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Dutch Economy Chart Book
ING Economics Department
Maintaining growth momentum
Amsterdam • January 2018
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2
Contents
1. Outlook summary
2. Forecast table
3. GDP
4. Exports
5. Non-financial businesses
6. Consumers
7. Labour market
8. Inflation
9. Housing market
10. Government
11. Sources
3
4
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After a record-breaking formation process that took 209 days, the Netherlands installed a new four-party government, with Prime-Minister Mark Rutte
starting his third term. In the meantime, the Dutch economy has been steadily marching on. The economy is forecast to outpace the Eurozone for the
fourth year in a row. Dutch GDP expanded by 2.2% in 2016, 2017 is expected to come in at 3.2% and for this year, our forecasts pencil in 2.9%.
Despite geopolitical uncertainty (Brexit, protectionism), export order books continue to look very healthy. Re-exports and domestically-produced exports
are both performing well and are forecast to continue to do so, facing only some slowdown due to politically imposed gas production limits.
Profits of non-financial businesses are rising, but the profit ratio on domestic activity still has a lot of ground to cover to return to the 2008 level. The
number of bankruptcies is at a level last seen in 2000. The investment rate of businesses has already approached 2008 levels and is expected to rise
further. All non-financial business sectors, except construction, produce more than before the crisis.
Consumers are set to increase their spending further. Confidence is high. Disposable income is rising, helped by the stronger labour market.
Meanwhile, the housing market will be contributing somewhat less to the economic recovery, but the number of house sales will remain high and prices
should continue to rise. Supply is running dry, especially in large cities. Price-to-income ratios are on the rise again, but nowhere near pre-crisis levels.
The economy has only just about reached its potential output. Unemployment is falling rapidly, but there is still hidden slack in the labour market. The
labour participation rate still has room to bounce up and wage growth has still only been moderate. Nevertheless, firms are increasingly reporting
shortages of workers as the main factor limiting production, especially in IT services.
Inflation has been rather moderate in 2017 and is expected to increase just a little in 2018. It might take a while longer before labour market pressures
feed into significantly higher inflation rates.
Government finances are benefitting from the economic recovery. The budget already showed a surplus in 2016 and debt dropped below 60% in 2017.
Public finances would have turned out even brighter if the new government had not decided on a (pro-cyclical) fiscal expansion.
In short
3 Summary <<
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ING forecast table – The Netherlands
4
* Not adjusted for working days
Forecasts as of 14 December 2017 (interest rates as of 1 December, 2017)
Forecasts <<
per cent change unless otherwise noted 2011 2012 2013 2014 2015 2016 2017 2018 2019
Demand and output*
Gross domestic product 1,7 -1,1 -0,2 1,4 2,3 2,2 3,2 2,9 2,4
Private consumption 0,2 -1,2 -1,0 0,3 2,0 1,6 2,3 2,2 1,6
Government spending -0,2 -1,3 -0,1 0,3 -0,2 1,2 0,7 3,3 3,0
Investment 5,6 -6,3 -4,2 2,3 11,0 5,3 6,7 5,4 3,2
of which private 7,8 -6,2 -4,6 3,4 12,3 6,5 8,4 5,7 3,4
Net exports (%-point contribution to GDP) 0,9 1,1 1,0 0,7 -0,6 0,6 1,1 0,0 0,3
Labour and housing market
Employment (in hours worked) 0,9 -0,9 -0,9 0,7 0,6 2,0 2,0 1,5 1,1
Unemployment (% of labour force) 5,0 5,8 7,3 7,4 6,9 6,0 4,8 3,9 3,6
House prices -2,4 -6,5 -6,6 0,9 2,8 5,1 7,4 6,1 3,9
Existing home sales (in 000s) 121 117 110 154 178 215 241 224 208
Government finances
Government budget (% of GDP) -4,3 -3,9 -2,4 -2,3 -2,1 0,4 0,7 0,5 1,5
Government debt (% of GDP) 61,6 66,3 67,8 68,0 64,6 61,8 57,4 53,6 50,5
Prices and rates
Inflation (HICP) 2,5 2,8 2,6 0,3 0,2 0,1 1,3 1,6 2,9
Euribor, 3 month (% eop) 1,4 0,2 0,3 0,1 -0,1 -0,3 -0,3 -0,3 0,1
Dutch gov't bond yield, 10yr (% eop) 2,2 1,5 2,2 0,7 0,8 0,4 0,6 0,9 1,2
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5
Dutch economy continues to outpace Euro area ‘core’
From growth laggard to leader
Gross domestic product, volume, change year-on-year, in %
-2
-1
0
1
2
3
4
2012 2013 2014 2015 2016 2017 2018
Nederland Duitsland België Frankrijk
Including negative gas effect on growth (-0.4ppt)
No more drag from housing …and austerity turned to stimulus
In 000s Net budget effect of Rutte III agreement
0
50
100
150
200
250
2008 2012 2016
Belgium Netherlands
France Germany
Existing home sales Cumulative in billion €, lhs
Cumulative in % gdp, rhs
GDP <<
Annual in % gdp, rhs
0.0
0.5
1.0
1.5
2.0
0
4
8
12
16
2018 2019 2020 2021
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75
80
85
90
95
100
105
1997 2001 2005 2009 2013 2017
6
Domestic demand is the key growth engine
Strong growth trend in GDP per capita
Index, 2008 = 100
Domestic demand remains growth engine
Contribution to GDP growth, in percentage points
GDP per capita
-6
-4
-2
0
2
4
2007 2009 2011 2013 2015 2017 2019
Private consumption Government expenditures
Private investment (incl. stocks)
Exports (net)
forecast
GDP <<
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-4
0
4
8
7
Output gap closed, but no considerable overheating yet
Growth is above trend and economy only just above potential in 2018
Change year-on-year, in % (lhs) Difference between actual and potential GDP level, in % of potential GDP (rhs)
Actual GDP growth
Change in potential GDP
-6
-3
0
3
6
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Positive output gap
Negative output gap
forecast
GDP <<
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Exports
8
Despite stagnating world trade growth in 2015-2016, the volume of Dutch exports continued to increase steadily. The weakness in
world trade was largely driven by emerging markets, but that’s not the main Dutch export destination. Relevant world trade
maintained its steady pace and continued to do so in 2017. Exports from the Netherlands are heavily focused on developed markets in
Europe and the US, which recovered further in 2017. Hence, Dutch exports outperformed world trade for a number of years, although
recent figures suggest that this trends might have come to an end.
