Belgian Socialist Party leader Elio Di Rupo, who is in charge of forming a new government, announced on November 27 that he has clinched the 2012 budget. There is no way back. On November 25 Standard & Poor’s downgraded Belgium’s credit rating from AA+ to a mere AA. This could lead to higher interest rates and a downward financial spiral.
Belgium has been without a government for more than 535 days, and Prime Minister Yves Leterme’s caretaker government has been looking after the shop. In June King Albert II put Di Rupo in charge of forming a government. On October 11 Di Rupo presented the so-called ‘‘Butterfly Agreement,’’ which details the rules that will redefine the shape of the Belgian state and the balance of powers between the federal and regional governments, as well as the new mechanisms for financing the federal and regional governments. The agreement also will enact a limited transfer of taxing powers to the regional governments.
The last obstacle Di Rupo faced was an agreement by all future government parties on the 2012 budget. Di Rupo favored more taxes while the conservative parties wanted structural reforms in the job market and the pension system. (read the full article).