Belgium to Miss Deficit Target on Recession, Coene Tells L’Echo

Belgium’s budget deficit will miss the 2012 target and exceed the European Union’s ceiling of 3 percent of gross domestic product as the economy slides into a recession, Belgian central bank Governor Luc Coene told L’Echo.

Belgium’s economy will probably shrink this year, pushing the budget deficit “slightly above” 3 percent of GDP, the newspaper cited Coene as saying in an interview published today. Following a 0.6 percent economic contraction in the second quarter, the remainder of the year will likely be “more negative than positive,” Coene said, according to L’Echo.

Coene urged Prime Minister Elio Di Rupo’s government to cut spending, saying expenditure growth that is outpacing economic expansion is one of the key structural weaknesses of Belgian public finances, the newspaper reported. Belgium should be “very careful” not to get caught up in the turmoil of the debt crisis again, Coene told L’Echo.

To contact the reporter on this story: John Martens in Brussels at jmartens1@bloomberg.net

To contact the editor responsible for this story: Jerrold Colten at jcolten@bloomberg.net

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