DOMESTIC POLITICS: Our central forecast is that the present government, led by Herman Van Rompuy and consisting of the Flemish and francophone Christian Democrats and Liberals and the francophone Socialists, will stay in power until the end of its term in mid-2011. The issue of devolving power from the federal to the regional level dominated the Belgian political scene since the last general election in September 2007, but in the face of the current economic recession has recently been surpassed by concerns about traditional issues such as employment, pensions, healthcare and education. While there is less appetite among the electorate for renewed inter-communal tensions between Flanders and Wallonia, regional tensions may rise over the issue of Belgium's growing budget deficit. In September 2009 the federal and regional governments agreed that the federal government will contribute 65% of the effort to reduce the budget deficit, with the remaining 35% covered by the regional governments. However, determining which level of government will contribute to exactly which austerity measures is still likely to cause regional tensions to rise.

Source: Belgium: Country outlook

Source: Country Forecast Belgium August 2009

Source: EIU Country Data