The Council of State (RvS) is far from satisfied with the government’s budgetary policy. According to the advisory body, “the cabinet is brushing the guardrail with an expansionary and pro-cyclical fiscal policy”. ‘And with that they confirm what we often observe in the broadcast,’ says Professor Arnoud Boot. “That Dutch fiscal policy has been extremely opportunistic.”
According to Boot, that means the government is pouring oil on the already “growing economy,” which would partially explain the inflation. “So it’s procyclical,” says Boot. “Because you want the government to slow down in good times and then have ammunition for bad times.”
“You want the government to slow down in good times and then have ammunition for bad times”
On the contrary, drastic cuts are being made to comply with the European Union’s Stability and Growth Pact. “Or at least the preventative part,” she continues. ‘So they have to stay within the three per cent budgetary norms. And the Council of State notes that there is arbitrariness and that the overall story is missing”.
Incitement
Boot therefore believes that the Council of State report should be seen as an incentive for the cabinet to come up with such a general story. “Otherwise, the haphazard austerity policy will be useless,” continues Boot, who thinks the policy will need to be tightened further. ‘Overburdened economy is forcing further reductions in government spending.’
According to Boot, even the State Council makes it clear ‘on every page’ that the absence of the story is mainly due to the government’s inability to prioritize. (…). “Government spending is too high and the Cabinet justifies it by saying there will be an umbrella on budget day.”
‘The locker falls’
Boot does not call this a realistic prospect, especially as such a statement forces the cabinet to set priorities, “and the coalition parties disagree on priorities,” he continues. “Because if the cabinet had really made this a priority in September, the cabinet would have gone down.”
And so he expects the Cabinet to stage a complicated story in September that looks primarily at “broad prosperity” – which also includes the climate, education, housing market and other spearheads important to society – “to hide that the budget is not in order.’
Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
