2018 Budget Memorandum: Dutch public finances in robust health
The Netherlands' public finances are in better shape than expected. The budget surplus that arose in 2016 will rise to 0.8% of gross domestic product (GDP) next year and the government debt will fall further to 54.4% of GDP.
The Dutch economy is performing better than expected, and in consequence so are the Netherlands' public finances. The economy will grow by 3.3% in 2017 and a projected 2.5% in 2018. The labour market is also developing more positively than anticipated. Unemployment is falling rapidly due to an increase in the number of jobs. These findings are set out in the 2018 Budget Memorandum, which finance minister Jeroen Dijsselbloem presented to the House of Representatives today.
The Netherlands is benefiting from the improved economic climate in Europe and the rest of the world. However, with its open economy it will face bigger risks if the economic tide turns in Europe and the wider world. Brexit, uncertainty about the direction of the United States' economic policy and geopolitical tensions in other parts of the world could dampen economic growth in the Netherlands.
To avoid having to make immediate spending cuts during an economic downturn and to enable a quicker response to any future crises, it is important to reduce the debt further now that the economy is picking up. This will create a scope to run a deficit and let the debt rise again in times of adversity, making it less likely that painful austerity measures will be required.
Measures in 2018
- The government will provide €425 million to improve the purchasing power of vulnerable groups so that they too can share in the improved economic situation. This measure will mean that not only the employed but also benefit recipients and pensioners are better off.
- As announced earlier, the government will invest a further €435 million in improving the quality of care provided by nursing homes. These costs will exceed €2 billion on a structural basis.
- The government will invest an extra €270 million in improvements to and new agreements on terms of employment in primary education. And next year an additional €223 million will be set aside on a one-off basis because of a rise in the number of pupils and students.
- The government will invest an additional €116 million in national security, providing extra funds for strengthening cybersecurity and counterterrorism.
- The government will set aside an additional €75 million to ensure the continuity of the Tax and Customs Administration if necessary in the years ahead.
- An additional €25 million will be reserved to improve the supervision exercised by the Netherlands Food and Consumer Product Safety Authority (NVWA).