A new government will have to make significant cuts or increase taxes to put public finances back in order. Top officials, united in the Budget Space Study Group, think that from 2028 onwards, seventeen billion euros will have to be found every year to prevent the budget deficit from rising too far.
Rising interest rates have made borrowing money significantly more expensive. At the same time, government expenditure has risen sharply. Choices have to be made, the study group says.
The past cabinets led by Mark Rutte have not done enough, is the criticism. Social problems were mainly solved by spending extra money. But the plans were often not implemented, partly due to a lack of staff.
Next generations
If nothing is done, expenditure on healthcare, aging and climate will crowd out other expenditure, the report states. That would mean that the bill would be passed on to subsequent generations. They will then be able to make less use of government facilities or have to pay much higher taxes.
In itself, the prospects for the economy are good, and therefore, according to the study group, it is the right time to build buffers.
In their calculations, top officials assumed a budget deficit of approximately 2 percent. EU rules have a limit of 3 percent. To avoid this, seventeen billion euros would have to be adjusted annually from 2028.
This can be done by cutting costs or increasing taxes. It is important that politicians realize that not all social problems can or need to be solved with extra money, the advice states. For example, when tackling climate change, more attention can be paid to “standards and pricing, based on the idea: the polluter pays”.
- Outgoing cabinet reaches agreement on budget, Kaag calls it ‘balanced’
- The government is allocating 2 billion euros for the purchasing power of lower incomes
- DNB president Klaas Knot thinks the budget deficit is too high
