Dutch government debt set to hit 126% of GDP by 2060 without policy change, CPB warns

The Netherlands Bureau for Economic Policy Analysis (CPB) has published new projections showing that government debt could surge to 126 percent of gross domestic product by 2060 if current policies remain unchanged.

The agency said the sharp increase is mainly driven by rising costs related to population aging, including higher spending on state pensions (AOW) and health care. While taxes on pension payments and higher health insurance premiums are expected to increase over time, the additional revenue will not be sufficient to offset the mounting expenses.

The CPB emphasized that the estimates do not yet account for potentially higher defense expenditures or the full costs of the energy transition, suggesting that the actual debt burden could become even more severe.

To show other possible outcomes, the CPB also looked at what would happen if the government followed different budget rules. For example, the agency analyzed scenarios where the government sticks to European budget standards or keeps the budget deficit at 2 percent of GDP. These choices would keep government debt much lower in the long run.

However, they would also mean decades of constant changes to the budget, since the aging population will keep increasing costs. “Such adjustments in the government budget effectively shift financial burdens between generations,” the CPB said.

The outlook for public debt remains highly uncertain. The projections are based on long-term modeling of historical relationships between economic variables such as government interest rates, the risk premium on equities, inflation, and growth. In its simulations, the CPB examined a wide range of possible trajectories.

According to the agency, in 10 percent of scenarios the debt ratio ends up exceeding 182 percent of GDP by 2060. In another 10 percent, it remains below 73 percent.