It will take five years for the Dutch unemployment rate to return to ‘normal’ levels, even if a coronavirus vaccine is in widespread use by next year, the government’s macro-economic forecasting agency CPB said on Tuesday.

‘Economic growth forecasts have had to be revised down because of the coronavirus crisis,’ the CPB said at the publication of two reports on the long-term impact of the crisis.

‘In both the short and the medium term, the decline in jobs, investments and productivity will have a negative impact on forecast GDP growth,’ the CPB said in a press released.

And this also means it will take longer to recover from the damage to the economy, if the deficit can be worked away at all, the agency said.

The warning comes as ministers finalise next year’s spending plans, which are due to be published on the third Tuesday in September.

The CPB expects the jobless total to peak at 6.5% next year, and then drop gradually to around 4.3%. However, if a vaccine takes longer to develop, or if there is a second wave of infections, the damage to the labour market will be deeper and more long-lasting, the researchers said.

Optimism

However, Groningen University economics professor Peter Verhoef told local paper Dagblad van het Noorden that the Netherlands is currently in a ‘unique’ economic crisis and is well positioned to recover compared with other countries.

The fear of catching coronavirus has kept people home and reduced consumer confidence, he said. ‘That is one aspect of the crisis,’ he said. ‘People are also worried out losing their jobs, and are being careful, so saving more.

‘And the third cause is that people have less opportunity to spend – cafes, bars, holidays, events – you don’t have many options.’

Nevertheless, major, capital-intensive industry is still doing well, as is agricultural business, digital companies and some retail and hospitality sectors, he said.

‘It is the events sector, nightclubs and fairs which have knocked out,’ he said. ‘It is very annoying, but luckily they are not part of our economic core.’