The State Council shows understanding for Kaag’s difficult task. In particular, sharply rising asylum costs and rapidly rising interest rates on public debt are causing major setbacks that need to be cushioned. It is the first time in years that the government has had to cut spending. At the same time, the government wants to continue investing in important systemic changes, especially in the fight against nitrogen and climate change.
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“It’s really a turnaround,” says State Councilor Richard van Zwol. He sees an “early inclination toward smaller cuts that seem painless,” though they certainly aren’t always. The Council of State warns against the ‘postponement of execution’. According to the adviser, the cabinet is buying time before arriving at real measures. According to the Council, the ‘gathering’ of cuts is not only due to the fact that the cabinet has had to get used to the cuts again, but also to the rushed process.
The government took steps in the spring memorandum to prevent public finances from becoming too unbalanced, the State Council acknowledges. “However, this is largely caused by temporary factors,” warns the Council: the money left on the shelf has been used for cuts and the Cabinet has benefited from some unexpected tax gains. There are long-term risks, because the government’s household budget is sensitive to economic stagnation or contraction. “It can go fast and deep,” says RvS.
Expansive budget
In the meantime, there is still talk of an ‘expansive fiscal policy’, with spending rising and/or (tax) revenue falling. In doing so, the cabinet “approaches the safety barrier”. After all, there are no reserves left for further financial setbacks and little budgetary space remains for the next term. Indeed, if economic principles remain the same, the next cabinet will first have to cut spending or increase the burden before a new policy can be implemented.