Great Britain left the Customs Union and Single Market on 1 January. This economic Brexit has been achieved according to the terms of the Trade and Cooperation Agreement concluded between the European Commission and the British Government. The National Bank has estimated the impact on the Belgian economy on the basis of a Brexit deal with a free trade agreement. It has also calculated that the agreement should help boost Belgian GDP by 0.4 of a percentage point within five years over and above the trajectory used in its December economic projections that were compiled under the assumption of a no-deal Brexit.

After the dip in November, the business barometer is back on the growth path again, mainly under the impetus of a marked upturn in business-related services, which had been sluggish last month. The recovery has also been evident in the trade sector and, once again, in the manufacturing industry. Conversely, the business climate in the building industry has deteriorated slightly this month.

The consumer confidence indicator, which is based on households' forecasts over a twelve-month horizon, shows that they are sharply up on vaccination hopes and an expected exit from the crisis in 2021.

The easing of certain restrictions at the beginning of December, such as the reopening of non-essential shops, had a very positive impact on the turnover of the trade sector and real estate activities, while many other sectors recorded a slight improvement. That is the picture presented by the new ERMG survey of Belgian businesses.

According to our projections, economic activity in Belgium is set to contract by 6.7 % this year, owing to the COVID-19 pandemic. The downturn is more than three times worse than during the 2008-2009 financial crisis. The economy should rebound over the following years, but it will take almost two years to return to pre-crisis levels. The government deficit will rise to more than 10 % of GDP in 2020 and will remain structurally high.