Coronavirus to put Dutch economy in recession: Rabobank

The Covid-19 crisis will result in the Dutch economy shrinking by 0.2 percent this year, according to economists from Rabobank. This is on the assumption that the crisis will be brought under control between April and July, and some economic recovery can occur in the second half of the year, they said in a report, NU.nl reports.

If the crisis can be under control by mid-2020, some sectors could start growing again in the second half of the year. But most sectors can expect shrinking. "The crisis is affecting almost all sectors, but the biggest blows are in the construction, agriculture, hospitality, and transport sectors," the economists said.

The hospitality and culture sector suffer greatly from the closure of restaurants, cafes, theaters, and museums. "Moreover, these sectors will have hardly any catch-up effect in the third and fourth quarters, because consumers will not go to a museum twice in a row, for example. 

Some sectors will continue to grow throughout the year, the economists expect. These include healthcare, education, the IT sector, and specialist business services. 

The economists called the government's measures crucial to maintaining household income. "Companies and households can pick up again when the corona crisis is over." But, these measures can't alleviate all problems. Flexible workers and people with temporary contracts cannot apply for working time reduction and their employment contracts may not be renewed, for example. 

Although the business community is happy with the government's measures to prevent mass redundancies, they fear the bureaucracy that will come with these new measures, Financieele Dagblad reports. Companies also doubt whether the Tax Authority and benefits agency UWV will be able to handle all the applications for the new bridging scheme that is replacing the working hour reduction regulation.

The new scheme promises to cover 90 percent of the wage bill if 100 percent of turnover is lost, though it is unclear how this will be measured. The turnover criterion can also be disadvantageous for companies with relatively low labor costs that had already applied for the old regulation, which worked on hours lost. "I counted on 70 percent of the salary for my 51 employees. That will be 45 percent, because my loss of turnover is smaller," Martijn Abers of the Nederlandse Kappersakademie said to the newspaper.

In addition to the national government, some cities are also stepping forward to help their entrepreneurs. In Rotterdam and Amsterdam, for example, business owners can apply for exempted or deferred payments on a number of municipal taxes for the next three months. A number of smaller municipalities also decided that entrepreneurs and sometimes residents do not have to pay local taxes for the time being, according to RTL Nieuws.