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Belgium: Improved confidence

The economy embarked on a slow recovery during the second half of 2009, supported by fiscal and monetary easing and an acceleration in world trade. Consumer confidence and business sentiment have improved, albeit from some of their lowest levels on record. Growth will not suffice to prevent further increases in unemployment until mid-2011, which is likely to push up the already high level of structural unemployment.

As the economy recovers, attention must return to securing fiscal sustainability. Consolidation measures should concentrate on achieving medium-term expenditure restraint at all levels of government and on controlling ageing-related costs. About two-thirds of the deficit reduction in 2010 and 2011 is to be achieved by the federal government and the social security system, and the remainder by communities and regions, although the implementation details have yet to be finalised. This should be complemented by implementing labour market reforms to increase the flexibility of wage formation and enhance job search incentives.

©OECD Observer 2010