Economic news and analysis

Reducing statutory pensions is politically nearly impossible: anyone who touches them risks protests from half the population. The realistic approach, therefore, is not to dismantle the first pillar (note: adjustments are still necessary) but to strengthen the second.

The average statutory pension in the EU is projected to drop from 43% of wages in 2022 to 36% by 2070, according to the European Commission’s Ageing Report. In concrete terms: someone receiving €100 in pension today will see that shrink to around €84 within 2 generations. Europe has no safety net for this. In most member states, over 90% of pension income comes from the government. Expanding occupational pensions is therefore essential and it simultaneously addresses a second European challenge: the shortage of risk capital.

Bond markets are facing an unprecedented crisis in 2026, marked by a sharp rise in interest rates, persistent inflation, and geopolitical tensions. 3 major shocks, namely a revived trade war led by Trump, surging AI-driven demand, and the oil crisis in Iran, explain this instability. Central banks are responding by raising rates, but fiscal challenges are deepening investor concerns.

Not a day goes by in Belgium without the issue of public finances being raised. The budget conclave is approaching, and debates are heating up: spending cuts, but where? Tax hikes, but which ones? Everyone knows the crux of the problem lies in the long-standing mismanagement of public finances. A household or business managing its budget this way would quickly find itself in trouble. Let’s look to the past to see if Belgium has ever faced such a worrying budgetary situation before.

Our flash forecast a few weeks back confirmed the National Bank of Belgium’s nowcast earlier this summer of a Belgian economy with zero growth in Q2. It was clear that rising fuel prices due to the conflict in the Middle East would be affecting growth. The euro zone was experiencing a slowdown before the summer, albeit somewhat limited by Ireland’s strong performance. 

Stock markets have been soaring to new highs for years, even amid a complex geopolitical climate that might otherwise deter investors. Several factors explain this phenomenon.