Crisis kills revival in microcosm Belgium
THE stunning, narrow 16th century Gothic houses in the centre of Antwerp are dwarfed by the nearby modern port, which stretches to the size of 22,000 soccer pitches. From it, there is a stream of ships carrying everything from cars to cosmetics around the world — 15,200 ships in 2011.
But what was shaping up as a record-breaking year for Belgium's second city turned sour. The euro zone debt crisis smashed into the continent's economy and the country's debt-reducing austerity programme is doing nothing for immediate growth.
Cutbacks by businesses, governments and households quietened the frenetic deliveries of containers on the dockside.
"We were on track to have a new, all-time record for cargo flows, but then the crisis came," said Eddy Bruyninckx, chief executive of the port. "As long as it goes on, it will keep affecting us," he said.
The debt crisis that began in Greece two years ago has crushed Europe's recovery from the 2008/2009 global financial crisis, potentially shrinking euro zone output by up to 1.5 per cent this year by ratings agency Standard & Poor's estimate.
Belgium is a kind of mini-europe, and not just because it hosts the European Union's headquarters.
The north speaks a Germanic language, Dutch, and has prospered through trade and industries. In southern Belgium, the locals speak French, a Latin language, and suffer joblessness and slow growth. Many in the north resent subsidising the south.
The economic slump, meanwhile, has revealed a deeper weakness that is a microcosm of the EU'S malaise. High debt, an ageing population and a growing mismatch between workers' skills and the jobs on offer mean Belgium, just like the euro zone, must reinvent itself to avoid stagnation.
After a 2 per cent expansion in 2011, Belgian economic output is expected to grow just 0.5 per cent this year, the central bank says. But Belgium's Finance Ministry and business leaders are more pessimistic, seeing virtually no expansion.
Antwerp port reflects that downturn. It forecasts no growth in cargo volumes in the first half of 2012, and beyond that there is little clarity.
The change in fortunes is not just from the loss of confidence stemming from the debt crisis.
Belgium, like much of Europe, is embarking on 12.6 billion euros in spending freezes and cuts this year to bring its deficit below the EU'S limit, while banks are unwilling to lend. But business leaders say the strategy is misguided.
"Cost-cutting doesn't mean that you stop investing. You'll kill entrepreneurship," said Jo Libeer, the head of the business chamber in Flanders, his Antwerp office overlooking the grey waters of the river Scheldt that are constantly dredged to allow the massive ships to pass.
"There's only one solution to get out of the crisis, and that's investing in entrepreneurship," he said.
Belgian entrepreneurs are finding it tough and for some, the sharp focus on cuts in the euro zone have had more impact than the collapse of US investment bank Lehman Brothers in 2008, which caused the world's deepest downturn since the 1930s.
Christine Buelens, the chief executive of Flanders-based engineering research company Metalogic, lost one of her biggest clients earlier this month, when a French firm cancelled plans for her firm to test new anticorrosive technologies for chemical storage tanks that would extend their lifespan.
"2008 was one of our best years, but now there's a panic reaction to cut costs," said Buelens, whose specialised business is the kind that business leaders say Belgium needs more of. "Our French client cancelled their project purely for financial reasons."
One blow to Antwerp was triggered in when Arcelormittal, the world's largest steelmaker, in October permanently closed production of liquid steel in the French-speaking city of Liege, a decision unions say could cost 500 jobs.