Belgium has a money problem. But I’m increasingly convinced it’s not the one we usually talk about. The standard story is familiar: government is too big, spending is too high, taxes are too high, and eventually we’ll have to cut everything.
There’s some truth in that. Belgium ended 2025 with a budget deficit of 5.2% of GDP and public debt of 107.9%. The National Bank expects both to worsen further. At the same time, Belgium still taxes labour more heavily than any other OECD country.
We already collect enormous amounts of money. And we’re still borrowing enormous amounts of money. On top of that, many people don’t feel like they live in an extraordinarily well-run country. In product management, we call that a resource allocation problem.
The Belgian loop
A lot of Belgian policy makes sense once you see it as compensation for previous policy.
- We make labour expensive.
- So we introduce wage subsidies.
- Those subsidies cost money.
- So taxes stay high.
- High taxes create strange incentives.
- So we add exceptions.
- Those exceptions create disparities.
- So another group gets compensated.
Eventually you end up with something recognisably Belgian: almost every individual rule has a reasonable explanation, while the system as a whole is completely insane.
I don’t think the answer is to take a proverbial chainsaw to the state. I think you have to simply stop adding compensations for previous compensations, and start to unwind the loop.
Separate the problems
There are two different problems we keep mixing together.
- The deficit.
- The way we tax work.
If Belgium wants to cut labour taxes by, say, €15–16 billion, that should be paid for by removing roughly the same amount in subsidies, exemptions and other tax advantages. That would be a tax shift, but it would not yet fix the deficit.
Separately, Belgium needs a structural budget improvement through slower spending growth, higher employment and a more productive state.
Separating those two already makes the debate more sensible.
Make every euro compete
This is probably the reform I care about most.
Every meaningful subsidy, tax exemption and government programme should have a clear objective, an owner, a way to measure whether it worked, and an expiry date.
After five years, ask a simple question: did the thing we said would happen actually happen?
If yes, renew it. If partly, redesign it. And if it didn’t work, stop.
Government can always choose to keep an ineffective programme for political reasons. That’s democracy. But then the choice should be transparent and explicit:
This costs €600 million a year. Independent evaluation found that it does not achieve its stated objective. We have decided to continue funding it anyway.
Trade bad bargains for better ones
I notice that most reforms fail because they are introduced one by one.
Remove a subsidy and companies revolt. Introduce road pricing and drivers revolt. Restrict construction outside cities and homeowners revolt. Change pension privileges and beneficiaries revolt.
So perhaps the unit of reform should be the exchange.
Remove business subsidies and lower general labour taxes. Charge for congestion and remove existing car taxes. Protect open space and make housing much easier to build around cities and railway stations. Make labour markets more flexible and provide better childcare, retraining and income protection. Simplify pension privileges and strongly protect the minimum pension.
If we do that, the political question changes from What are you taking away from me? to What bad bargain are we replacing with a better one?
Make Belgium easier to operate
A state is not a company, but entropy works surprisingly similarly. I’ve seen this repeatedly over the past decade: if you don’t actively simplify, you get systems on systems on systems with 90% overlap that try to achieve mostly the same outcome.
For example: Belgium should become much easier to build in. Housing permits should have deadlines. Infrastructure decisions should have deadlines. Businesses should not spend years waiting for administrative uncertainty to resolve itself.
Belgium also doesn’t need another grand institutional revolution. Federalism isn’t going away. But political autonomy does not require every government to duplicate payroll systems, procurement, identity, payments, digital mailboxes and basic IT infrastructure.
Different governments can make different political choices while sharing more of the machinery underneath. For every major outcome, we, citizens, should be able to answer one simple question:
Who owns this outcome?
We seem to be world class at making that difficult.
The goal
I wouldn’t even make eliminating public debt the objective. The goal is to get onto a trajectory where the economy grows faster than the debt.
Reduce the deficit. Balance ordinary current expenditure over time. Borrow for genuine emergencies and productive investment, not because recurring spending exceeds recurring revenue every year. And reduce taxes on work while doing it.
Because a Belgium that balances its budget while continuing to make work absurdly expensive has solved only half the problem.
The destination I find interesting is not a smaller Belgian state for the sake of it. It’s a state that does fewer inexplicable things.
Belgium is already an extraordinarily wealthy country. Maybe the great economic reform project isn’t figuring out how to become rich.
Maybe it’s figuring out how to stop being so expensive at being rich.