News item | 20-09-2022 | 15:15
The cabinet is allocating a lot of money in the national budget for next year to support purchasing power problems and it is investing in the Netherlands of the future.
Rising prices are taking a big bite out of purchasing power. More and more people are getting stuck because of this. Structural recovery of purchasing power must in the first place come from an increase in wages. In addition, the government is also taking significant measures to support people with low and middle incomes. Not just next year, but the years after that.
Purchasing power measures
- There will be a temporary maximum on the gas and electricity rates to keep the energy bill manageable and to provide guidance. An energy allowance will be introduced for the most vulnerable households and the health care allowance, housing allowance and the child budget will be increased.
- To structurally help people, the minimum wage will increase by 10% in 2023, earlier and more than planned. The state old age pension and work-related benefits will also increase.
- In order to ensure that people have more income from their work, the taxes on labor are being structurally reduced. The 1st rate of income tax will go down and the employed person’s tax credit will go up. Middle incomes are also supported in this way.
A total of €17.2 billion is available for this in 2023, of which €5 billion is structural. The measures are partly funded by the government taking steps to bring the tax on labor and wealth more into balance.
Investments in the future
The Netherlands faces major challenges for the future. These are mainly about our broad prosperity, which encompasses more than material things and economic growth. These tasks now require investments, otherwise the problems will only get bigger and the solutions more expensive.
For this reason, the government is earmarking substantial sums in the coming years for education and equal opportunities (€2.8 billion), housing and infrastructure (€7.5 billion), the future of rural areas (€24 billion), climate change (€35 billion). ) and defense (€5 billion). Partly because of the war in Ukraine, which threatens not only our purchasing power, but also our European borders and values.
Solid public finances
The sizeable investments lead to a temporary worsening of the budget deficit, which amounts to 3% of gross domestic product (GDP). Rising interest rates on the national debt will put additional pressure on the budget for the coming year.
Government debt is expected to remain relatively favorable next year, at 49.5% of GDP. This is partly due to high inflation. As a result, GDP rises and the debt is proportionally lower.
Challenges for public finances remain in the medium and long term. It is possible that government debt will exceed 60% by 2030. In the longer term, the risk is that bills will be passed on to future generations. The government is therefore committed to stable debt development. Sound public finances are essential for now and in the future.