Belgium in the Mark zone ?
Should Belgium have held control over its currency, the Belgian franc would already have been devaluated with numerous rebounds some three years ago, logically resulting in imported inflation. Ever since the introduction of the Euro, of which Belgium is one of the clandestine passengers, this is no longer possible.
So what is going to happen ? We observe various dangers. There is the risk of the Euro zone to crack down, for which the countries detached from the sole currency would have to adapt to the choice of hyperinflation and authoritarian regimes. However far away this risk might seem, is not unconceivable and could be triggered by social unrest and unexpected political movements.
This might occur under the royal formulation of « debt repudiation » and is a scenario that should be kept in mind for certain peripheral countries. However, it seems inevitable for certain countries to restructure their debts, on the long or less long term. Moreover, there is the unignorable inflation factor which seems to be the mechanical consequence of public debt excess and recently adopted monetary relaxations.
Our governments have installed a twisted Keynesian (which leads to the deepening of public deficit running expenditures), as well as monetary policy that would have been unimaginable two years ago. Of course, inflation is not an ideal economic choice, but it will be a granted scenario in the aim of avoiding too strong social tensions.
So, what orientation are we to adopt for Belgium? We observe one: align meticulously our socio-economic policy and thus our competitiveness with Germany so as to import the budgetary discipline of our foremost economic partner. This would be a choice comparable to the one made at the beginning of the nineties, when the Belgian franc was as strong as the German Mark and the Dutch guilder as the result of the Jean-Luc Dehaene doctrine.
Coincidentally, Belgium is Germany’s seventh commercial partner and its growth is triggered by German economy.
So, what exactly are future implications? Everyone has it clear that taxes will not be sufficient so as to correct public debts, for it will block growth, which we are to stimulate.
Firstly, we are to reconsider growth, the sole acceptable means of digesting public debt. This implies dressing up a model that generates confidence and employment amongst youngsters. Apart from that, a lucid analysis of Belgium’s strategic plan is to be carried out, as well as a consistent public debate on our social model so as to support revenue repartition.
Inflation will also play an important role since monetary relaxation is untenable and will lead to monetary value decrease. This having been clarified, we feel aligning Belgian with German economy is choosing for a discipline of rescue. This approach could be stimulated on the grounds of geography: Belgium and Germany have everything to win from an economic alignment, both on terms of access to maritime and terrestrial communications and on prolonged industrial activities of both countries. Twenty years after the choice of Jean-Luc Dehaene, Belgium would re-enter the Mark zone.
