Executive insight

An investment plan for 2030. Now is the time.

Today we are experiencing one of the most serious crises in our country's history. Together with the Great Depression and the two World Wars, the corona crisis is just about the biggest economic challenge Belgium has ever faced.

But first the good news: our healthcare system has been able to cope with the corona pandemic. Thanks to our network of doctors, nurses, hospitals, prevention and crisis management, we have managed to contain the medical consequences of this pandemic. This once more highlights the fact that we have a high-quality healthcare system that makes us unique in the world.

Now the pandemic is largely under control, we face the even greater challenge of stabilising and rebuilding the economy. But this will take more than a few adjustments here or some sleight of hand there. We won't square the circle with a couple of slogans. What we need is a far-reaching recovery plan for the next decade. After this huge blow to the economy, we need to get growth back on track as soon as we can. Failing that, we risk a permanently lower standard of living for the next generation and our hard-earned prosperity may be lost forever.

I see two pillars that should be part of any recovery plan. First and foremost, Belgium urgently needs to increase its investments. Long before the crisis, international organisations such as the OECD or the IMF pointed out that the Belgian government was not investing enough. We have a notably long list of urgent and necessary investments in Belgium. Take infrastructure, healthcare, digital, government or education, to name but a few. But the energy transition and the climate plan also call for a great deal of sustained investment. Before the crisis, there were always budgetary constraints that prevented us from making those investments. We had a budgetary deficit and the European Commission stopped us from allowing it to become even bigger. Today, limiting the government deficit, let alone reducing it, is not the primary concern. Supporting the economy is. At the same time, this will support employment. Governments in all European countries are spending many billions to revitalise the economy. Let's do that too - in a sensible way. We need to spend in a way that structurally raises our growth potential. Government consumption doesn't do that, but public investment does. Every euro we spend today on productive investments will pay for itself over time.

This brings me to the second pillar of a recovery plan: the mobilisation of Belgian savings, as also recently announced by the Flemish Government as part of its recovery plan. Last March, regulated savings accounts in Belgium totalled 283 billion euros. Influenced by the lockdown, that mountain of savings has grown even bigger over the recent period. Money that yields practically zero returns today. Let us mobilise some of those savings to help finance the necessary investments. We could offer Belgians a higher return than the savings accounts, and citizens could at the same time promote growth. This would not be the first time that Belgian savings have been mobilised to support the economy. In 1982, for example, there was the Cooreman-De Clerq Act - in the middle of a major economic crisis. This made it fiscally attractive for citizens to invest their savings in listed companies. That enabled them to support the local economy and the stock exchange was democratised for Belgians. This was later successfully followed by pension savings, in which more than 3.3 million fellow countrymen participate today, thus partly meeting the challenge presented by the ageing population.

So how can we mobilise Belgian savings in concrete terms? We could set up a Recovery Fund. A saver buys a share in that fund and in return receives an annual return and repayment of their investment at maturity. Compare it to a savings certificate. The main difference is that concrete investments are made with the total investment of all savers in this case. The saver is assured of a return and gets his deposit back at the end of the term. He also knows what type of projects his money will be used for. To make the investment even more attractive, the government could also help by guaranteeing part of the deposit or by making investing in this product fiscally attractive.

Investment alone will not be enough. At the same time, we will have to continue our efforts in various areas, including increased productivity, faster procedures for obtaining permits and greater efficiency in government. Not all problems can be solved by throwing money at them. Sometimes we can do more with less money, simply by spending it more efficiently.

Belgium is in urgent need of investment and at the same time it has almost 300 billion euros in dormant savings. Why not connect the two and mobilise some of our savings to invest? Let us take a big step in catching up on investments today. That will help us to boost economic growth after the crisis. But the next generation will also thank us for it: they will have a modern and sustainable economy, stronger economic growth and good future prospects.

Bart De Smet
CEO Ageas