A few weeks ago, the Central Economic Planning Bureau had expressed the expectation that the government would face a budget deficit of six billion euros. But since government revenues have increased by €39 billion, the government can now count on a windfall. Moreover, expenses were also lower than expected, explains BNR’s in-house economist Han de Jong. “That’s because the support for companies has been lower, because we’ve had far fewer lockdowns than in 2021, for example. Also, the government also has a hard time spending money.”
Staff shortage
This is mainly due to the tightness of the labor market. ‘Sometimes it is not possible to spend all that has been budgeted because there is a shortage of staff. This probably saved a few billion.’ The reduction in the excess profits of the fossil fuel industry also resulted in a six billion increase on the national budget: “As a result, public finances have fared better than expected.”
“It could be a stupid coincidence or a foresight”
Despite the small windfall, public debt has increased by more than 31 billion euros. But in percentage terms there is even a 1.5 percent decrease in gross domestic product (GDP). The Netherlands is also doing well on EU fiscal rules. For example, there was no budget deficit in 2022 and the debt-to-GDP ratio, at 51%, is still well below the 60% limit set by the EU.
Smart move?
De Jong attributes the absolute increase in public debt to an error of assessment by the Finance Ministry. “It has to estimate how big the deficit will be and borrow money on that basis. As a result, more than was needed was borrowed last year.’ But that’s not necessarily a bad thing, says De Jong. With current knowledge, that would have been a smart move, says the economist. “At the time, interest rates were lower than they are now, so it could be a stupid coincidence or a prediction.”