On Friday, the Cabinet Rutte 3 resigned collectively. Because of the unprecedented harsh conclusions of the parliamentary committee on the failure of the government, this step was politically obvious. The fall of the Cabinet calls for political unanimity in The Hague; the cabinet and the opposition, in order to enable a vigorous approach to the coronacrisis. It is also necessary to start working quickly with a new cabinet after the elections of the House on 17 March.
This haste is needed because various developments threaten the Dutch economy, but also our prosperity. It is customary for the formation of a new cabinet to have all the relevant data about our economy on the table. This includes an analysis of the economic position of the Netherlands vis-à-vis other EU countries and forecasts of our future economic growth and the state budget.
It strikes us that most political parties, but also economist circles, still have the idea that the Netherlands, also in Europe, has a strong economy and that we have little to worry about our future. It also assumes that the Dutch economy will grow steadily in the coming years and that we have sound public finances that make it possible.
In anticipation of the data, analyses and estimates on the Netherlands that will be on the table when a new cabinet is formed, we expect this dossier to make it clear that the Netherlands should be concerned. After this we list a number of concerns points. Because many parties in their electoral programmes, especially the left, believe that there is sufficient resources for additional public spending, we start with the health of Dutch public finances.
Recently, official budget experts have tested this financial health. The harsh conclusion: a new cabinet has no room for additional public expenditure compared to the current situation. The experts also estimate that new expenditure is only justified if it is financed by cuts in other public expenditure. They have not yet taken into account the fact that Rutte 3 now spends billions on a monthly basis to keep our economy alive and that a new cabinet is facing an increasing budget deficit and a public debt. We note that for public investment could be borrowed.
Politically The Hague still fails to take account of international developments, causing the growth of our economy and employment. This week DNB published a study on the consequences for the Netherlands of the growing international trend of protectionism. More and more countries believe that the benefits of free trade for their country do not outweigh the disadvantages. That is why they are taking protectionist measures, such as imposing taxes on imports, limiting trade flows, but also favouring their own businesses and citizens. In addition, many countries, including within the EU, are trying to strengthen their own economies by actively recruiting international tech companies and smart start-ups and scale-ups. They offer these companies, among other things, tax cuts and investment subsidies. Dutch is in the rear and therefore loses companies. We also see that countries and businesses, partly as a result of coronacris, are getting goods and services closer to home.
Especially trading countries, such as the Netherlands, are severely affected. More than a third of our national economy (GDP) is earned by exports of services and goods. This means that our exports account for 2.4 million full-time jobs. The Nederlandsche bank warns that the aforementioned developments will cost the Netherlands economic growth and employment. According to this study, the Netherlands needs not less but more Europe in order to maintain our prosperity in the future. Further integration of the European market is of great importance for the Dutch economy. It protects against the negative effects of protectionism. We agree with this analysis, but in the formation of a new cabinet will certainly call for discussion with the EU.
A strong economy?
Especially in recent years, the Netherlands has been among the European countries with the strongest economy. Also in important international rankings in terms of competitiveness, innovation, trade position, business environment and education, our country was often in the leading group. This beautiful image is still cherished in Hague politics, but the formation is a good time to test it against reality. For example, the Netherlands has fallen on several rankings. Recent OECD figuresalso show that we are internationally among the countries with the highest burden on labour. In addition, we must be concerned about our international corporate climate. This has become less attractive due to: high employers burdens, tax deteriorations, a lack of staff with a technical background, increased political hostility towards business and increased government bureaucracy.
For growth, jobs and prosperity, the Netherlands needs smart international companies, especially in the field of technology, but also creative new start-ups. As a result of a deterioration in our business environment, companies but also investors are more likely to opt for other EU countries that offer a more attractive climate than before.
This will cost the Netherlands companies and jobs. After the elections, the Netherlands needs a cabinet that will quickly take measures to drive our economy.
This requires parties that will work together to restore our economy and drive it towards the future. It is characterised internationally by climate change and policies to tackle global warming effectively. The new cabinet and our businesses must be at the forefront of this. This also applies to measures that promote innovation and technological progress, as advocated in this newspaper by Ineke Dezentjé Hamming-Bluemink, President of the FME technology industry.
It would be wise to conclude a polder agreement with the social partners in order to have broad support for future policies, which is urgently needed given the list of problems. History has shown that such an agreement can be successful.