As of March 2025, Belgium is facing a critical economic challenge, with recent data indicating that one in seven small and medium-sized enterprises (SMEs) is classified as a 'zombie company.' According to figures from the Organisation for Economic Co-operation and Development (OECD), approximately 40,382 companies in Belgium, or 13.3% of all enterprises, have been operational for at least ten years but have failed to generate adequate profits for three consecutive years to cover their financial obligations.

These businesses collectively employ a significant portion of the workforce, in which around 15% of capital is tied up in financing these non-viable firms.

In 2024, Belgium recorded over 11,000 bankruptcies — marking a ten-year high — with an average of more than 30 businesses failing each day.

This surge raises questions regarding the overall health of the country's business environment, particularly as many of these firms lack a viable economic future.

Comparative data show that Belgium's entrepreneurial landscape is notably static, characterized by a low 'turbulence rate,' which measures the dynamism within a region by accounting for both new births and closures of businesses.

Belgium’s turbulence rate stands at just 11%, substantially lower than the European average of 19.2%, and starkly contrasted with Lithuania, which boasts a much higher rate of 42%.

The relative underperformance of Belgium's SMEs can be attributed to various factors.

Notably, the low rate of business closures suggests that many non-viable companies are surviving, thereby consuming critical resources such as capital and workforce.

This situation poses a significant hindrance to the productivity of healthier businesses, causing competition distortions, particularly in public procurement sectors, as struggling firms often accept contracts below sustainable profit margins.

Analysis reveals that businesses with negative equity represent a further complicating factor within the Belgian market landscape.

Approximately 65,660 companies, or 14% of the total, report negative equity, indicating that, at least on paper, they lack substantial value.

The ongoing prevalence of these firms contributes to a growing category of unhealthy enterprises, distorting the competitive equilibrium necessary for a thriving economy.

Another underlying cause of the zombie phenomenon in Belgium is the generous public subsidy framework, which accounts for around 6.3% of the country’s Gross Domestic Product (GDP), well above the OECD average of 3.8%.

This generous allocation translates to significantly higher support for Belgian firms, creating an environment where unproductive businesses are propped up rather than allowed to fail.

Additionally, financial institutions may delay declaring insolvencies, maintaining credit lines for businesses that are struggling, and family-owned firms often prolong their survival by adjusting annual losses instead of addressing underlying financial challenges.

Such dynamics suggest a pressing need for systemic reforms to enhance the viability of new enterprises and encourage a more dynamic economic environment in which only those companies capable of sustaining profitability can thrive.

However, the impact of recurring bankruptcies on entrepreneurs and their families underscores the human cost of these economic trends.