Belgian Business Confidence Declines to Record Low

By Fergal O’Brien

Dec. 22 (Bloomberg) -- Belgian business confidence declined to a record low in December as the global financial crisis pushed Europe’s economy deeper into a recession.

The confidence index for Belgium, whose government is reeling from a crisis surrounding the state-organized breakup of Fortis, plunged to minus 31.3 from minus 23.7 in November, the Brussels-based National Bank of Belgium said today in an e-mailed statement. That is the lowest since the data were first collated in 1980. Economists expected a decline to minus 26, according to the median of 19 estimates in a Bloomberg News survey.

Business and consumer confidence across Europe is tumbling as the financial turmoil saps demand for exports and unemployment rises. In Belgium, where the prime minister offered to resign over allegations his government tried to interfere with a court ruling on the Fortis breakup, the economy is forecast to shrink in 2009 for the first time in 16 years, the central bank said this month.

Confidence in Europe is “at a record low already. How deep, how low can you go?” Carsten Brzeski, an economist at ING Group in Brussels, said on Bloomberg Television today. “Unfortunately, there is some scope to see a further deterioration.”

European executive and consumer confidence in the economic outlook has dropped to a 15-year low even after interest-rate cuts and government stimulus measures aimed at battling the impact of the financial crisis. Executive sentiment in Germany, the region’s largest economy, slumped to the lowest level in more than a quarter-century in December, data showed last week.

Slowest Pace

Belgium’s economy grew at the slowest pace in five years in the third quarter and the drop in business confidence indicates the slump will extend into 2009. Gross domestic product will contract 0.2 percent next year after growing 1.4 percent this year, the central bank forecast on Dec. 8, revising a June forecast for 2009 expansion of 1.5 percent.

The Belgian king is working to name a new prime minister by Christmas after Yves Leterme tendered his resignation Dec. 19, with the fate of Fortis, formerly the nation’s largest financial- services firm, hanging in the balance. Leterme yesterday ruled himself out as the leader of a new government.

Leterme’s coalition collapsed after the Justice minister quit because the nation’s highest appeals court didn’t clear him from allegations of interfering with a ruling that blocked the sale of Fortis assets to BNP Paribas SA.

To contact the reporter on this story: Fergal O’Brien in Dublin at fobrien@bloomberg.net.