Budget deficit creeps up to 3%, no room for further setbacks

29.04.2023, 17:51 dutchnews.nl

Sigrid Kaag talking to reporters this week. Photo: Robin Utrecht ANP/HH

The Dutch budget deficit is running above 3% of gross domestic product (GDP), which is higher than allowed by Brussels, finance minister Sigrid Kaag said in her spring budget statement on Friday.

The figures show that the government no longer has any room to absorb new setbacks if it wants to stay within the European norm, and that the next cabinet – the elections are in March 2025 – will have to take steps to stay within the Brussels rules, the Financieele Dagblad reported.

‘Ministers are taking joint responsibility to cover the budget as much as possible, while taking rising interest rates into account,’ Kaag said. ‘We want to avoid passing the bill on to future generations because this is the only way we can meet major challenges in the future.’

The spring statement is an annual update of the current year’s budget plus a look ahead to the coming years. Ministers reached agreement on the statement on Wednesday after weeks of intense talks.

As leaked or announced earlier, spending will be shaved across the board to keep the deficit under control and to meet cabinet commitments on Groningen, the childcare benefits scandal and refugees.

For example, the cabinet is spending a further €13.5 billion on paying the government’s ‘debt of honour’ to Groningen in the wake of the earthquakes. A further €1.3 billion will go on reparations in the wake of the childcare benefit scandal while the cost of caring for asylum seekers goes up by €1.6 billion.

Ministers have also agreed that healthcare workers who developed Long Covid during the first wave of the coronavirus pandemic will be entitled to a one-off payment of €15,000 per person.

The extra spending will be financed by not increasing ministry budgets in line with inflation and through incidentals.

Plans to introduce virtually free childcare for everyone will be delayed from 2025 to 2027, and the controversial Stap training budget will be scrapped after this year.

In addition, traffic fines will go up 10%. Spending on the state pension will also be down by some €250 million, because more people have died than forecast, the finance ministry documents show.

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