Constantly increasing prices are being brought under control slowly but surely. To reach the inflation target in just over a year, the new cabinet must not overspend and unions must not demand the best for new collective agreements. This is the result of De Nederlandsche Bank’s (DNB) new forecast for the Dutch economy.
According to new economic slowdown calculations, inflation will be close to 3 percent next year, then drop to a “normal” rate of around 2 percent in 2025. “We are seeing price increases coming down. This is good news,” DNB board member Olaf Sleijpen told NOS.
“At the same time, we see that the economy is stagnating due to high interest rates and developments around us,” says Sleijpen. “But there is no question of a deep recession. “The main reason for this is the measures taken by the government during the corona epidemic and increasing energy prices.”
Tampons are running out
However, Sleijpen does not want to declare victory in the fight against the historically high inflation of recent years. He refers to the national deficit, which, according to DNB’s estimates, will reach the critical limit of 3 percent in 2025. DNB warns that the Ministry of Finance will not be able to absorb new economic shocks in this situation. “The buffers we have are slowly running out. If more is spent now, we will have to hit the brakes at some point. “In case of a new crisis, our hands will be tied because the government will have to make cuts.”
Before the House elections, candidates were often accused of promising free beer; For example, they did not want these promises to be included in their programs. “If you want to incur additional expenses or reduce costs, you need to make up for it elsewhere in the budget,” says Sleijpen. DNB does not want to give advice. “This is a matter of politics. “The important thing is that all decisions are financed in a healthy way.”
However, the DNB emphasizes that international trade and cooperation must be taken into account in all political decisions in The Hague, where Eurosceptic parties hold a large number of seats. “We benefit greatly from this, as from membership in the European Union. Our message is that our future and prosperity largely depend on the European Union and what happens there. Leaving the European Union or closing the borders is very similar to, “This is a very bad idea for us. “It is also unwise to lump all types of labor migration together.”
higher salaries
The European Central Bank (ECB) warned about possible wage increases in Europe last week. DNB assumes the Dutch economy can handle a 6 percent wage increase next year, but “it shouldn’t be more.” Sleijpen said it was up to the social partners to determine the wage demand. “If inflation still needs to be incorporated into a new collective agreement, this must be taken into account. “But where this has already happened, it would be wise not to introduce such large wage increases again.”
Many union members believe that companies make enough profits that they can better compensate their employees. “I understand the union movement, but I also understand the business world,” Sleijpen replies. He advocates pragmatic negotiations for new collective agreements. “I think it’s good to keep the church in the middle at some point. “It is important for the economy that we find a good balance together.”
Source: NOS
Emma Fitzgerald is an accomplished political journalist and author at The Nation View. With a background in political science and international relations, she has a deep understanding of the political landscape and the forces that shape it.
