Dutch business climate has worsened since 2018: PwC

The business climate in the Netherlands has been deteriorating since 2018, due both to physical restrictions and volatile legislation which is making it difficult to plan long-term investments, according to a report by consultancy PwC.

The report also compares the position of the Netherlands to that of Belgium, Denmark, France, Germany, Luxembourg, Switzerland and Britain, using the same set of indicators and categories.

The agency has drawn up a “heat map” based on 60 different indicators across six categories and concludes that while other countries are all facing similar problems, the Netherlands is now losing ground to Denmark and Switzerland in key areas.

The aim of the heat map, chief economist Barbara Baarsma told the Financieele Dagblad, is to provide “broad, rich insight” into the Netherlands’ performance. It ranges from green (improving) to red (worsening) and looks at the availability of workers, infrastructure, democracy and the capital markets, among others.

Since 2018, a number of areas have turned red, PwC said, and this is enough to conclude that the business climate is getting worse. The cost of labour, greying population, infrastructure issues, political stability, pollution and government investments in innovation are among the key areas where the situation has worsened.

House prices too have an impact, with the report pointing out that not having affordable housing makes the Netherlands less attractive as a place to do business.

“Many things are at play in all countries, such as increased geopolitical tensions,” said Baarsma. “ But that does not necessarily lead to a deterioration of our position compared to other countries.

“Where we really score lower when compared to 2013 is government effectiveness, including the predictability of policy. Companies are quite willing to invest, for instance in becoming more green, but with regulatory certainty. Uncertainty is disastrous for the investment climate.”

The new government said in its coalition agreement that the country should be among the “top five countries with a good competitive position” and that “companies should want to invest and stay here”.