If the economic contraction continues and the Netherlands enters a recession, it would be unwise to allocate billions again to continue to compensate for the decline in purchasing power of citizens. With that “uncomfortable message”, Finance Minister Sigrid Kaag addressed the congress of her party D66 on Saturday afternoon. “Unlike with corona, we cannot take on every setback.”
On Prinsjesdag, the Rutte IV cabinet took the decision to compensate for the rising energy bills by introducing a price ceiling. The bill for this measure will be high, although the exact amount is not yet known. At the beginning of October, Kaag himself valued it at between 10 and 40 billion euros in 2023. For the years after that, the cabinet has not yet made any promises about purchasing power repair, while it is realistic that the
energy prices will remain high beyond next year.
Last week, Statistics Netherlands announced that the Dutch economy contracted by 0.2 percent in the past quarter – a limited contraction, but a larger decline compared to other Western European countries. “The chance of a recession is increasing,” Kaag said about this on Saturday. “The honest story is that we will all feel this crisis.” Officially, a recession is when the economy shrinks for two quarters in a row.
That means, said Kaag in De Doelen in Rotterdam, that the cabinet cannot keep busy taking costly emergency measures. “Even larger support packages inadvertently drive inflation further. We don’t want to pass the bill to future generations, do we?”
Public finances are in good shape at the moment, with a relatively low government debt, but according to the Minister of Finance that could “turn quickly” if we get too large annual deficits and interest rates continue to rise. “To prevent us from having to cut costs in a crisis situation,” Kaag wants to ensure that revenues are kept up with government spending. “What we spend with one hand must first come in with the other. That is the lesson we have learned from the past.”
Strong criticism of Minister Adema
At the same party congress, D66 MP Tjeerd de Groot again lashed out at the new Minister of Agriculture Piet Adema (ChristenUnie). Without mentioning Adema by name, De Groot reproached the minister of agriculture for not working on the transition to sustainable ‘circular agriculture’, as laid down in the coalition agreement.
“I gave a presentation at the ministry about how you could do that. Every debate is about how you could do that. I’m going into the region to tell you how you could do it. But a minister has been appointed who is not doing it, and I find that very frustrating,” De Groot said about Adema.
De Groot also has little confidence in the Agricultural Agreement that Minister Adema wants to conclude with farmers early next year, including on tackling nitrogen. “If your highest goal as a minister is to become good friends with the target group you are talking about, that will not work. Because it is very drastic,” De Groot said about Adema.
De Groot said he was trying to keep Minister Adema ‘on his toes’. But: it will be ‘fighting’.
Read also: Coalition party D66 opposes nitrogen statements by Minister Adema