Nick Hood: Belgium battles recession

Our roving reporter finds Belgium crying into its fruit beer as it struggles with the global downturn.

by
Last Updated: 31 Aug 2010

Antwerp is home to one of the world’s strangest pubs, a café rejoicing in the unlikely name of Het Elfde Gebod (The Eleventh Commandment), in which drinkers can choose between over 60 Belgian beers, surrounded by statues of saints and religious artefacts.  But during this credit crunch summer, the patrons were thinner on the ground than either the beers or the statues.

Apart from the beer, and the national dish of moules et frites, much of Belgium’s tourism is driven by its heritage and plethora of fine art and architecture.  Here too, the signs are not good. Cathedrals, churches and art galleries in Ghent and Bruges are not just quiet, some are almost deserted - even now when the visitor season should be in full swing.   

Not only are tourists notable by their absence, reflecting financial pressures elsewhere in the world, but the locals are feeling the pinch too.  The latest unemployment figure for Flanders is 195,309, up 23.5% on a year ago. Weirdly, there are also 40,000 job vacancies, reflecting a common structural weakness of Western European economies: a lack of technically qualified candidates in the healthcare and education sectors.

The depth of the recession is vividly illustrated by a record figure for goods brought into the Flemish equivalent of pawnshops (Kringwinkels). Measured by weight, this has hit a new high of 3.6m kg - 80% up on the previous peak in 2004.  Another indicator of financial hardship may be a 78% increase in reported bag-snatchings from cars.  Detected tax fraud is also at an all time high, estimated at €4bn in 2008.

The most basic measure of the recession, of course, is the number of business bankruptcies. In Flanders there were 2,504 insolvencies in the first half of 2009, up 27% on the same period in 2008. Nationwide, 5,000 Belgian enterprises failed, destroying 13,000 jobs in the process – which confirms that just like everywhere else in Europe, the financial carnage is concentrated heavily at the bottom end of the SME sector.

Curiously, the Belgian stock market looks positively overheated, with one of the highest average price earnings ratios in the world. At over 18 times earnings, shares are more highly-rated than in most other developed countries, and are beaten only by such markets as India, Japan, Taiwan and Slovenia. Given that Belgium is one of the top five exporters of goods in the global economy, and therefore highly exposed to the world downturn, this enthusiasm for equities is hard to explain.

Leaving behind the empty restaurants, quiet bars and rows of shops advertising heavy discounts to board an equally-quiet Eurostar train at Brussels, it is difficult to see what will drive the recovery in Belgium, or when things may start to improve.  The publican at The Eleventh Commandment may be crying into his fruit beer for a long time to come.  


This is the latest missive from the travels of our some-time correspondent Nick Hood, a partner at UK insolvency firm Begbies Traynor and executive chairman of Begbies Global Network.


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