Finance minister Eelco Heinen has unveiled plans to invest in defence, the technology industry and a plan to tackle the nitrogen emissions crisis in his annual budget statement.

Heinen said he was frustrated that the collapse of the government meant he could only produce a limited package of measures, just as economic conditions were improving.

The economy is growing, purchasing power is increasing, the national debt is low. And we live in one of the most successful and prosperous countries in the world. That’s something we don’t realise enough,” he said.

According to official government estimates, next year’s budget will boost average spending power by 1.3%, with pensioners better off by 1.5%. The national debt is projected to be 47.9%, well below the EU’s benchmark, but the deficit will increase to 2.9%, staying just within Brussels’ guideline limit of 3%.

But Heinen also said the Netherlands was in danger of taking its prosperity for granted. “Trust has fallen, not just in the cabinet but in politics in general. That has to change,” he said.

In an apparent swipe at Geert Wilders, who pulled his far-right PVV party out of the cabinet in June over the lack of progress on immigration, Heinen said: “We can’t keep walking away from problems. We have to put the national interest first.”

Under pressure

Heinen said Dutch prosperity and security were “under pressure as never before” following three years of war in Ukraine, the decline of international co-operation and Donald Trump’s revival of trade tariffs, while autocratic regimes such as China were openly threatening democratic values.

“To be very honest, this is not the world I want my two sons to grow up in,” he said.

The most ambitious of Heinen’s spending plans is a €2.6 billion commitment to bring down nitrogen compound emissions through a combination of measures, including a voluntary buyout scheme for farmers.

Prime minister Dick Schoof will head a special ministerial committee that will also come up with proposals to reduce emissions through innovation and conservation programmes.

Defence and prisons

The cabinet hopes that applying the classic Dutch “polder“ method of balancing the interests of agriculture, industry and nature and requiring concessions from all sides will secure enough support from opposition parties to steer the plans through parliament.

Heinen also announced an extra €3.4bn of extra spending on defence to bring the department’s budget to 2% of GDP, in line with Nato countries’ commitment to raise their contribution to 5% over the next five years.

Another €35 million is being invested in the prison system to ease overcrowding in cells – less than the “hundreds of millions” that former deputy justice minister Ingrid Coenradie said was needed to tackle the problem.

Semiconductor boost

A previously announced extension of the discount on vehicle tax, which will cost an estimated €1.6 billion, will be partly funded by scrapping the reintroduction of low-tax red diesel for farmers, saving €146 million.

Some €430 million has been earmarked for the technology sector, including €230 million for semiconductor companies and €200 million to support startups through the European Tech Champions Initiative.

The cabinet is also allocating €79 million for flexible homes for people in immediate need, including refugees with settled status who are stuck in reception centres, in an attempt to relieve overcrowding.

And Heinen announced measures to improve public safety, including €20 million for extra measures at railway stations and €12 million on bodycams for train staff. Another €12 million will be spent on accommodation for victims of domestic violence.

The main points of the budget