2020 Budget Memorandum centres on investment and tax cuts
The Netherlands is faring well in a world of growing economic and geopolitical unrest. The economic growth seen in recent years is flattening, but with growth rates of 1.8% this year and 1.5% in 2020 the Dutch economy is still in robust health. These findings are presented in the 2020 Budget Memorandum, which the Minister of Finance, Wopke Hoekstra, submitted to the House of Representatives today.
Furthermore, the employment rate is very high. ‘Many people who spent their days looking for a job two or three years ago are now cycling or driving to work,’ says Mr Hoekstra. ‘This is tremendously important for many families.’ The budget is in good shape, with the national debt projected to fall to less than 50% of GDP. The country is in a better position to absorb economic setbacks in the future.
Much has already been achieved, but there is still a lot to do. The government will therefore keep to the chosen path of investing in society and reducing the tax burden for private individuals. In the 2020 Budget Memorandum the government provides additional funding for, among other things, affordable housing, defence, the earlier phasing out of gas production in Groningen and youth care.
Additional funds will be provided to reduce the tax burden, especially that borne by employees, who were badly hit by the economic crisis. The government is therefore putting them at the centre of this Budget Memorandum.
The government also wishes to do something about the growing uncertainty on the labour market. It is taking measures to improve the balance between permanent and flexible work. It also wants to reduce the tax differences between employees and self-employed persons without employees. The government will therefore lower the self-employed person’s allowance to €5,000 by 2028, in steps of €250. In return, the self-employed, like all employees, will benefit from an increase in the employment tax credit.
The government has not lost sight of longer-term needs. The National Climate Agreement and the Pension Agreement are important steps towards a more sustainable Netherlands and a pension system that is fit for the future. Their implementation will be high on the agenda in the coming period.
The challenges we are facing, however, require even more robust responses. ‘We are growing older and older, our productivity growth is declining and we are having to come to terms with new technologies such as artificial intelligence, robotics and big data. They will all affect the way we work,’ says Mr Hoekstra. This means that society and the economy will be different in the future. To put it simply, how we make a living will change. The government is already taking preparatory measures. ‘Low interest rates provide opportunities for this,’ says Mr Hoekstra. ‘We will explore avenues to invest more in innovation, knowledge development and infrastructure.’ The Minister of Economic Affairs and Climate Policy and the Minister of Finance are studying the establishment of an investment fund to strengthen earning capacity and will report to the House in early 2020
With the 2020 Budget Memorandum, we are working not only on our current prosperity but also on that of future generations.
- Economic growth is projected to be 1.5% in 2020.
- Unemployment is projected to be 3.5% in 2020.
- Household purchasing power is projected to increase by 2.1%.
Budgetary decisions in 2020 include:
|Youth care||€300 million|
|Asylum and migration||€134 million|
|Housing market||€350 million|