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The Belgian economy has been particularly boosted since autumn 1997 by a revival in consumer confidence sparked off by a significant improvement in the country's public finances. Public debt is still at around 118% of gross domestic product, but the Belgian government has seen considerable success in reducing the absolute level of public debt. This has ensured Belgium's acceptance as one of the 11 founder members of European monetary union. The key element in reducing public debt has been the fixing of a target of a 6% primary surplus in the annual budget.

Belgium's economic policies have given considerable attention to European monetary union since 1992, according to Prime Minister Jean-Luc Dehaene. Belgium accepts that it still has some economic difficulties, but has already made considerable progress in certain areas, including social security reform. The government acknowledges the importance of responding to an apparent lack of confidence in the country's institutions among ordinary people.

Belgium has seen strong economic growth over recent years, and is now set to be among the first countries to take part in a European single currency. The Belgian economy is forecast to expand by 2.2% in 1997, according to Banque Bruxelles Lambert, but higher exports and investment could cause it to expand even further. The only serious economic difficulty is unemployment, which is currently at 13.9% of the active population. Belgium has one of the lowest rates of labour force participation of any Organisation for Economic Co-operation and Development member, at 63.1%.

Belgians like to build their own homes and may often purchase houses to demolish and build a new home. They then tend not to move which means that the market tends to be sluggish. The Belgian market is depressed and this offers opportunities for buyers who still need advice when putting in an offer. Purchasers should assess their position in terms of capital gains tax liability for second homes which was implemented in Jan 1997. Belgium offers good food, beer and is a good place to raise children.

The Netherlands and Luxembourg are on target to be among the first countries to join European monetary union (Emu) in 1999, but the third Benelux country, Belgium, will find it harder to meet the convergence criteria. Luxembourg already meets all five criteria, while Luxembourg is expected to do so by 1999, although currently it has not met the budget deficit and public debt targets. Belgium also falls down on those two targets, and it has the EU's highest debt, at 133.8% of GDP in 1995. However, the Belgian government is still determined that it will join Emu in 1999.

The Belgian economy has seen economic recovery in 1994 with growth of between 1.5% and 2% forecast for the year. This recovery has been affected by a rise in long term interest rates following rate rises in Germany, and the impact of a weaker dollar. Consumers are cautious and the savings ratio in Belgium is over 20%, which has affected Belgian retailers which have yet to benefit from recovery. Some analysts argue that the dollar has reached a low, and will rise, while long term interest rates may also stay stable.

The prospects for the economies of Belgium, Luxembourg and the Netherlands seem bright, with solid growth and low inflation expected. The main problem for the Benelux economies is unemployment: annual growth of 3-3. 5% would be needed to create enough new jobs to reduce unemployment. A failure to do so would mean pressure on public deficits and maybe even social unrest. The OECD recommends measures to attack 'structural unemployment', but for the Benelux nations these measures challenge their model of a welfare state and a social market economy.

The Belgian economy seems to be recovering from its hard recession, but still faces great challenges. The economy suffered badly from recession, and the government often seemed near collapse. The turning point seemed to be the adoption in Nov, 1993, of the Global Plan, a package aimed at improving industrial competitiveness, freezing wages in real terms, and curbing social security and budget deficits. Prime minister Jean-Luc Dehaene pushed the plan through in the face of union opposition, and the measures seem to be working.