News item | 11-09-2023 | 4:00 pm
The 17e In part 1 of its advice, the Budget Space Study Group recommends a course correction to the budget for the upcoming cabinet period. Government finances have deteriorated considerably due to, among other things, increased interest costs and a sharp increase in expenditure. Money has recently become significantly more expensive and that is precisely when it is important to make choices. Making choices is also necessary to achieve goals; if we try to do too much at once, there is a risk that investments will be delayed. Sound public finances in both the short and long term are important for tackling social challenges and prevent us from leaving an account open for future generations. The Dutch economic prospects are good given the circumstances. Now is the time to build buffers for economic downturns in order to be able to absorb future setbacks.
The study group recommends a budget deficit of approximately -2% of gross domestic product (GDP) in 2028 for the coming government period. According to the study group, this provides sufficient distance from the European -3% standard and contributes to a stable debt and therefore healthy public finances . The budget statement for the upcoming cabinet period will then structurally amount to approximately 17 billion euros. However, estimates are inherently uncertain due to economic cycles, inflation and geopolitical developments. During the government’s term of office, the advice is not to make adjustments if the economy is doing better or worse (trend-based budget policy). This results in peace and stable policy that people and companies can rely on.
The study group recognizes the need for investments in the future. However, the dimensions and choice of instruments deserve attention; not all goals can be achieved through government spending. In addition, it is important that the new cabinet works on structural reforms of the long-term financial challenges, such as in the areas of healthcare, aging and climate. These costs will continue to increase after 2028.
Raising taxes or spending less affects people and companies. When making policy choices and associated investments, it is therefore important to start from the perspective of broad prosperity: in which people and society are central. This requires an integrated approach. Sound public finances are and remain a way to ultimately ensure good education, good care and safety for everyone. Therefore, ensure sensible reforms, take into account measurement and implementation and look at both increasing taxes and reducing expenditure.
About the Budget Space Study Group
For the 17e The Budget Space Study Group advises politicians on the budget target and the budget system prior to the House of Representatives elections. With this advice, political parties can make a good decision about the budget policy to be pursued in the next government period.
Due to the fall of the cabinet, the study group has gone through an accelerated procedure. The budget targets are included in the first advice presented today in the run-up to the elections. The advice on the budget system and rules will follow in December of this year prior to the formation.
The Budget Space Study Group is traditionally chaired by the Secretary General of the Ministry of Finance and also consists of senior civil servants and directors from the Ministry of General Affairs, the Interior and Kingdom Relations, Economic Affairs and Climate, Finance, Social Affairs and Employment, Public Health, Welfare and Sport, the Central Planning Bureau and De Nederlandsche Bank. The Netherlands Environmental Assessment Agency and the Social and Cultural Planning Office have an advisory role.