The Netherlands' Growing Debt Problem—What It Means for Everyone
Without policy changes, the Netherlands' public debt could triple by 2060. New CPB scenarios explore how different fiscal rules could stabilise the debt and protect future generations.
The Netherlands is dealing with a dramatic increase in public debt, mainly due to growing healthcare and pension costs as the population ages. According to new projections from the Netherlands Bureau for Economic Policy Analysis (CPB), if current spending policies remain unchanged, national debt could surge from 44% of GDP in 2024 to 126% by 2060.
The CPB looked at four different budget strategies to control this debt growth. Each has different long-term consequences:
Keeping the yearly deficit at no more than 2% of GDP
Following updated European fiscal rules
Keeping debt stable at current levels
Making one major adjustment in 2027 to reach 60% debt-to-GDP by 2060
Ageing Population Creates Budget Pressures
Current demographic changes are putting enormous strain on Dutch public finances. Spending on state pensions and healthcare keeps rising while the working population shrinks. Higher pension taxes and increasing healthcare premiums provide some help, but they don't cover the mounting costs. Even without considering future defence or climate spending, the financial outlook remains troubling.
All four fiscal approaches would result in much lower debt levels compared to taking no action. However, they differ significantly in how the financial burden gets shared across time and between generations:
The first three options require decades of gradual spending cuts or tax increases. Each new government would need to make ongoing adjustments.
The one-time adjustment is more dramatic. It means sharp spending cuts worth 2% of GDP in 2027. This places a heavy burden on current taxpayers but avoids the need for further corrections later. This approach delivers short-term relief but creates less predictable long-term results.
Managing Uncertainty and Generational Fairness
The CPB's long-term projections account for economic uncertainty by modelling various scenarios for growth, inflation, and interest rates. These models show that gradual, rule-based strategies provide better protection against runaway debt than a single major correction.
By 2060, projected debt levels under each scenario are:
51% (EU rules)
49% (debt stabilisation)
56% (2% deficit limit)
63% (one-time adjustment)
126% (no action)
Even the best scenarios require decades of challenging decisions. Younger generations may face reduced public services if adjustments are postponed.
Policy Considerations
The research shows there's no universal solution. Decisions about debt and spending involve not just economic factors, but also fundamental values. Who should pay? When should they pay? How much financial risk is acceptable? The longer governments delay making adjustments, the more severe those adjustments may need to be.
These findings serve as a clear warning for future government planning. Proactive and consistent fiscal policies are essential to maintain stability, protect future generations, and preserve the ability to spend on other national priorities like defence and climate initiatives.