Rabobank economists expect economic growth despite Cabinet collapse; ING predict delays

The Dutch economy will grow this year and next year, economists of RaboResearch have predicted. The margin of insecurity in regard to the prediction is high due to the fall of the Cabinet and what they describe as “unpredictable” trade policies by the United States.

The economists foresee a growth of 1.5 percent in 2025 and 1 percent in 2026. They have stated that the percentage for this year is “still very high,” considering the huge insecurity caused by the trade wars.

According to the experts, the growth will be lower in 2026 due to a cooling global economy as a result of the trade war and the uncertainty surrounding it.

The consequences that the fall of the Cabinet will have are limited in the short term, Hugo Erken said. He did admit that policies surrounding important subjects like: the climate, infrastructure, and the housing market will take longer as a result of the development. “This will lead to companies and consumers being hesitant to make any long-term investments.”

Long-term economic growth will also be put under more pressure due to the lack of reforms, the economist said. Erken added that delays will also have a negative effect on government finances because they lead to higher costs.

Despite the fact that the Cabinet is now in caretaker mode, economist Wouter Remmen assumes that many planned government expenditures will continue this year and next.

He expects consumers to increase their expenditure due to a rise in wages, which will give them more purchasing power. In addition, many people have been saving money over the last year.

Remmen also expects less investment from companies due to changes in the tax rules and the effects of the trade war. For 2025, economists predict an investment contraction of 1.6 percent.

Bert Colijn, a leading economist for ING, has said that he expects delays to government measures as a result of the Cabinet collapse. Colijn agreed with Remmen’s thoughts regarding the Dutch economy and government finances, saying that they are in “quite good shape” compared to other countries around the Netherlands.

However, he also mentioned that there are files on the housing market, labor market, climate transition, the nitrogen problem, and the overcrowded electricity grid that have been left unaddressed in recent times.

An issue like the electricity grid will be a negative for economic growth because companies have to wait to be connected to the grid, Colijn explained. He thinks that it is important that the right measures are taken as quickly as possible.

He also sees defense spending as a topic on which important choices will soon have to be made.