Dutch business climate has been declining since 2018: PWC
The business climate in the Netherlands has been deteriorating since 2018, according to a “heatmap” drawn up by PwC Netherlands covering the past decade. “This heatmap makes it clear that the business climate improved between 2013 and 2018 but deteriorated thereafter. This was particularly the case in the last two years,” the firm’s analysts said. The Netherlands has been losing ground to Denmark and Switzerland since 2013.
The heatmap developed by PwC analysts scores the Netherlands in six specific categories. It shows that the Netherlands has scored poorly for five straight years in politics, regulation, institutions, and society. Since the pandemic, it has also scored below average in physical safety and security and, more recently, macroeconomics.
Two other categories evaluated include human capital and trade, and investment and market opportunities. The Netherlands has consistently scored well in the last category, infrastructure and physical space.
“The value of the heatmap lies in the broad perspective on the business climate,” said Barbara Baarsma, the chief economist of PwC Netherlands. “Our heatmap shows much more precisely where things are going well and where there is room for improvement,” she added.
“The government has expressed the ambition to remain in the top five of the rankings. This heatmap makes clear where the opportunities for improvement lie. It provides companies, politicians, and policymakers with a tool to monitor the progress of business climate policy.”
PwC compared the Netherlands' performance with seven other culturally and economically similar European countries with which the Netherlands competes as a location for international businesses. The comparison showed that the Netherlands performs consistently better than Belgium, the United Kingdom, France, and Germany. But since 2013, the Netherlands has been losing ground to Denmark and Switzerland.
According to Baarsma, that is not yet alarming. But she pointed out that the Netherlands mainly fares well against countries with bigger problems, like the UK’s Brexit and Germany’s dependence on Russian gas. “In that sense, the relative position of the Dutch business climate is helped by larger problems elsewhere.”
The Netherlands business climate has been a hot topic of discussion since the runup to the November 2023 parliamentary elections, which was particularly hostile towards immigrants, highly-skilled foreign workers and their income tax break, international students, company recruitment abroad, and corporate tax benefits.
As a result, big employers like ASML, NXP, Boskalis, and Van Oord threatened to move their future plans outside of the Netherlands. That set the outgoing Cabinet scrambling to keep these businesses, resulting in a 1.4 billion euro plan promising they’d have access to the resources, including workers, they need. ASML finally agreed to stay in Eindhoven and announced expansion plans that would create 20,000 jobs in the region.
The Dutch Innovation Monitor 2024, an annual study by the economics journal ESB and the University of Amsterdam, recently showed that a quarter of Dutch businesses that employ people from abroad plan to realize future growth outside the Netherlands if the Schoof I Cabinet implements stricter rules on labor migration. Another 23 percent may scale down production in the Netherlands, and 17 percent said they’d move some or all of their activities out of the Netherlands.
