They point to the deteriorating business climate and the tight labour market. Which sectors, in their opinion, will receive additional funding, and which will not? The scholars discuss the key themes and their impact on the Netherlands.

Themes to watch

For Professor Roel Beetsma, the message is clear: ‘The business climate must play a central role in the Budget Memorandum. Unpredictability in government policy, especially around the energy transition, creates uncertainty among companies.’

Additionally, Beetsma points out the structural tightness in the labour market. ‘This problem also affects (higher) education. For a healthy knowledge economy, you would expect more investment in education, but the opposite is happening.’

Assistant professor Albert Jan Hummel emphasises that the Netherlands faces significant challenges on various fronts. ‘The climate crisis, the housing shortage, an ageing population, and the tight labour market are urgent issues. You hope that steps will be taken in all these areas, but the proposed policies lack ambition. It is remarkable that the cabinet, despite substantial cuts in the civil service, barely stays within European budget rules, especially given the numerous problems in implementation.’

How will funds be spent?

When asked which sectors can expect extra funding, Beetsma is pessimistic about education. ‘There will likely be significant cuts in higher education, which is harmful for a knowledge-based economy like ours. At the same time, you see more and more money going towards various compensation payments, such as for the childcare benefits scandal and other social issues.’

Hummel expects additional funding for defence, partly to meet NATO standards, as well as for healthcare. The latter includes reducing the health insurance excess (eigen risico) in healthcare insurance. Agriculture will also receive more funding. However, these extra expenditures come at a cost. ‘There will be significant cuts in development cooperation, public services like the Netherlands Public Broadcasting (NPO), and higher education. The cuts to higher education, in particular, will almost certainly have a negative effect on the economy in the long term.’

Tension During the General Political Debates

The researchers anticipate intense discussions during the Parliamentary Debate on the Speech from the Throne. While the exact topics are difficult to predict, Beetsma thinks that taxes, energy transition, healthcare, and immigration are likely to take centre stage. Hummel will mainly focus on the dynamics within the coalition: ‘If a financial setback requires budget cuts, it remains to be seen whether these parties will be able to reach an agreement.’