Dijsselbloem says Dutch economy better than expected

Dutch Finance Minister Jeroen Dijsselbloem on Tuesday said the Dutch economy was better than expected, but not good enough.

Presenting the national budget plan for the forthcoming year on the traditional opening day of the Dutch parliamentary year, Dijsselbloem told the house of representatives in The Hague the Dutch economy was growing faster than expected after a difficult period.

"The Netherlands is out of the crisis and back among the leading economies of Europe," he added.

The Dutch economy will, according to figures by the Netherlands Bureau for Economic Policy Analysis (CPB), grow by 2 percent this year, and 2.4 percent in 2016.

This recovery is, according to a forecast, driven by increasing consumer spending, as well as rising exports and investments.

In addition, the economic recovery is expected to have a positive effect on public finances. The budget deficit will fall from 2.1 percent this year to 1.5 percent of the gross domestic product (GDP) in 2016.

In the budget plan, the government says it has ensured as many people as possible can benefit from the recovery, while continuing its reforms aimed at creating more jobs, sustainable growth and healthy public finances.

The minister said in recent years the government had taken many hard measures to put public finances in order, preserve the welfare state and strengthen the economy. "Those affected by the measures have had to make many sacrifices," he said.

"As the economy is picking up, the government wants the public to feel the effects. We also want to create buffers so that we can deal with any shocks during more difficult times in the future," Dijsselbloem said.

A key aim of the budget plan is to reduce the tax burden. Next year, the government will cut taxes on labor by 5 billion euros (5.6 billion U.S. dollars), in order to generate higher economic growth and 35,000 extra jobs on a structural basis. This structural tax cut will benefit both employees and employers.

The government has also decided to make purchasing power more equitable, raise spending on health care and defense, and continue to implement the reforms already introduced. "For the first time in five years people in the Netherlands can spend more again," Dijsselbloem said. "The purchasing power of households will rise this year and next year."

Dijsselbloem believes that, although the projected growth of the Dutch economy gives cause for optimism, unemployment is still too high and is falling too slowly, and there is too little scope for growth.

Unemployment is expected to decrease from 6.9 percent of the working force this year to 6.7 percent (600,000 people) in 2016.

Opposition parties were not impressed by the budget plan. SP (Socialist Party) leader Emile Roemer said there was no reason at all to cheer. "The tax plan is not profitable for everyone," she said.

CDA (Christian Democrats) leader Sybrand Buma found that the cabinet paid too little attention to employment. "The 600,000 people who are unemployed will feel nothing of the purchasing power plan," Buma said. Endit