Most Netherlands households will have more to spend next year: CPB

Due to the measures against poverty the government announced on Budget Day on Tuesday, most households in the Netherlands will have more to spend next year, the Central Planning Office (CPB) calculated. The average household will see their purchasing power increase by 1.8 percent, slightly lower than the 1.9 percent the CPB expected in August. But low-income households will gain purchasing power instead of losing, NOS reports.

In August, the CPB warned that due to the lapsing of the 1,300 energy allowance, low-income households would see their purchasing power decrease, and poverty would rise. The government took several other income measures to compensate for that. The maximum rent allowance will be 416 euros higher next year than this year. And the child-related budget is increasing to a maximum of 750 euros for the first child and up to 883 euros for the second child.

The latter measures will prevent the increase in childhood poverty the CPB was worried about. Instead of increasing to 7 percent next year, the CPB expects childhood poverty to drop from affecting 6.2 percent of children this year to 5.1 percent next year.

On the other hand, the purchasing power of higher-income households will improve less than in the CPB’s August calculations because the support for lower incomes is partly paid for by slightly more taxes for people with higher incomes.

The anti-poverty measures are partly funded by the government moving incomes into the higher, second tax bracket sooner. People earning a gross income of 75,625 euros or more will pay the 49.5 percent tax in the second tax bracket. The original plan was for that to happen at 89,263 euros.

All in all, most income groups will see their purchasing power increase next year. But some will have slightly less to spend. For example, the purchasing power of single people with only a state pension will fall by 0.3 percent. And that of a single person on social assistance without children will fall by 0.4 percent because they don’t benefit from the higher child-related budget.

The CPB also recalculated how the Dutch economy is doing with the additional measures taken by the government. The economy shrank in the first half of this year, but the CPB still expects a slight growth of 0.7 percent for 2023 as a whole and growth of 1.5 percent next year.

Poverty will remain stable at 4.8 percent of the population. Unemployment will increase slightly to 3.6 percent this year and 4.0 percent next year, but is still historically low. The national debt will fall to 46.9 percent, and the budget deficit will increase to 1.5 percent this year and 2.4 percent next year.