Spring budget update, economic developments will further increase budget deficit: CPB

The Netherlands’ budget deficits will be higher in the coming years than previously estimated, the Netherlands Bureau for Economic Policy Analysis (CPB) said on Tuesday after calculating the Cabinet’s plans in the Spring Memorandum, the spring update to the national budget, and processing new economy figures from Statistics Netherlands.

In February, the CPB expected the deficit to be 1.8 percent of the gross domestic product (GDP) this year. With the Spring Memorandum plans, the deficit will be 2.3 percent. If the policy remains unchanged, the deficit will rise to 2.8 percent of GDP in 2026.

According to the CPB, the government’s plans in the Spring Memorandum will result in only minor changes in the government deficit compared to previous calculations in February. The deficit will deteriorate by 0.5 percent of the GDP this year, compared to the previous calculations. “More than half of this” is due to economic developments shown in new figures from Statistics Netherlands, the CPB said. “The rest is due to the policy in the Spring Memorandum.”

The CPB noted some underlying shifts. For example, the reversal of the VAT increase on culture, media, and sports in 2026 is offset by an increase in wage and income tax. “On balance, the effect on the [government] income is limited.”