According to CPB director Pieter Hasekamp, the government has “buyed time” with support measures, but needs to “think quickly about an exit strategy from 2023”. ‘We will have to take into account the structurally higher energy prices. A structural problem requires structural solutions, the current price cap does not.’
BNR’s internal economist, Han de Jong, finds the 4% drop in purchasing power exceptional. ‘In a previous estimate, they still factored in for a 7% decline this year. But above all: in 2023, purchasing power will develop much worse than previously thought. In September it was still thought that purchasing power would improve, but now it’s worse.
The decline in purchasing power is mainly due to high inflation and lagging wages, according to the CPB. According to the baseline scenario, which is based on current energy prices, inflation will be 3.5% next year. Without the energy cap, it would be 6% higher.
“The economy must adapt structurally”
The fact that energy prices remain structurally high, according to the CPB, also means that the economy needs to “structurally adjust,” says De Jong. ‘You can’t have a government that permanently subsidizes energy prices. This is possible under the current circumstances, because it is sudden and has such an impact. But this is not a structural solution.’
The CPB sees, among other things, the usefulness of a wage increase. “Which will also happen: some companies will no longer be profitable with higher energy prices.” However, De Jong is surprised that there appears to be no solution from the CPB to bring energy prices down to a “normal level”. “I think it’s part of the long-term solution, but they don’t talk about it.”
Low-income people are most at risk
People with lower incomes are more at risk. It is true that they appear to benefit most from the energy price cap, but this group spends a larger share of their income on energy. The CPB estimates that around 430,000 households will eventually run into financial problems and will no longer be able to pay for food, shelter or energy costs. In the event of a harsh winter, this number can reach 500,000.
Whichever scenario comes true, the price cap will ensure that an average household is less affected by fluctuations in energy prices. If, for example, the price of energy increases, the loss of purchasing power of an average household will only increase by 0.2 percentage points compared to the baseline scenario, even with a severe winter.