At the end of last week, the European Commission published the so-called Debt Monitor, and the Netherlands turned red. That is not good news, according to professor Arnoud Boot. “It’s surprising anyway.”
According to Boot, the Netherlands is ’emphatically mentioned’ in the executive summary of the Debt Monitor, which he finds striking. ‘Within the European Commission, this is the independent agency that looks clinically at the figures and whether government finances are sustainable,’ says Boot. ‘You wouldn’t expect the Netherlands to be among them, and precisely because of the reason the European Commission was recently enthusiastic.’
‘You don’t expect the Netherlands on the list’
Boot refers to ‘throwing open the treasury’ after the coalition agreement of the Rutte-IV cabinet was concluded. According to Boot, the European Commission was pleased with this, because the Netherlands also showed a certain degree of irresponsibility.
Structural problem
According to the Debt Monitor – which takes a less political view of things – the Netherlands is faced with a structural problem that government deficits will increase over time. ‘And on top of that, we have deteriorated our very good starting position in a relatively short period of time.’
The Monitor predicts that by 2030 the national debt will have risen to 70 percent of GDP and that the budget deficit will have risen to more than five percent. But it is not a direct cause for concern, Boot reassures. ‘In the longer term, I always worry less about the Netherlands,’ he continues. We are a country that wants to get its affairs in order. In addition, this is about the longer term, and it is not percentages that bankrupt the country. After all, the underlying Dutch economy is very strong.’
In the nests
The reason that the Netherlands seems to want to get into trouble can be traced back to the political stalemate in which the country finds itself. “No election seems to be won without handing out extra money,” he continues. ‘Everyone knocks on the door of the government, and the question is whether Minister Kaag can resist a cabinet that wants to spend far too much money.’
He therefore believes that the government should stop reserving jars of money for every problem. ‘We always pretend that it is a one-off and can be done outside the budget,’ he concludes. ‘But you have to make it part of the budget. And when you do, you have to make tradeoffs. Because then it immediately becomes apparent that the budget is no longer correct and is therefore not sustainable in the future.’
