Few changes to spending power next year, but some will be hurt
Most households will hardly see any improvement in their purchasing power, excluding those where the composition of the household changes. Most groups will have about as much to spend next year as this year, the Ministry of Social Affairs reported on Budget Day. The economy is recovering strongly and collectively negotiated wages are rising, but prices are also going up.
Lower income groups will benefit relatively more than the highest income group, and subsidy recipients benefit slightly more than employed and retired people. The only group whose disposable income will slightly decline are the single earners. Families with one breadwinner and an average income in particular will see purchasing power go down by about 0.5 percent, relatively worse than other demographics. This is partly due to the phasing out of the tax credit known as the "aanrechtsubsidie," a general tax credit for the lowest earner in a household.
This group will be in decline, despite more than 200 million euros being allocated by the government for tax relief for single wage earners, families and people with a low income.
Furthermore, it is mainly measures that are already in place that will have an effect on disposable income, such as the announced phasing out of the tax deduction for the self-employed.
The government expects the economy to recover better from the coronavirus crisis than previously thought. In 2022 the economy will grow 3.5 percent. Growth of 3.9 percent is assumed for this year.
The purchasing power projections only apply if a personal situation does not change. The government expects slightly more unemployed people due to the expiry of the coronavirus economic support packages, but the effect of this is not visible in the purchasing power overview.
Reporting by ANP.