The Netherlands is slowly recovering from the crisis. Exports, corporate investments and consumption are all increasing. Economic growth in 2015 is projected at 1.25%. But the recovery is fragile and at risk from international developments. Unemployment remains high and tackling it is one of the government’s top priorities. The 2015 Budget Memorandum strikes a balance between restoring purchasing power and strengthening public finances. It also includes targeted measures to accelerate economic growth, stimulate employment and respond to the current international tensions.

The Minister of Finance, Jeroen Dijsselbloem, will present the Budget Memorandum to the House of Representatives on Tuesday 16 September. He refers to it as a prudent budget. ‘Prudent in the burden it places on individuals and businesses. And prudent in the light of the international turmoil. The Netherlands is in better condition but we are not there yet.’

Priorities

Given the financial constraints and the challenges facing the Netherlands, the government has set a number of priorities in the 2015 Budget Memorandum:

  • The tax burden on labour will be reduced by €1 billion (€500 million to increase the employed person’s tax credit and €475 million to cut the lowest rate of income tax).
  • Purchasing power will increase for most people. An additional €160 million has been set aside for the child budget to support the purchasing power of families.
  • Defence expenditure will be increased by €100 million on a structural basis. This is a reversal of the recent trend. Additional funding will also be provided on a structural basis for the General Intelligence and Security Service (€25 million) and the Public Prosecution Service (€20 million).
  • An additional €375 million will be made available for the first-year reception of asylum seekers in 2014 and 2015 to meet the costs of the high numbers coming to the Netherlands. An additional €570 million will be made available during the government’s current term of office for emergency aid and regional reception.
  • An additional €40 million will be provided to ease the transition to the new Social Support Act (WMO).
  • A Future Fund will be established to invest in innovation and provide capital for future generations. Its initial capital will be €200 million.
  • The reduced VAT rate for construction and renovation work will be extended until 30 June 2015. To encourage mobility on the housing market, the maximum period in which interest payable on residual mortgage debt can be deducted will be extended from 10 to 15 years. An additional €31 million will be made available for housing benefit.