Iran conflict and energy‑price surge put Belgium on alert over market default bets

Brussels – The economic repercussions of the war between the United States and Israel in Iran are a cause for concern for the governor of the Belgian central bank, who fears that if the conflict drags on, the financial markets might start betting on Belgium’s defaulting. “We are truly vulnerable, and it would only be a matter of time before the markets react”, said Pierre Wunsch during a hearing before the Chamber’s Finance Committee. 

The head of the Belgian Central Bank, and a member of the  of European Central Bank’s Governing Council, appearing before parliamentarians to present the 2025 annual report, expressed concerns about the health and sustainability of the national public finances should military operations not cease and trade not resume along the Strait of Hormuz: in such a scenario, he warns, the Belgian monarchy faces “very weak growth, or even a technical recession,” which translates into “a contraction in gross domestic product for two consecutive quarters.” The result: “The deficit will therefore increase by 1–2 per cent of GDP, and we will be truly vulnerable.” 

He therefore called on lawmakers to act with prudence and pursue reforms to keep debt and deficit under control. Wunsh warns: “The money has run out.” Put another way, “the resources we had in 2022 to tackle the crisis no longer exist,” and therefore, envisaging new public spending is practically impossible, unless the government is willing to risk market speculation and downgrades from rating agencies. Because, on this point, the message was clear: Belgium could find itself in the crosshairs of financial markets.

Meanwhile, Belgium’s Minister for Defence and Trade, the Flemish Theo Francken (NVA), announced his intention to join the coalition of countries willing to guarantee free passage through the Strait of Hormuz. “We are working together with France and all other willing partners to achieve this strategic goal once conditions in the region will allow for it, such as a ceasefire,” he wrote on his X profile. The reason for this decision is linked precisely to the country’s financial stability: “Freedom of navigation is essential for our security and economic stability.”