A phase of expanding economic activity that has been
underway for the last five years and a whole host of different
economic policy measures, have helped strengthen the
fundamentals of the Belgian economy. The widening of the
employment base, on the back of a great deal of job creation,
the extension of working life and the strengthening of the
situation in the financial sector are examples of significant
progress in this respect.
The risks and uncertainty weighing on the international
economy nevertheless intensified considerably in 2019 and
economic activity and international trade have decelerated. At
the same time, while the impact of population ageing is
becoming increasingly evident, a general sentiment of losing
control and being left behind is emerging among some segments
of the population, in response to technological change,
globalisation and the challenge of climate change.
The Eurosystem's monetary policy, which is likely to remain
accommodating for some time yet, could, to a certain extent,
have a moderating influence in the face of an economic
slowdown. However, it cannot remove every risk and it provides
no answers to the structural challenges.
In this context, the next few years must be used proactively
to build up the resilience of the economy and its growth
potential. This will involve making sure of a stable and
durable outlook on the macroeconomic, fiscal and financial
fronts, so that individuals and companies alike can make
informed decisions on long-term commitments. The context in
which the economy turns must also foster dynamism and a
capacity to adjust among all the different economic
stakeholders – companies and individuals alike.
There is, of course, no miracle solution for fulfilling this
ambition but the actions of all the various policymakers must
point in this direction. In my view, the most important lines
of action for Belgium should comprise three aspects.
First, is getting more people onto the labour market and
keeping them there. This should be done by optimising the
financial incentive to work and aligning wage developments with
local and sector labour market conditions, but also by greater
efforts in education, skills and lifelong learning. This can
help boost the economy's production capacity at the same time
as achieving wider social inclusion.
Second, is revitalising productivity gains, as their sharp
slowdown is compromising income growth and the long-term
sustainability of the social model. What is needed is to
encourage wider diffusion of innovation potential, currently
concentrated in the hands of a small number of top-performing
firms and sectors.
Third is boosting the economy's agility to enable a smoother
and more efficient allocation of human capital and physical and
financial capital to the most promising activities.
Consolidation of public finances is key to speeding up debt
reduction and improving the economy's resilience in bad
economic times. Consolidation must follow the guiding principle
of a quest for efficiency in all aspects of government action
– whether it is public spending, and not least
infrastructure investment, or taxation or regulations
– so as to maximise its contribution to the growth
potential and put in place conditions conducive to an efficient
energy and environmental transition.
Essentially, even in a globalised world subject to rapid
technological innovation, national authorities' ability to
decide on and implement appropriate policies can make a
difference for our fellow citizens, offering them the
opportunity to reap the fruits of economic development. A
shining example of this comes from the small open economies in
the EU, such as the Nordic countries.