For the past 10 years, Dutch public consumption has been weaker than in other eurozone countries and this is one of the main reasons why the country is now in recession, the central bank said in a new report on Thursday.
Public spending is now lower than it was during the serious economic crisis of the early 1980s, the central bank said.
Between 1992 and 2001, the Dutch were big spenders in eurozone terms. The central bank says the turnaround is partly due to job market developments compared with the rest of Europe. After enjoying good pay rises in the 1990s, between 2001 and 2011, earnings fell 0.7% in real terms.
In addition, the sharp rise in pension premiums since the beginning of this century have also depressed spending power, the central bank said.
Problems on the housing market have also made the situation worse. House prices doubled between 1995 and 2001 but are now falling.
‘Many people used the excess value in their property to take out new loans which they used to buy goods and services,’ the central bank said. But many people now own property which is worth less than their mortgage.