The Dutch economy developed better than expected in the summer and early autumn. That is why the budget deficit does not amount to 7.6 percent of GDP, as was thought on Budget Day, but to 6.2 percent. However, a setback of no less than 700 million euros has been included due to an argument with the European Commission about a possible extra payment for imported solar panels.
This is stated in the Autumn Memorandum that Minister Wopke Hoekstra (Finance) sent to the Lower House on Monday.
The debt is also slightly lower at 57 percent compared to the estimate in September, although it is still 54 billion euros more than a year ago.
The changes mark the uncertainty of public finances in the corona era. The cabinet has now spent tens of billions on aid packages to keep jobs, prevent bankruptcies and guide people to other work. The current and third aid package will run until June next year.
“A bankruptcy wave would also cause major damage to the economy as a whole, while the Netherlands can only build up financial buffers again in the long term if the economy starts to grow again. The rapid recovery in the summer gives confidence that this can also be done”, Hoekstra writes.
Great uncertainty about public finances
The greater the economic dip as a result of the corona measures, the more use is made of emergency aid. The third package has now also been adjusted a number of times due to advancing insight.
The fact that it is difficult to predict how much extra money the cabinet will spend due to the corona virus is also evident from the figures that the cabinet sent with the Spring Memorandum seven months ago. At the time, a shortage of almost 12 percent was thought.
The Spring and Autumn Memorandum are interim changes to the current national budget. Normally, a few hundred million euros is shifted, but in corona time it is logically different. Hoekstra said this spring that the budget plans for this year could be thrown away.
The biggest setback is bill from Brussels
The cabinet is earmarking an extra EUR 800 million for the health care bonus because the application is larger than what was taken into account, as reported earlier on Monday.
More money is also being allocated to road construction (400 million euros) and there are higher costs for long-term incapacitated workers (300 million).
But the biggest setback comes from an argument with the European Commission. Brussels believes that the Netherlands has not properly complied with customs rules when importing solar panels from China. This is subject to a so-called anti-dumping levy, but the Netherlands has never paid it.
The solar panels were assembled in Malaysia, Taiwan, Mexico, India and Vietnam, but originated in China. Hoekstra therefore claims that the additional levies did not apply here.
The reason that the amount is now still being transferred to Brussels has to do with the increasing interest charges.
It is uncertain whether the Netherlands will get back the amount or part thereof. A “constructive dialogue” is started with the European Commission. If that leads to nothing, the cabinet will go to court.