2023 central government budget focuses on purchasing power and major future challenges
In the central government budget for the year ahead, the government is setting aside a considerable amount of money to ease purchasing-power problems and invest in the Netherlands of tomorrow.
Rising prices are making a large dent in purchasing power, and more and more people are getting into difficulties as a result. The structural restoration of purchasing power must come about primarily through higher wages. The government is also taking substantial measures to support people on low and middle incomes, not only next year but also in the years to come.
Measures to restore purchasing power
Taxes on energy will be substantially reduced in 2023. An energy allowance will be paid to the most vulnerable households, and healthcare benefit, housing benefit and child budget will be increased. In order to provide structural relief, the minimum wage will be raised by 10% in 2023, an earlier and larger increase than planned. The state pension (AOW) and work-related benefits will rise in parallel.
To ensure people retain a greater share of their earnings from work, the tax burden on labour will be lowered on a structural basis. This will also help people on middle incomes. An additional €17.2 billion has been earmarked for 2023 for this purpose, €5 billion of which will be available on a structural basis. The measures will be funded in part by steps taken by the government to strike a better balance between tax on labour and tax on wealth.
Investment in the future
Looking to the future, the Netherlands faces major challenges. They mainly concern our wider prosperity, which includes more than just material matters and economic growth. These challenges demand investment now, otherwise the problems will only become greater and the solutions ever more expensive. For the coming years the government is therefore reserving substantial amounts for education and equal opportunities (€2.8 billion), housing and infrastructure (€7.5 billion), the future of rural areas (€24 billion), climate change (€35 billion) and defence (€5 billion), a decision made partly in view of the war in Ukraine, which threatens not only our purchasing power but also our European borders and values.
Sound public finances
These sizeable investments will result in a temporary deterioration in the budget deficit, bringing it to 3% of gross domestic product (GDP). The rising interest on the national debt will put additional pressure on the budget over the coming year. The level of the national debt is expected to remain relatively favourable next year at 49.5% of GDP. This is partly due to high inflation, which increases GDP and thus makes the debt relatively smaller.
In the medium and longer term, challenges in the realm of public finances will remain. By 2030 the national debt could exceed 60%. There is a longer-term risk that the bills we run up will be passed on to future generations. The government is therefore committed to ensuring that the debt develops in a stable manner. Sound public finances are essential, both now and in the future.