Belgium's King Philippe has rejected the resignation of Prime Minister Bart De Wever and ordered the country's five-party coalition government back to the negotiating table, after a week-long crisis over the federal budget. The Royal Palace announced the decision on Friday after the king met De Wever.

De Wever offered to resign on Monday 2 November after months of talks failed to produce agreement on about €10 billion in spending cuts and tax rises he says are needed to stabilise Belgium's finances. The king held off on a decision while consulting the leaders of all five coalition parties.

Ten days to reach a deal

According to the palace, each party leader reaffirmed a determination to agree a sound budget path for the next three years and committed their party to making concessions. The king has asked De Wever to resume negotiations immediately and report back on 16 November.

The dispute centres on how to close the gap: some parties favour spending cuts while others insist on tax increases. De Wever had proposed raising VAT across the board, which would have raised around €4 billion, but the plan met resistance. Without an agreed budget, Belgium would enter 2027 on a provisional budget, spending one-twelfth of this year's budget each month — an outcome De Wever called a failure.

Markets watching closely

The crisis comes as borrowing costs rise for governments with weak finances. The European Commission forecast in May that Belgium's debt would reach 110.5% of GDP this year, behind only Greece, Italy and France in the eurozone, with a deficit of 5.2% of GDP. De Wever has repeatedly warned of an "interest snowball" in which Belgium must borrow to pay interest on existing debt.