The Courier: Brussels economy: Growing anyway

Discovering Europe

Issue Nr. I (N.S.) – July/August 2007

Brussels economy: Growing anyway

Perhaps best known abroad as the de facto capital of the European Union, the economic role of Brussels and its importance are less well understood. In fact, the city is a hive of economic activity, with an open and cosmopolitan business culture and an exceptionally strong appetite for trade. The Brussels-Capital Region is home to 54,000 businesses, of which around 2,000 are foreign.

Eurostar train. Brussels, a centre for transports.

Many, of course, are associated with the international character of activities in Brussels, a city that hosts a vast foreign community of diplomats and civil servants, interpreters, lobbyists, consultancies, advertising agencies and journalists.

Most of Brussels’ inhabitants speak at least two languages well, and many speak more. It is usual – indeed, expected – for a receptionist in an office to speak English, French and Dutch, and the same goes for people in managerial positions. English is increasingly the language of business and is spoken even by directory enquiries and telephone sales people. In addition, from the marketing angle, the co-existence of several cultural communities in Brussels makes the city and the region an excellent test market to study of consumer behaviour.

Brussels now has the largest number of international organisations in the world and attracts over 1,000 business conferences annually, ranking it the fourth most popular conference and congress city in Europe. It is also rated the seventh most important financial centre in the world and the fourth most attractive city in Europe for starting a business.

The city has many other hidden advantages, such as a strategic geographical location in Europe, some of the most productive workers in the world, excellent transport connections with other cities and a plentiful supply of relatively cheap office space.

A lesser-known attraction of the Brussels region is the favourable tax rates for expatriates: each day they spend out of Belgium is tax-deductible, and they can also opt out of the expensive Belgian social security contributions while still benefiting from the country's excellent health and education services. The amount and the value of foreign investment is another economic feature of the Brussels region: it represents over one-fifth of all investment in Belgium, and around 60% of the foreign companies with business interests in Belgium have their registered office in Brussels.

Brussels is also the city where many of Belgium’s top companies choose to base their headquarters even if their production sites are elsewhere. These include the Delhaize retail group, the CFE industrial group, the Besix construction company, the Sabca aerospace company, metals group Umicore and the chemical and pharmaceutical companies, Solvay and Union Chimique Belge (UCB).

Although the Brussels economy is mainly service-oriented, it has a highly diversified industrial fabric. Of course, as an urban area, the Brussels region does not have the facilities for large-scale industry. The Volkswagen plant, which employs several thousand people on its production lines, is a notable exception, while Toyota Motor Europe is based in Brussels and DaimlerChrysler centralises sales, marketing, and logistics in its city offices.

There are 27 industrial zones in the Brussels area, located alongside the main access roads, along the Brussels Canal and on the edge of the ring road and the motorways that converge on the capital. The main areas are mechanical engineering and electronics, chemicals, printing and publishing, clothing and the food industry. However, there has been a recent shift to high value-added products, such as fine chemicals, aircraft construction, precision tools and telecommunications.

Some 45% of Brussels physical exports are cars, followed by chemicals at 12% and machinery and electrical equipment at 11%. The EU accounts for 89% of the exports – 21% to France, 17% to Germany and 10% to the Netherlands – while the Americas claim 2.9%, Asia 2.4% and Africa 2.2%.

But the services sector forms the backbone of the Brussels economy, accounting for around 88% of jobs in the region.

These are highly diversified and include banking, research, information technologies, tourism, transport and health.

The biggest service is the financial sector, where Brussels has a long tradition of banking, a respected stock exchange that is part of the Euronext system, and a variety of insurance, leasing and investment fund firms including major financial services groups Fortis and KBC.

Brussels is particularly renowned as a reference centre for international banking transfers and clearing. Its expertise in this specialised field has been nurtured through the presence of the headquarters of world leaders like Swift, Euroclear and Banksys. The Bank of New York is just one that has made Brussels its worldwide processing centre. The city is also a training ground for processing with courses like Solvay Business School’s programme in Financial Transaction Services.

The information and computer technology sector is another key area of the economy, with around 4,500 ICT companies in Brussels, employing 75,000 people – and accounting for one quarter of all new jobs. Indeed, Brussels’ IT sector dovetails with its financial services, having taken a lead in developing e-banking and e-business.

The health sector has become an important vehicle of growth and employment in the Brussels region, representing more than 3,000 companies and around 70,000 jobs. Brussels is well equipped in this field: it is home to three faculties of medicine and pharmacy, five university hospitals, a military hospital, more than 40 general hospitals, psychiatric and specialised clinics, specialised public research centres, four university schools and numerous private centres.

University research has also fuelled the city’s leading role in developing life sciences, including biotechnology and pharmaceutical activities (no less than four Belgians have received the Nobel Prize in Medicine and Physiology). Its network of scientists, prominent research institutions and universities includes almost 3,000 researchers in life sciences.

