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Government hopes of an improvement in the Dutch economy were dashed on Wednesday when new figures showed unemployment continues to rise, consumer spending is down and the recession will continue to the end of the year at least.
The Dutch economy contracted a further 0.2% in the second quarter of 2013, meaning the Netherlands has now been in recession for a full year, economists from the national statistics office CBS said on Wednesday.
And prospects for the rest of the year and 2014 have worsened compared with forecasts made in June, the government’s macro-economic think-tank CPB said.
Cuts
The two sets of figures make gloomy reading for the government which has already said it plans to bring in a further €6bn package of spending cuts and tax increases.
The CPB now says the economy will contract 1.25% this year, and that is without taking extra austerity measures planned by the government into account. This is worse than the 1% shrinkage foreseen in June.
Next year there will be a return to growth, but this will only be 0.75%, not 1% as forecast earlier.
At the same time, the economies of France and Germany have both grown, prompting further criticism of the Dutch government’s new austerity measures.
Deficit
There is some good news for the government. The CPB says the budget deficit will hit 3% this year, in line with eurozone rules. But next year the deficit will rise again to 3.9%, unless the government intervenes again to cut spending, the CPB said.
The think-tank also predicts a further rise in unemployment next year. According to the CBS statistics office, some 8.7% of the Dutch working population – nearly 700,000 people – are currently without a job.
The gloomy economic prospects and rising unemployment have further depressed household spending, which fell by 2.4% in the second quarter of this year. Consumer spending has now been going down for more than two years, the CBS said.
Corporate investments also continue to decline with a 9.4% drop compared with the year-earlier period.
The CPB estimates form the basis for the government’s 2014 spending plans which are currently being put together. Definitive forecasts will be published in mid September alongside the national budget.
