Purchasing power estimates stay the same, despite energy bill blunder

The purchasing power increase that the central planning office CPB calculated for this year remains the same, despite a higher energy bill. 96 percent of all Dutch households will see their purchasing power increase, by an average of 1.6 percent this year and 1.3 percent next year. The increase is mainly due to higher wages, CPB said in a new estimate published on Tuesday, NU.nl reports.

The CPB took another look at the purchasing power figures, because two weeks ago it was announced that the energy bill for this year will likely be much higher than the government reported. Minister Erik Wiebes of Economic Affairs and Climate initially said that the energy bill will increase by no more than 100 euros on average this year, but now an increase of 330 euros is expected. The government used figures from the Netherlands' environmental assessment agency PBL for its estimate, but those figures came from 2017. In the meantime, market prices for electricity and gas rose faster than expected and more energy is being used than expected.

The CPB used its own figures to calculate purchasing power estimates, and therefore did not use the outdated figures the government used. That is why this new estimate is basically the same as the previous one.

The planing office did, however, reduce its forecast growth for the Dutch economy in its new estimate. The CPB now expects that the economy will grow by 1.5 percent this year and next year. In June 2018, the CPB expected 2.7 percent growth for the Dutch economy in 2019. And in December the office lowered that estimate to 2.2 percent, noting that the peak of economic growth is behind us.

According to the CPB, international trade is growing at a slower pace and that is clearly visible in Dutch exports. International uncertainties like the upcoming Brexit, the United States' trade policy, and the slowdown in the Chinese economy, are also affecting the Dutch economic growth. "The economy is switching back to a more normal speed, but can still take a beating", CPB director Laura van Geest said.

Unemployment in the Netherlands will remain at 3.8 percent this year, same as in 2018, and may increase slightly to 4 percent in 2020, the CPB expects.