In the coming years, the government will face setbacks in expenditure on asylum reception and disability benefits totaling around 3 billion euros. These setbacks are only compensated to a limited extent by the better-than-expected healthcare expenditure.
According to figures from the Ministry of Finance, the government also has little financial space: according to officials, the budget deficit will amount to 2.5 percent in 2026 and 2.9 percent in 2027. That is close to the Brussels standard of a maximum of 3 percent, which the cabinet says it will strictly respect.
This is evident from the Spring Memorandum that the cabinet sent to the House of Representatives this Friday. This year’s Spring Memorandum is not only an adjustment to the current year’s budget and a look ahead to the following year. It also contains the plans for the coming years of the minority coalition of D66, VVD and CDA. Despite criticism from the House of Representatives on, among other things, the accelerated increase in retirement age care and the cuts in care for people with disabilities, the government has not yet changed those plans.
This means that, among other things, the significant cuts to healthcare, social security and the civil service from the coalition agreement have ended up in the books of the Ministry of Finance. Just like the significant increase in expenditure on the armed forces.
The major profit warning in the latest figures from Finance is that the economic consequences of the war in the Middle East have not yet been included in the books. This week, De Nederlandsche Bank calculated that inflation will rise to 3 percent this year due to higher oil and gas prices. If the war continues longer, inflation could rise above 5 percent.
This higher inflation can have major consequences for almost all income in the budget. The expenditure side of the budget is more or less fixed, partly due to current contracts. The government will face setbacks in spending on asylum reception and disability benefits of approximately 3 billion euros in the coming years. These setbacks are compensated to a limited extent by better-than-expected healthcare expenditure.
Mental illnesses
A major financial setback is expenditure on disability insurance. In 2026, these will increase by 285 million euros, an increase that could reach one billion euros in 2031. This is because more people than expected are incapacitated for work due to psychological disorders and because the UWV has too few medical examiners.
Furthermore, the government must spend more money than expected on asylum reception, approximately half a billion annually, and in the longer term the cabinet expects to have to pay approximately 300 million euros more to the European Union than budgeted. The cause is, among other things, higher economic growth, to which the remittance to Brussels is linked. In addition, the proceeds from confiscating criminal assets are disappointing: this is expected to yield 284 million euros less annually than previously estimated.
In the healthcare budget, Minister of Finance Eelco Heinen (VVD) actually found lower expenditure than budgeted. As a result of this windfall, the government expects to have to spend more than one billion euros less on healthcare every year. This money is partly used to pay for setbacks.
According to the Ministry of Finance, the budget deficit, expressed as a percentage of gross domestic product, will be 2.5 percent in 2026 and 2.9 percent in 2027. This would keep Dutch public finances (just) below the Brussels budget standard of a maximum of 3 percent.
However, in its estimates presented in March, the Central Planning Bureau (CPB) assumes a deficit of 2.6 percent in 2026 and 1.9 percent in 2027. This is because the CPB, more than the Ministry of Finance, takes ‘under-exhaustion’ into account. This is the case if the ministry fails to actually spend money in the budget, for example because it is difficult to find certain personnel in the tight labor market. In recent years, the Ministry of Finance underestimated this under-exhaustion, resulting in repeated billion-dollar windfalls.
What also makes the figures uncertain: the cabinet does not have a majority with 66 seats in the House of Representatives. The Spring Memorandum should therefore primarily be seen as the starting signal for negotiations between the minority cabinet and the House of Representatives.
Heinen will use the high deficit according to his own figures in those negotiations to show that there is little money for the wishes of the opposition. He will also point out that the government will most likely have to tighten its purse strings in the coming months due to the war in the Middle East. Minister Heinen (VVD) said in his weekly conversation with RTL that the economic situation could deteriorate further. He warned of an “economic shock” for which he will need the “scarce resources” that remain in the future.
