Belgian economic policy is based upon the encouragement of private enterprise, with very little government intervention in the economy. Also, as a country heavily dependent upon foreign trade, Belgium has traditionally favored the freest exchange of goods, without tariffs or other limitations. Restrictions on free enterprise and free trade have always been due to external pressure and abnormal circumstances, as in time of war or economic decline.
To meet increased competition in world markets and to furnish relief for areas of the country suffering from chronic unemployment, the government has taken measures to promote the modernization of plants and the creation of new industries. Organizations have been established to provide financial aid and advice, marketing and scientific research, studies on methods of increasing productivity, and nuclear research for economic utilization. Government policy aims at helping industry to hold costs down and to engage in greater production of finished (rather than semifinished) goods. Results have been mixed, with greater success in chemicals and light manufacturing than in the critical iron and steel industry.
In 1993, the government modified its policy of forbidding more than 49% private ownership in government banks, insurance companies, and the national telecommunications company. In 2000, the government enacted tax reform, reducing corporate, trade, and income taxes. The tax cuts planned through 2006, although improving work and investment incentives, will have to be countered by reduced government spending to compensate for the lost revenue. The telecommunications sector has been liberalized, as have the gas and energy markets. The postal market as of 2003 had been liberalized only to cover the transportation of large packages. Sending goods by rail had been open to cross-border competition only since the beginning of 2003. Belgium successfully attained a budget deficit of less than 3% by the end of 1997, as stipulated by the European Union (EU). Due to a strict control of spending, the budget was balanced in 2001. However, the Belgian economy remained weak in 2002, largely due to a slowdown in Germany and the Netherlands, Belgium's major trading partners. Investments declined for the first time ever, by 2.3%, in 2002.