Fiscal consolidation in federal Belgium

Abstract

This article analyses fiscal consolidation policy in federal Belgium in the period 2009–14, until the initial 2014 budget. It relies on documentary analysis and interviews to examine the intensity, content and decision-making process of this policy. Explanations for this particular fiscal consolidation policy are looked for in the macro-economic context, the political-administrative system, and external influences. We find generally modest budget cutbacks punctuated by an exceptionally significant budget exercise. This pattern is best explained by the tensions within the Belgian political-administration, generating policy continuity, and by external pressure, that allowed policymakers to overcome these tensions.

Points for practitioners

Beyond providing insight into the specifics of fiscal consolidation in federal Belgium, this article allows a better understanding of why governments engage in fiscal consolidation the way they do. Emphasizing that fiscal consolidation is an essentially political process influenced by national and international factors, our analysis helps practitioners to understand how national and international arguments can be mobilized in national political contexts to trigger policy changes.