National Bank of Belgium reports weaker business sentiment with subdued prices and slowing investment

The National Bank of Belgium published findings from its Business Echo discussions with business leaders, indicating that economic conditions have deteriorated and firms are increasingly wary about the current quarter. Growth expectations have generally been revised down amid uncertainty over US tariffs and slowing consumer spending, with many respondents expecting these conditions to persist until the end of the year and reporting that long-term planning has become difficult. Price developments were described as very subdued, with the recent escalation in trade tensions not yet having a noticeable impact on input costs. Competitive pressure is keeping sales prices broadly steady, while energy and other costs continue to erode competitiveness despite some easing in concerns over labour cost increases. Investment activity has reportedly slowed, not because financing conditions are seen as restrictive but due to heightened uncertainty, alongside concerns about permitting issues, more stringent environmental regulation, fragmented national policies and perceived distortions in the EU single market, prompting some firms to consider regional diversification including outside Europe. Businesses reported efforts to reduce payroll costs mainly via hiring freezes, fewer temporary contracts and reduced working hours, while layoffs appear limited and labour demand remains high in a tight Belgian labour market, leading to recruitment from abroad for scarce profiles. Sectoral sentiment remains subdued in manufacturing, with petrochemicals under pressure and pharmaceutical firms scaling back activity, while construction continues to slump and services activity is broadly steady but uneven; no significant regional differences were reported.