What kind of winter are we in for? How cold does it get, how high should the heating be? And above all: how high will the energy bill be? Behind how many front doors do money problems arise? Most of us don’t know this, we are used to stable prices. Huge jumps in the price of basic necessities such as gas and electricity are new to many Dutch people. You have to go back to the seventies for that.
Just as new is the uncertainty associated with continued inflation: not knowing how much more prices will rise. Not knowing what your living expenses will cost in the future. Suppose that prices had risen by a third once. That would have been a hard blow, but one you can count on. Now you don’t know what your household book will look like in a few months.
It reminded me of the despairing cry I heard from entrepreneurs in the lockdown sectors during the corona crisis: we don’t know what numbers we can count with if we don’t know how long we’ll be closed. Such uncertainty is now back. There is more that reminded me of corona: once again in good economic health we will get a fat optater on the nose. There are still vacancies, unemployment is low.
Again, a lot depends on the government. Can it support the people who really get into trouble because of these prices? This gas crisis is triggering an enormous redistribution of wealth: between countries that export energy and countries that import energy, between companies that sell energy and companies that buy energy. One gets rich while sleeping, the other bleeds. Many citizens are on the losing side, especially those without solar panels or an insulated house. The government must divide and support the pain.
At the start of the corona crisis, three economic ministers stood in front of television cameras to say: we have very deep pockets, we will not let you down. In retrospect, it seems that this aid gave the economy a boost of confidence. The Netherlands sank less deeply into recession than other countries and came out of it faster. I can think of a reason for that: if the government offers such a buffer, entrepreneurs still dare to invest, and people still dare to renovate their house. If confidence disappears, an economy will falter more strongly.
As uncertain as the economy is now for households, it is also uncertain for administrators. Scholar economists and central bankers told each other in Jackson Hole last week that it could go either way: is this going to be an era of volatility? There’s a lot of humility about what we know and what we don’t know, IMF economist Gita Gopinath told the Financial Times. Elsewhere I see government leaders giving incisive speeches. President Macron told the French: the time of plenty is over.
I don’t hear a lot of big words here. But this gas crisis goes deeper than the purchasing power buttons in The Hague can solve. That requires something from society: resilience, resilience, energy efficiency, inventiveness, helping each other. It also demands something from the government. To convey: “This can be a bad time, one of which we don’t see the end. Chances are you’ll have to surrender, but we’re trying to prevent you from falling through the ice.”
This is not a time to sell fairy tales, but a time to repeat that message: we won’t let you down.
Marike Stellinga is an economist and political reporter. She writes about politics and economics here every week.
A version of this article also appeared in the newspaper of September 3, 2022