Belgium’s King Philippe urged Prime Minister Bart De Wever on Monday to find a compromise over next year’s budget, with his government on the brink of collapse following the failure of another round of late-night negotiations.
De Wever had offered his resignation in a meeting with the king on Monday morning.
The king will weigh De Wever’s offer, but will also hold talks with the leaders of the other coalition parties from Tuesday, the Royal Palace said in a statement.
“In light of the large geopolitical uncertainty and severe economic challenges, the country can’t afford a long political crisis,” it said.
The government has been arguing for months about €10 billion ($11.2 billion) in budget cuts and tax increases De Wever says are needed to keep state finances in check.
A coalition deadline to reach an agreement on next year’s budget had been set for Tuesday.
Like other European countries, including France and Italy, Belgium is struggling to balance ballooning national debt with demands from protesters for greater spending to improve services, such as education. Demonstrators have clashed with police in countries including France, Spain, Italy and Belgium in recent weeks.
Without an agreement the Belgian government could only work with a limited budget next year, allowing it to spend one-twelfth of this year’s budget per month.
The crisis coincides with heightened stress on financial markets, where interest rates have risen sharply on government bonds of Belgium, France and other European countries seen to have weak government finances.
The European Commission forecast in May that Belgium’s debt-to-gross domestic product ratio would be 110.5 per cent this year, behind only Greece, Italy and France among euro zone countries, with a projected general government deficit of 5.2 per cent of GDP.
Belgium’s 10-year benchmark bonds were trading at a yield of 4.36 per cent on Monday morning, against 4.92 per cent for France and 3.30 per cent for Germany.
Four months ago, Belgian 10-year yields were at 3.48 per cent.
