Leader of Belgian government negotiations resigns

AFP - The man tasked with ending Belgium's record political crisis, by finally putting a government together, threw in the towel Monday after talks collapsed over budget cuts to counter the eurozone debt crisis.

As Belgium hit 526 days without a government, Socialist leader Elio Di Rupo offered his resignation to King Albert II, who delayed any decision and exhorted politicians to find a rapid solution for the sake of the kingdom.

The king "recalls the gravity of the current situation and underlines that the defence of the general interest of all Belgians and European deadlines require a very quick resolution to the political crisis," the palace said.

"The king asks each negotiator to use the next hours to reflect and measure the consequences of a failure, and actively find a solution."

The latest marathon talks collapsed at 2:00 am on Monday after Flemish and French-speaking centre-right parties rejected Di Rupo's plan to curb the public deficit, saying it relied too much on tax hikes and not enough on cuts.

The other parties were ready to back the Francophone leader's plan to slice 11.3 billion euros ($15.3 billion) off the deficit next year and some 20 billion in all by 2015.

Belgium's borrowing costs have spiked in recent months, but so far the nation has fended off the type of market pressure that has already toppled the Spanish, Italian, Greek, Irish and Portuguese governments and forced the latter three to take out multi-billion-euro EU-IMF bail-out loans.

Caretaker Belgian premier Yves Leterme and the European Commission have repeatedly called for a deal that would bring the country's public deficit below three percent of gross domestic product by 2012 -- rather than the 4.6 percent now forecast.

EU economic affairs commissioner Olli Rehn warned Belgium and four other EU states earlier this month that they could face fines if they failed to get their public finances back in order.

Hopes of an end to the crisis had risen last month after the feuding Flemish and French-speaking parties reached a deal on the thorniest issues, such as giving the regions more power and reforming the status of bilingual Brussels.

But the parties are now divided over how to slash the Belgian debt, leaving the country without a new government since April 2010 elections.

Flemish centre-right Open Vld said the latest proposals were "insufficient," calling them an "unbalanced scenario that will not spark the increase in the rate of (economic) activity needed to preserve our prosperity."

French-speaking counterparts MR argued that the taxes would strain the economy by hurting small- and medium-sized companies.

But the other parties, Christian-Democrats from Flanders, Socialists from both linguistic regions and French-speaking centrists have been ready to back Di Rupo's budget plan and see him become the country's next prime minister.

Angry at the deepening austerity, trade unions will hold a demonstration on December 2 and have threatened to lead a general strike.

Belgium's growth prospects, like the rest of the debt-saddled 17-nation eurozone, have deteriorated in recent months.

The European Commission published new growth figures this month showing that Belgium's economy would expand by 0.9 percent next year, as against the 2.2 percent previously predicted by the EU six months ago.