Budget Day in the Netherlands. A memorable day for the Dutch and a glimpse into the future for Europe.
The Festival of Democracy, or, as the Dutch call it, “Prinsjesdag”, was upon us again last week. On Tuesday September 20, the traditional Glass Carriage rode through The Hague, after which King Willem-Alexander read his speech from the throne. After the speech, many of us reflected and tried to understand the impact that the new plans will have on businesses, citizens and society as such. Not only is it important to understand to impact of the new plans for 2023 from a Dutch perspective, the many changes, in many ways, also reflect the state of the economy within the European Union. We noticed a lot of buckets, but we could not find out yet who will be in charge of fixing the roof.
This year, not entirely unexpected, the King's speech received extra attention. The invasion of Ukraine, unprecedentedly high inflation and skyrocketing energy prices clearly have had their effect on the plans of the Dutch government. With inflation at 13 percent and an average wage increase of 4.5 percent, Dutch people's purchasing power declined significantly already. The Dutch cabinet has announced ambitious plans to make to make the Netherlands the country it was before all turbulence began. In total, the cabinet will spend close to 400 billion euros in 2023 which includes an additional 17 billion euros for the so-called Purchasing Power Package: more income and lower energy bills.
Increased Climate Goals ambition and enabling the Energy Transition
Substantial measures must be taken to prepare the Netherlands for a climate neutral and circular economy by 2050. To achieve the climate goals, an acceleration of the emission reduction is necessary. The cabinet is working on a proposal to record this in the Climate Act. The target of a 95% reduction in 2050 will be tightened up to an obligation for the Netherlands to reduce net emissions of greenhouse gases to zero by 2050. The legal target of a 49% reduction in 2030 will be replaced by a target of at least a 55% reduction. The government wants to achieve the tightened target of a 55% reduction by 2030 with sufficient certainty. That is why the government wants to focus on a 60% emission reduction when developing its climate policy, so that the 55% is not jeopardized even in the event of setbacks.
To achieve the new climate goals, the cabinet has established a Climate Fund of 35 billion euros for the next 10 years, on top of existing investments and subsidies. The government is investing heavily in innovation, such as hydrogen (145 million euros in 2023 alone). Subsidies that enable the continued use of fossil fuels, such as CO2 capture and storage, are reduced. The cabinet also wants to tighten up the existing legislation for the CO2 levy for industry. A minimum CO2 price for the industrial sector will be introduced. This guarantees that if the European ETS Carbon price falls below a certain minimum, a national tax will be levied. This gives the industry more certainty, which is important for making investments that are necessary for further sustainability.