Analysts at ABN AMRO point out that Belgium will go to the polls on Sunday 26 May and the polls show that the parties that were in the previous coalition government have each lost support, while far-right, far-left and green parties have gained, so the political landscape has become even more fragmented than it already was.
Key Quotes
“Similar to the results of the previous two elections, the Flemish-nationalist conservative N-VA is expected to become the biggest individual party, while the Walloon social-democrat PS will become second.”
“Formation of a new government could (again) be complicated and might take considerable time as a majority coalition might need as much as five or six individual parties. We think it is most likely that N-VA will fail to form a government and that ultimately a Purple-Green coalition (of centre-left, centre-right and Green parties) will take office.”
“Under all likely coalitions, Belgium’s public finances would likely deteriorate modestly compared to the baseline, although the calculations by Belgium’s Federaal Planbureau of the impact of the party programmes on economic growth and government finances have to be taken with a pinch of salt.”
“During the coalition talks, the discussion about a break-up of Belgium could move to the headlines again, but the chances of a break-up are low. Belgium’s government bonds are likely to underperform, mainly due to relatively high sensitivity to Italian government bond spreads, which we expect to widen further.”
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