After months of tense negotiations and a three-day strike, the five-party coalition reached a 2026 budget deal ahead of the December 2025 deadline set by PM De Wever. The agreement aims to restore political credibility and tackle Belgium’s status as one of the Eurozone’s weakest fiscal performers, with a projected deficit of 5.5% of GDP in 2026 and 5.9% in 2027 without corrective measures. Main measures include tackling long-term sick leavers' return to work and introducing temporary caps to automatic wage indexation. Cuts to public services will be balanced by higher military spending (to 2% of GDP) and targeted growth/social cohesion investments. Postponed income tax reduction plus higher VAT/excises, airline ticket taxes, the e-commerce levy and increased wealth/banking taxes together generate additional resources. The package should bring progressive savings (from EUR2.1bn in 2026 to over EUR9bn in 2029), though the deficit will remain above 5% in 2026 and only decline to 4-4.5% by 2029. 

The catch-up in insolvencies began early, in 2022, and proved substantial, rising by around 20% per year between 2021 and 2024. The number of bankruptcies reached a 12-year peak in 2025, with roughly 11,700 cases (+6%). Construction, trade, and hospitality made notable contributions, while most other sectors, including B2C services and transport/storage, also saw increases. A meaningful reduction in insolvencies is expected only 2027 with the economy resuming pace. We anticipate a gradual easing back toward the 2016–19 average by the end of 2027, with around 11,000 cases in 2026 and 9,900 in 2027. 

Belgium’s industrial sector continues to grapple with persistent headwinds as manufacturing sentiment remains muted amid global trade uncertainty, cyclical pressures and deep-rooted structural challenges. While services and construction have recorded modest gains, industrial activity has largely stagnated. In 2024, the sector accounted for 13.2% of Belgian gross value added in current prices, with pharmaceuticals (23.0%), food (16.2%), chemicals (12.0%) and metals (10.5%) together representing nearly two-thirds of the total. Yet even these heavyweight industries are showing limited dynamism. The pharmaceutical sector—traditionally a pillar of resilience —has been weakened by intensifying international competition and softer demand following cuts to US humanitarian aid programs. Chemicals remain flat and food processing, though stable, lacks forward momentum. Many firms are prioritizing cost controls, directing investment mainly towards environmental upgrades required by regulation rather than toward growth-oriented innovation. An exception is defense-related manufacturing, where increased military spending has boosted turnover and improved the outlook for companies operating in this niche. 

Belgium remains an extremely attractive place to invest. The country is strategically situated at the heart of Europe and is home to many EU institutions, NATO and numerous multinational company headquarters. It has an international rail, air and shipping infrastructure that makes it one of the best locations for industry and logistics.

Belgium is governed by a five-party coalition led by Prime Minister Bart De Wever from the New Flemish Alliance (N-VA). The coalition includes parties from both sides of the linguistic divide, reflecting Belgium's federal structure and the need for cross-community cooperation. The political landscape remains highly fragmented, with numerous parties representing different linguistic and regional interests. This fragmentation often leads to complex negotiations and compromises to form and maintain a stable government.