Recent interviews with business leaders conducted for this issue of the Business Echo revealed that, in general, respondents remain wary - at times even pessimistic - regarding the economic situation in the current quarter. Growth expectations have, for the most part, been revised downwards. Concerns were expressed about the uncertainty surrounding US tariffs and slowing consumer spending. Most expect these conditions to persist until the end of the year, with no clear turning point in sight. The main challenge, many note, is long-term planning, which is proving impossible in an increasingly unpredictable and rapidly changing global environment.
Price developments remain very subdued
Price developments were generally described as subdued. The recent escalation in trade tensions was not indicated to have had a noticeable effect on input costs for the time being. Instead, respondents pointed to structural challenges. Concerns about the recent sharp rise in labour costs have dissipated somewhat, but various other costs, including energy bills, continue to erode competitiveness. Sales prices reportedly held steady overall, as competitive pressure remains high.
Uncertainty is curbing investment
Investment activity has reportedly slowed. While business leaders do not generally consider financing conditions to be restrictive, rising uncertainty and a cloudy outlook have led to caution and more conservative investment spending. In addition, permitting issues and increasingly stringent environmental regulation remain concerns for many firms, both in Belgium and across Europe. Fragmented national policies and perceived distortions in the EU single market were also mentioned. In this context, companies are often exploring regional diversification, including outside Europe, to mitigate regulatory and operational risks.
Businesses are tightening their belts, but demand for labour remains high
Respondents reported efforts to reduce payroll costs, which mostly entail hiring freezes, reductions in the number of temporary contracts and cuts to working hours. Layoffs were mentioned but appear limited in scope. Labour demand remains resilient, and Belgium's labour market is still tight. Businesses reported recruiting from abroad due to the continuing shortage of certain skills and profiles on the domestic labour market.
Sentiment in the manufacturing sector remains subdued due to cyclical and structural factors.
Petrochemicals companies in particular are under pressure, and pharmaceutical firms report scaling back their activity. While most manufacturers have yet to be directly affected by tariffs, they mentioned higher costs and potential disruptions to their supply chains and product markets as causes for concern. The slump in the construction sector continues, and the outlook remains gloomy. Activity in the services sector held more or less steady, although conditions varied significantly across industries.
Businesses did not report any significant regional differences.