The Dutch economy will grow by some 3.1% next year, the second year in a row of plus 3% growth, the government’s macro-economic forecasting agency CPB said on Wednesday.

All forms of spending will contribute to the continued growth, the CPB said in its traditional December forecasts.

The CPB says government spending is playing a particular role by pursuing a pro-cyclical budgetary policy, which fuels economic growth. In 2017, the increase in government spending was no more than 0.4%, whereas in 2018, it is projected to be 3.5%, due to measures outlined in the coalition agreement.

Unemployment will also continue to fall, reaching 3.9% in 2018, compared with around 4.9% at present, and its lowest level since 2007, the CPB said.

The tight labour market means companies will pay higher wages in order to attract and hold on to personnel. ‘The increase in real wages translates into an increase in purchasing power and the increase in the number of jobs is also leading to a higher disposable income for households,’ the CPB said.

The CPB forecasts are slightly less optimistic than those published by the central bank on Monday.

It said GDP grew by 3.3% in 2017 and is likely to increase by 3.1% next year before cooling in 2019 to 2.3%. Over the same period the unemployment rate is likely to drop to around 3.5% of the working population from its current level of 4.9%.