Dutch budget group urges €7 billion spending cuts by 2030 to manage aging, defense costs

The Budgetary Space Study Group (Studiegroep Begrotingsruimte) has advised the Dutch government to implement 7 billion euros in spending cuts by 2030 to stabilize public debt, as costs related to an aging population, defense, and climate policies continue to rise.

In its 18th report, The Future Begins Now, the group warned that the Netherlands faces significant long-term challenges, including nitrogen emissions and housing shortages, reportedly requiring tough choices on how to distribute wealth between current and future generations.

The 7 billion euros target is based on two fiscal anchors: keeping the national debt stable and maintaining the budget deficit well below the European Union’s limit of -3 percent of gross domestic product. If the advice is adopted, the deficit would reach -2 percent by 2030, providing a buffer to absorb economic setbacks without the need for immediate additional cuts or tax increases. “Such measures often affect people directly,” the report stated.

A key driver of rising costs is the aging population, which will continue to increase through 2040, placing growing pressure on health care and social security spending. The study group recommends reforms specifically aimed at curbing these aging-related expenses as a critical part of the 7 billion euros savings goal. The group also proposed shifting tax burdens from labor to consumption, capital, and wealth to strengthen long-term public finances.

The Netherlands currently fails to meet the long-term spending path required by European budgetary rules under the Stability and Growth Pact. The study group emphasized the importance of each government gradually assuming responsibility for rising aging costs to keep debt levels sustainable over the long term.

In addition to the 7 billion euros savings target, the report noted that the Netherlands’ commitment to meet NATO’s new defense spending norm of 3.5 percent of GDP by 2035 requires separate, fully funded budget increases. The group advised that this additional defense spending should be financed through a combination of spending cuts and tax increases. It also suggested that spreading these reforms over time is acceptable if they ultimately yield fiscal benefits, provided the government implements them consistently.

Besides fiscal and demographic pressures, the report highlighted the nitrogen emissions problem and housing shortages as factors affecting the economy and society, necessitating prioritization and clear policy choices. The study group stressed the importance of balancing short-term constraints with long-term goals to maintain broad societal welfare.

The Budgetary Space Study Group was established in 1971 to provide independent fiscal advice to political parties and governments ahead of Tweede Kamer elections. The group is chaired by the secretary-general of the Ministry of Finance and includes the director of the Central Planning Bureau, the president of De Nederlandsche Bank, and senior officials from multiple ministries. The Netherlands Environmental Assessment Agency and the Social and Cultural Planning Office serve in an advisory capacity.