Budget Memorandum 2011 First step towards financial recovery

Public finances have greatly deteriorated as a result of the crisis.   

Strong interventions are required to realise recovery and sustainability of public finances. In the 2011 Budget Memorandum a first step is taken towards financial recovery and stimulus measures make room for measures aiming at recovery of public finances. 

In 2011 a start will be made with reducing the budget deficit. The additional measures to stimulate the economy will be phased out and spending cuts will be initiated. This Budget Memorandum contains the 1.8 billion euros cost-cutting measures in 2011 from the supplementary policy agreement. The additional measures to structurally cut back 3.2 billion euros have also been defined. This includes wage restraint, lower wage adjustment for Civil Servants and cancelling of reservations for additional expenditure from the Coalition Agreement. More than half of this amount will be realised in 2011.

Public debt is expected to rise in the coming year from 382 billion euros in 2010 to 406 billion euros in 2011 (66 per cent gdp). In 2011, the deficit will fall sharply as a result of increasing revenue and spending cuts, but at 4,0 per cent gdp it is still high. The consequences of the crisis will still be noticed for a long time, even with an improving economy.

In 2011 the Dutch economy is expected to grow by 1½ per cent gdp. This means that the Dutch economy, after the historic shrinkage of 4 per cent in 2009, will have a relatively normal growth in 2010 and 2011. However, this recovery is still surrounded by many uncertainties.

The Budget Memorandum presents a balanced and equitable set of tax measures (including social security and health care premiums). From 2010 to 2011 tax and premium burdens will hardly rise. The average purchasing power is expected to fall slightly. However, the consequences for people who have lost their jobs can be considerable. The number of unemployed is expected to rise from 4.8 per cent in 2009 to 5¾ per cent in 2010 and 2011. In view of the major shrinkage of the economy in 2009 this increase turned out better than expected.