It’s the Budget Day of purchasing power. Because the high inflation and the energy crisis threaten hundreds of thousands of people with financial problems. The cabinet will partly repair that purchasing power, according to leaked documents.
According to a calculation by the Central Planning Bureau (CPB), the measures could lead to an improvement in purchasing power of 3.9 percent. These are measures that will take effect next year. The CPB expects that people will lose 6.8 percent this year. The figures are surrounded by many uncertainties, which means that the situation can differ enormously per household.
Purchasing power improvement
The government is introducing a package of measures worth 17.2 billion euros to improve purchasing power. For example, the minimum wage will increase by 10 percent, as will the related state pension and benefits. The rent allowance, the health care allowance and the child budget will also be increased. And the rate of the first bracket of income tax (to almost 70,000 euros) is slightly reduced.
To ease the pain of high energy prices, the energy tax will be reduced. And the temporary reduction in fuel excise duty will be extended until at least June 2023. For people with the lowest incomes, there will also be an energy surcharge of 1,300 euros next year.
Up to the last moment, the cabinet has been working on the implementation of an emergency fund for people who have high energy bills and who are struggling with payment arrears. That fund would have to be filled by means of an additional levy for energy companies. The cabinet has also examined the possibility of a price ceiling for a cubic meter of gas and a kilowatt hour of electricity. More information about the emergency fund and the price ceiling will be announced today.
The economic figures
The cabinet will spend 395 billion euros next year and this will be offset by 366.4 billion euros in revenue. Economic growth is expected to amount to 1.5 percent; for this year is still assumed to be 4.6 percent.
The national debt will amount to almost 49 percent of the size of the economy next year, well within the European standard of 60 percent.
The government is taking into account inflation of ‘only’ 2.6 percent in 2023, which is striking given the expectation of 9.9 percent inflation this year.
Extra education money
The government is concerned about the deteriorating educational performance in primary and secondary education and is willing to spend billions to change this. For example, an extra billion will be made available for tackling inequality of opportunity, a billion for improving the quality of education and an extra 800 million will be available for teachers, school leaders and educational support staff.
Another billion euros has also been set aside for better compensation for students who previously did not receive a basic grant.
Climate and corona
The government will also continue to invest in the Climate Fund. EUR 145 million is available for stimulating the production of sustainable hydrogen, EUR 180 million for offshore wind and EUR 200 million for heat networks.
And in 2023, 5.2 billion euros will be made available for measures to curb the corona virus.
Crime
To prevent vulnerable young people from ending up in crime, the cabinet will allocate 100 million euros next year. EUR 100 million has also been earmarked for a more efficient fight against drug crime.