Dutch now pay more on housing, healthcare and energy than before the crisis: ING

The average Dutch household now spends a larger share of their income on basic needs like housing, healthcare and energy than in 2008. They therefore have less money left over for services and items. As a result, households now consume less than before the crisis, while at the same time spending more money, ING's economic office said on Thursday, NU.nl reports. 

In 2017 people in the Netherlands consumed around 6 percent less than in 2008. Due to price increases of 9 percent in total, they received fewer goods and services in return for their money. Even if the growing consumption in 2018 is taken into account, the consumption of the average household is still below pre-crisis levels.

In 2017 basic needs such as housing, healthcare, food and energy accounted for 41 percent of household spending, compared to 36 percent in 2008. Housing and maintenance in particular became a relatively larger cost item, increasing from 19.5 percent in 2008 to 23.7 percent in 2017. Healthcare accounted for 3.8 percent of household spending in 2017, compared to 3.1 percent in 2008. Households also spent a larger portion of their income on food and non-alcoholic beverage, increasing from 10.1 percent to 10.8 percent. According to ING, this is due to faster than average price increases.

Energy and water accounted for a slightly smaller part of household spending in 2017 than in 2008. Due to, among other things, more energy efficient new construction, people gradually started spending less on energy in that period. 

In 2017 the GDP was 6.5 percent higher than in 2008, but consumption per household still decreased. There are various reasons for this, ING said. There were 7.5 percent more households in 2017, which lowered the average. Households also paid 7.1 percent more on consumption that goes through the government, like healthcare and education. The proportion of household income that goes into savings also increased, and the number of loans, such as mortgages, decreased.

"The lower consumption with a higher GDP was therefore due to the pursuit of other social goals, such as more healthcare and education, and the building of financial buffers", ING said.

ING believes it will take until at least 2025 for consumption to fully recover, even with the economy growing and incomes increasing. That is because the share of income devoted to basic needs remains high - healthcare costs are rising due to the aging population, energy costs are rising due to the transition to sustainable energy, and rents will also continue to increase. A large part of incomes will also go to extra collectively financed healthcare and extra savings, the bank said. 

"The space for fun things is therefore still limited, and it will only gradually increase in the coming years", Marcel Kok of ING's economic office said, according to the newspaper. "This helps explain why people think that they are not yet really benefiting from economic growth. The growth provided room for healthcare and the building of buffers."