The Netherlands should invest more in itself in order to sustain growth in the longer term and take advantage of the healthy government finances, according to a new report on the Dutch economy by the International Monetary Fund.
At a briefing following the report’s presentation, IMF economist Thomas Dorsey suggested an extra impulse of 0.5% of GDP in the form of tax cuts and extra spending on education and innovation.
‘The buffers are growing quickly,’ Dorsey is quoted as saying by the Financieele Dagblad. ‘At the current pace the Dutch national debt will quickly fall from 57% now to 42% in 2023… Even with extra government stimulation of 0.5% a year, the Netherlands would still retain a substantial safety margin.’
In particular, the Netherlands should bring in policy ‘aimed at reducing dualism in the labour market and supporting wage growth,’ the IMF report said, referring to the rise in self-employment in the Netherlands.
Furthermore, the ‘rapid increases in house prices’ and high levels of mortgage debt ‘reflect structural weakness in the Dutch housing market’. The IMF again said that the maximum amount people can borrow should be reduced below 100% of the value of the property.
This, it says, remains high by international standards and a cut would reduce household financial vulnerabilities.