|Di Rupo of the Socialist party has been asked to form a cabinet, after 18 months of no formal government [EPA]|
A 19-month political feud between Belgium’s political leaders had ended with a budget deal that met the European Union structure a day after a debt downgrade.
The budget envisages a fall in Belgium’s public deficit to 2.8 per cent of gross domestic product (GDP) in 2012.
“There is an agreement,” the spokesperson for Elio Di Rupo, the French-speaking Socialist premier-to-be, told the AFP news agency.
Di Rupo had been trying to form a government based on a six-party coalition. But he tendered his resignation on Monday after talks for the 2012 budget – agreement on which is a condition for forming a government – ground to a halt.
King Albert II, who had stepped in throughout negotiations to soothe tempers and urge politicians to find agreement to end 18 months without a formal government.
“As a next step, he has asked the chief negotiator to form a government as quickly as possible,” the palace said in a statement.
Negotiators for the six parties involved said the deal “meets Belgium’s commitments to the European Union.”
The budget is expected to take in the suggestion that 2012 could unleash a significant recession despite milder predictions, but the budget haspredicted that Belgium would return to having a balanced budget in 2015.
But in order to get there, Belgium has had to agree to “long-term structural reforms” of the sort imposed on Greece, Italy and other euro countries, meaning early-retirement options will disappear in a generational change over the coming years.
Friday’s ratings blow, after Greek, Portuguese and Irish bailouts, and with Italy, Spain and France also now under pressure, underlined a sharp escalation of the debt crisis at the end of a week that even saw Germany struggle to raise funds.
Concern has grown rapidly that the euro currency, in the absence of a game-changing European Central Bank decision to mount a gigantic financial rescue, could be close to breaking point.