Within the current economic environment, where inflation is still here and solidifying its position, with a visible dropping buying power for most of the people in the Netherlands and the fallout of some populist measures taken lately by the government, the budget starts to feel a little bit sick and some more solutions to fix the problem will actually make it worse. What seems to be major concerns on the expenses side?
Energy cap
The response of the government for the energy crisis was to subsidize partially energy costs for everyone in the Netherlands. This energy crisis was mainly triggered by the EU response to Russia, and cutting off the cheaper natural gas coming from there, was just a part of an endless row of sanctions packages. This costs money (January ate around 1 billion euros) and it's still going through the 2023. What's even worse, is that the situation is not getting better meanwhile, and at some point, the government will have to choose between continuing with these subsidies for years to come or let the population take the full blown of higher prices.
Asylum seekers
This was amplified by the war in Ukraine, but even without, the number of people crossing the sea in order to get here is rising, and also the costs associated with their housing, medical assistance, food and clothing, etc. Billions more euros are required, and the amount is not going to drop any further, quite the opposite.
War in Ukraine
This is not quite a topic brought forward, since EU will do what it takes to keep it going, until the final victory (for Ukraine, that is), but all this process involves a large amount of money. Civil help, military help, all these are eating considerable sums.
Groningen damage claims
Due to the natural gas exploitation in this area, earthquakes started to develop, and this caused damage in the houses around. Paying for the damage will bring more billion euros on the table. The exploitation is still operational, but plans to completely close it are pointing out to this year or the next, at latest. We'll see how this will develop, since we have already the example of Germany starting up coal based power plants in order to cover to the missing Russian gas.
Euroinflation
This is quite a shit show, and after years of negative interest rates, and years of endless printing and pumping euros in the Eurozone, the ECB fueled bubble started to deflate, living everyone with a nasty smell of shite. Late in September 2022, the ECB started in a shy manner to raise the deposit facility rate, and currently we have it at 3%. This means the money is more expensive for everyone. Including for the government which sees...
Debt financing is getting expensive
With artificially suppressed rates to 0, the euro governments could borrow like there was no tomorrow and refinance their spending easily. This is not quite that easy right now, and over indebted states, as Italy, might start to feel the heat. However, ECB will do whatever it takes to protect Italy, since defaulting on the amount of debt will pulverize euro into the void. So the euro will be kept on printing, Italy will get their part of the cake. This will induce more inflation overall, leading to even more government intervention.
Also, euro is a really effective control tool, and our lords in Brussels are not shy to make it known. Local elected politicians can be controlled via their budget dependency on euro borrowing.
So, what does the government intend to do in order to raise the money? Some fancy ideas on the table:
- increase the flight tax, flying should be considered a luxury and the forced Corona lockdowns showed how good is it also for the environment
- make healthcare more expensive, by raising your own deductible limit (eigen risico). Currently €385 (for the highest insurance rate - agreeing to pay more from your own pockets leads to slightly lower rates), this threshold should jump the next years with at least €25 each year
- make fuel more expensive - as Climate Minister Jette puts it, discouraging the use of cars is a good thing, and fights also the big century scare, climate change. The fuel will get anyway more expensive starting with 1st July, when the government will drop tax cuts over it.
With issues are all over the spectrum, it has to be seen how much the tax payers and the economy can endure. Instead of prosperity, what we have now is an accelerated drop in the quality of living, and uncertainty growing over the direction of the country. The recovery will be, without a doubt, a painful process. But in order to get there, we have to be able to change direction. Which for now it's just wishful thinking.
