CD&V

Speech of Yves Leterme at the Belgian lunch of the World Economic Forum in Davos

January 28 2011, 8:41am

Excellencies, Ladies and Gentlemen,Let me first welcome you all on behalf of the Belgian government and of Their Royal Highnesses Prince Philip and Princess Mathilde.  I am glad to do this together with President Van Rompuy, Commissioner De Gucht, Ministers Vanackere and Van Quickenborne and the Minister-Presidents of the Flemish and Walloon governments, Mr. Peeters and Mr. Demotte.  Your presence today, Ladies and Gentlemen, is an indication of your interest and friendship for Belgium and of your willingness to further strengthen your ties with our country. When we met one year ago we were all working hard to get out of the confidence crisis which was itself a consequence of the biggest financial crisis of the last 70 years. From the end of from the end of 2008 on, the Belgian government took measures to revive confidence of consumers and companies, in a balanced mix of reduction of charges of companies and increasing the purchasing power of consumers.These measures were further implemented throughout 2010. As the OECD said earlier this week, the recovery measures of the government to protect the labour market were the most efficient of all the OECD countries.Today we meet in a context of strong economic recovery in Western Europe.  The world trade recovered under influence of strong growth figures in South-East Asia and in Germany. Belgium fully participates in this recovery with a real GDP growth of 2.1 % in 2010 which is well ahead of the 1.6 % average in the euro area. Foreign direct investments in Belgium also rose with 50 % in 2010 reaching 50 billion dollars, the second highest figure in Europe after France.  Also for 2011 the outlook and the framework conditions are benign. Economic growth is forecast to be 2% and employment creation will accelerate. Moreover, the draft wage agreement for 2011-2012 guarantees a moderate wage growth that boosts the competitiveness of our companies while keeping purchasing power of the employees intact.The robust economic growth and the sound fundamentals combined with a strict budgetary discipline have resulted in 2010 in a reduction of the annual budget deficit to 4.6 % of GDP, which is better than our target under the European stability pact, and which places the Belgian budget deficit amongst the six lowest in the euro area, performing better than countries like France, Italy and the Netherlands. For 2011, the Belgian government decided two weeks ago to further reduce this deficit under the 4 % of GDP, again well ahead of EU targets. In 2010 we had the smallest debt increase of the euro area (only 1%) . In 2011 our debt ratio could even stabilize.As you can see, the actual political difficulties did not impact on the economic course our government is following. I consider this as one of the main tasks as a caretaker Prime Minister and I am confident that we will further show the strength of our commitments in this field, just as we did by managing, with pragmatic ambition and concrete success, the rotating presidency of the European Union in the second half of last year. The issue at stake in the political negotiations today is in no way about endangering Belgium but indeed about improving the federal structure of the Belgian state to make it more efficient. I strongly hope an agreement will be found in a near future.The excellent performance of the Belgian economy is based on good economic fundamentals. The Financial Times recently stressed the strength of the Belgian economy, pointing among others to the consistent current account surplus. Our economy can build on some stable features, listed in the booklet “Best of Belgium” we offer you today, and amongst which I would highlight :-         our education system, among the world top performers, guaranteeing a highly skilled and multilingual workforce  ;-         our labour productivity expressed per hour of work, which is the third  highest in the world ;-         our position as a world leader for so-called ‘in-house product innovators’, this is innovation developed within the firm ;-         some very interesting tax measures such as the notional interest deduction scheme – which is a worthy successor to the much praised coordination centers, the tax ruling, and since 2009, the partial tax exemption of income from patents ;-         and, last but not least, our central location in Europe, two thirds of Europe’s Gross Domestic Product being produced within 300 kilometers from our main cities Brussels and Antwerp ;  Belgium is ranked amongst the top 10 countries worldwide in logistical efficiency and 8th in the quality of life index.Excellencies, Ladies and Gentlemen,Let me conclude by stressing another element of positive assessment of the European economy in general, which is the important reform of the Economic and Monetary Union achieved last year as a result of the public debt crisis hitting some countries of the euro area.  A financial stability fund was created capable of coping with future crises and important steps were taken towards stronger economic governance at European level.  Since the 1st of January 2011 all EU countries are involved in a system of budgetary and macro-economic surveillance called the “European semester”. President Van Rompuy will come back on this important achievement of 2010 and will, I’m sure, give his perspectives on the future work of the European council.Excellencies, Ladies and Gentlemen, let me thank you again for your participation to this lunch and for your interest for Belgium.  We stand ready to help you in the development of your business in our country.  Let me wish you an excellent and productive stay in Davos and, of course – it is still time to do so –, a very happy New Year.