Focus on Dutch Budget Day 2018

by: Nico Klene , Philip Bokeloh

On the third Tuesday of September, Budget Day, the Dutch government announces its plans for the coming year. At the same time, the CPB presents its Macro Economic Outlook.

MEO-and-Budget-Memorandum-2019.pdf (132 KB)
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Summary:

Macro Economic Outlook (MEO) 2019

• The CPB expects the Dutch economy to continue growing at an above-average rate of 2.8% in 2018 and 2.6% in 2019
• After the downturn in 2018, growth in world trade will pick up again slightly in 2019 and, as a result, Dutch exports will increase faster than in 2018
• Consumer spending and investment will increase more slowly in 2019 than this year
• This year’s government spending will rise considerably more slowly than forecast, given that part of the extra boost to spending cannot be implemented until next year
• Inflation will rise sharply in 2019, mainly because of the rise in the lower rate of VAT
• Unemployment will fall slightly further, thanks to the ongoing, albeit slightly less strong growth in job creation

2019 Budget Memorandum

• The government will increase spending and reduce the net burden on households
• Thanks to various additional measures, almost everyone will see an increase in purchasing power next year
• The EMU surplus is set to rise to 1.0% of GDP in 2019, having fallen from 1.2% to 0.8% this year
• Without the favourable effects of the currently strong economic growth, next year’s general government balance would be negative. However, the government believes its finances to be sufficiently shock-resistant
• The tax burden on businesses will rise in 2019
• The EMU debt will fall to 49.6% of GDP, compared to 62% in 2016