The Netherlands back in the black, economic growth of 2.6 per cent

Economy23 Sep ’22 07:41Updated on 23 Sep ’22 08:40Authorp: ANP and BNR Web Editors

The Dutch government writes black numbers again after two corona years with shortages. The economy also grew by 2.6 percent in the second quarter. This is shown by figures from Statistics Netherlands.

According to Statistics Netherlands, the treasury accounted for a surplus of more than 10 billion euros in the first half of this year. In the same period a year ago, it was a deficit of 13 billion euros. ‘And this is primarily due to the strong economic growth in the first half of this year’, says Peter Hein van Mulligen from Statistics Holland. ‘The result was that there was much more tax revenue, and at the same time the expenses were less.’

Higher profits were only achieved in 2018 and 2019. According to CBS, it is too early to talk about a trend, says Van Mulligen. ‘But it is a positive result for the first half of the year.’

Higher expenses are also expected in the second half of the year. The budget memorandum for 2023 shows a deficit of 8.5 billion euros for the whole of this year, which corresponds to 0.9 percent of gross domestic product.

Also read | Businesses earn more in the second quarter

flattered

According to BNR’s internal economist Han de Jong, it is necessary to guard against ‘looking backwards’. He calls the figures drawn and flattered. ‘We would be very happy with a growth of 2.6 per cent in a year, and we are now doing that in a quarter. Because that would mean 10 percent in a year, just like China in its best years. But we are not. These figures are the result of delivered ‘lumpy’ products such as boats and aircraft and this distorts the figures.

This provides a good starting point for the coming period. ‘VAT revenues have increased and everything looks fine.’

Higher earnings

Government revenue rose 12 percent to 22 billion euros in the first six months of the year. More than 17 billion euros of this came from taxes and premiums. Corporation tax and VAT in particular gave the state more revenue. More money also came in through payroll and income tax. Energy tax revenues, on the other hand, fell by 1 billion euros due to lower rates and slightly lower consumption.

Public spending fell by 1 billion euros in the first half of the year compared to the same period last year. But this drop appears to be a temporary break in the trend, according to Statistics Netherlands.

Due to the phasing out of the corona measures, almost 10 billion euros less was spent on subsidies in the first half of 2022. This lower burden was offset by higher expenses, in particular for salaries of civil servants and for benefits and care. These costs increased by 6 billion euros. In addition, capital transfers increased significantly by 2 billion euros. This was due, among other things, to compensation from NAM in connection with natural gas storage in Norway.

Economic growth of 2.6 per cent

The Dutch economy grew on a quarterly basis by 2.6 percent in the second quarter of this year. Statistics Netherlands also came to this conclusion after another calculation, after a first estimate in mid-August. Investments and public consumption were adjusted upwards. The trade balance, exports minus imports, was slightly lower.

Statistics Netherlands also adjusts the growth figure for the first quarter of this year. The economy grew not by 0.5 but by 0.4 percent according to the new calculation.

Van Mulligen talks about an overheated economy. ‘You can clearly see this from the large staff shortage, while so many have never been employed before.’

Compared to a year earlier, the economy grew by 5.1 percent in the second quarter. According to the first calculation, it was 5.3 percent. This adjustment is primarily due to new figures on financial institutions, the temp and travel industry, estate agents and the hotel industry.

Job growth was also somewhat lower according to the new estimate. Not 94,000, but 85,000 jobs were created. On an annual basis, the number of salaried and self-employed jobs increased by 474,000, not 484,000.

Disposable income increases

Dutch households had slightly more to spend in the second quarter of this year than in the same period last year, the Central Statistics Office (CBS) calculated. According to the statistical office, higher collective wages and more people who worked in particular contributed to this. At the same time, mortgage debt also increased.

Real disposable income increased by 1 per cent. This is the increase in disposable income, adjusted for price increases. The total remuneration of employees increased by 6.5 percent, according to the statistics. More jobs were created, but the number of working hours also increased. In addition, collective bargaining wages increased by 2.9 percent on average.

The total mortgage debt of all Dutch citizens increased by 10.6 billion euros to 804.3 billion euros, Statistics Netherlands further reports. In addition, the debt ratio, total mortgage debt as a percentage of the size of the economy, fell. It is now 89.4 per cent. This lower debt-to-GDP ratio is due to stronger growth in gross domestic product (GDP) than total mortgage debt.

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