Join us