Science parks, like the Parc Da Vinci, the Mercator research park and the 92-hectare Erasmus Science Park, work closely with the universities.

One of the emerging technologies concerns the environment and Brussels companies have developed new methods to deal with waste, reduce energy consumption, and to cut air, water and noise pollution.

Brussels is, of course, the place that gave its name to the sprout, but although the vegetable is not grown in the city, there is a strong tradition of food in the region. The most famous Brussels food export is chocolate, from the Côte d’Or bars to the exquisite pralines of houses like Godiva, Pierre Marcolini, Wittamer, Leonidas and Neuhaus. But Brussels also exports biscuits, including the ‘speculoos’ gingerbread.

But no mention of food in Brussels could ignore the beer: the country produces 450 of the world's finest ales, and brewing is rooted in Belgian culture, with varieties like the ‘lambic’, a yeast-free local brew available as ‘gueuze’, ‘kriek’, ‘faro’ and ‘framboise’.

Culturally, Brussels enjoys a worldwide reputation for design. Although nearby Antwerp is lauded as Belgium’s fashion capital, Brussels designers like Xavier Delcour, Olivier Strelli, Natan, Yves Dooms, leather stylist Delvaux, and hatmaker, Elvis Pompilio, have made their mark. Brussels can also boast its own style district – the Rue Antoine Dansaert just in front of the Belgian stock exchange – with trendy art galleries, fashion shops, antique stores, cafés and restaurants.

The capital has other artistic talents. Brussels is the city of Pieter Brueghel, Tintin creator Hergé, surrealist painter Magritte and Art Nouveau’s Victor Horta. Their influence reflects the strong tradition of graphic arts that is still vibrant today in architecture and interior design.

Like any city, Brussels faces economic challenges. Although the Brussels region is second only to London as Europe's most affluent, high unemployment remains a concern, particularly among immigrants. The closure of national airline Sabena, the decision of courier service DHL to relocate from Brussels to Germany, and the halving of the VW workforce recently caused much anguish in the city. But such setbacks can only serve to underline the ever-growing importance of the EU to the local economy. And given Brussels’ historic ability to adapt to changing circumstances, the city can be expected to make the most of the new opportunities.

* Leo Cendrowicz is a Brussels-based journalist

Leo Cendrowicz *

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Brussels in figures

The Brussels-Capital Region itself is composed of 19 communes spread over 162 square kilometres, or half a percent of the total area of Belgium, and its 1.1 million inhabitants account for a tenth of the country's 10.4 million population.

But the Brussels Region contributes almost a fifth of the Belgian economy's gross value-added, while its 555,000 jobs account for 17.7% of national employment. Its economy is service-oriented: 88% of Brussels jobs and 89% of its added value are with service companies.

Some 300,000 people from other regions commute into work in the capital every day: in other words, more than half of the people employed in Brussels come from other parts of the country.

In trade terms, the Brussels-Capital region represents around 4.2% of the Belgian commodities, although this amount increases to nearly 20% if the services are included. Over half of the products made in Brussels are exported.
The international presence has become vital for the economy of Brussels. As host to the EU, NATO, and the Belgian government, Brussels contains 159 embassies and 2,500 diplomats, and is the second largest diplomatic city in the world.

The European element accounts for a significant part of the city’s activities: there are 30,500 European officials, but when added to people linked to the EU and family members, it works up to around 105,000, more than a tenth of the total population. Indeed, the number of EU residents in Brussels region is around 160,000. The institutions have brought in wealth, and as a region Brussels is now the second richest in Europe after London, with a per capita GDP of over twice the EU average.

Belgium at a glance

Geographically and culturally, Belgium is at a crossroads of Europe, and over the past 2,000 years has witnessed a constant ebb and flow of different races and cultures.

The country gained its independence in 1830, and has survived despite being made up of two different language groups. These are the Flemish, who speak Dutch, and the francophones, who are dominant in Wallonia and Brussels (there is also a small German minority in the east). It is a constitutional monarchy and a federal State divided into three regions, Flanders, Wallonia and the Brussels-Capital Region.

Brussels is supposed to be a bilingual region, although in practice, around 80% of the city’s inhabitants have French as a first language. English is also widely spoken. Some argue that Brussels is now all that holds Belgium together: because it is a largely French-speaking city situated in Flanders, it makes a break-up of Belgium hard to imagine.

Belgium is the third most open economy in the EU as measured by the value of exports and imports relative to GDP (84%). It was one of the first countries in Europe to industrialise, building up the coal, textile, steel and heavy engineering sectors. But once-thriving Wallonia is still affected by this declining legacy – only partly offset by new businesses like light engineering, chemicals and food processing. By contrast, Flanders has been successful in modernising and attracting high-technology investment.