Dutch government posts first mid-year deficit in four years

The Dutch government spent 3 billion euros more than it brought in in the first half of 2025, according to Statistics Netherlands. It marks the first time in four years that the government has posted a deficit for the first half of the year. By mid-2024, there had still been a surplus of 2 billion euros.

Measured against gross domestic product, the government’s deficit currently stands at an annualized rate of 1.4 percent. For the full year 2025, however, the Ministry of Finance’s 2026 Budget Memorandum projects a deficit of 25 billion euros, equivalent to 2.1 percent of GDP.

Government spending in the first half of the year rose by nearly 15 billion euros compared with the same period last year. Spending on social benefits accounted for more than half of that increase, rising by nearly 8 billion euros, or 6 percent, driven largely by higher costs for state pensions (AOW) and healthcare.

Government spending on staff salaries and investments each grew by 3 billion euros, representing increases of 7 percent and 14 percent, respectively. The surge in investment was largely driven by acquisitions of military equipment.

Government revenues grew by nearly 10 billion euros, a 4 percent increase, but this growth still lagged behind the rise in spending. Taxes and social contributions made up the bulk of the increase, rising by 9 billion euros.

Other revenues climbed by almost 1 billion euros, driven primarily by higher interest income and EU contributions aimed at supporting the Dutch economy’s recovery from the COVID-19 pandemic and the energy crisis.

Government debt increased by almost 1 billion euros, bringing the total to 492 billion euros. Yet the debt-to-GDP ratio fell to 42.7 percent, as the Dutch economy expanded at a faster pace than the rise in debt. The ratio is now near its lowest point in three decades, with only the third quarter of 2024 seeing a slightly lower level.

The Ministry of Finance projects in its 2026 Budget Memorandum that government debt will climb to 533 billion euros by the end of 2025, equivalent to 44.9 percent of GDP. Even with this increase, the debt ratio would remain well below the European ceiling of 60 percent of GDP.