Re-exports have posted the strongest growth, but exports of domestically-produced goods have expanded well, too. Despite the
recent appreciation of the euro, the competitiveness of the Netherlands improved in recent years. Internationally, the Dutch national
savings and current account surplus are still very high. Strong order positions point to further growth in the coming months.
In nominal terms, export growth was subdued in the past few years. This was caused by low commodity prices. Recent movements in
oil prices have pushed the current account balance back up. Income on Dutch FDI is tightly linked to oil revenues. All in all, nominal
exports were on the rise again in 2017.
Between 2013 and 2016, Dutch exports of energy products declined by more than 50%, as a result of a shift in the gas production
policy. Exports of high-tech products offset part of the decline in energy exports. Going forward, additional pressure on Dutch exports
comes from the government’s decision to further lower the maximum allowed gas production in the Northern Province Groningen.
Unless 2018 turns out to be a very hot year, the 10% reduction in production leaves less gas for foreign markets and will lead to higher
energy imports.
Although it might be more relevant some years further down the road, Brexit is still a considerable risk to the export outlook. In value
added terms, the UK accounts for 8% of Dutch exports. So, a slowdown of the British economy will not go unnoticed.
Exports <<
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9
A very competitive economy: Dutch are ranking high
WEF Global competitiveness Index
Global Innovation Index
Network Readiness
Global Enabling Trade Report
Logistics Performance Index
Ease of Doing Business*
Corruption Perceptions
Human Development
Prosperity Index
Position in 2010
1 2 3 4 5 6 7 8 9 10 138
1 2 3 4 5 6 7 8 9 10 128
1 2 3 4 5 6 7 8 9 10 136
1 2 3 4 5 6 7 8 9 10 160
1 2 3 4 5 6 7 8 9 10 32 190
1 2 3 4 5 6 7 8 9 10 176
1 2 3 4 5 6 7 8 9 10 188
1 2 3 4 5 6 7 8 9 10 149
…
…
…
…
…
…
…
Current rankings from 2016 or 2017. *The somewhat lower rank in Ease of Doing Business is i.a. due to strict spatial planning, a lack of an elaborate public credit registry and high cost of litigation.
1 2 3 4 5 6 7 8 9 10 139 …
Exports <<
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10
Main trading partners of the Netherlands
Goods (2016):
€373 billion
18%
10%
9%
8%
6%
4%
4%
2%
2%
2%
Imports Share, turnover
Goods (2016):
€425 billion
23%
10%
9%
8%
4%
4%
3%
2%
2%
2%
Exports Share based on turnover Share based on value added (2014)
17%
8%
8%
7%
5%
5%
4%
2%
2%
2%
Exports <<
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11
Almost €600 billion of Dutch exports in year
78 57 79 76 135 160
agri energy chemicals low/mid-tech high-tech
Goods (73%) Services (27%)
Mostly goods, but more than a quarter now consists of services
In billions of euro
Agri exports are dominated by domestically produced goods, high-tech is mostly re-exports
Share of domestically produced goods in exports, per category
Exports <<
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0
5
10
15
20
25
30
35
40
2003 2005 2007 2009 2011 2013 2015 2017
0
2
4
6
8
10
12
14
2003 2005 2007 2009 2011 2013 2015 2017
12
Strong export performance
Strong increase in high-tech, rebound in energy exports
Per month, in € billion, seasonally-adjusted
Recent pick-up in nominal exports, after long ‘flat’ period
Per month, in € billion, seasonally-adjusted
Total monthly exports, goods Chemical Agri High-tech
Energy Low-/mid-tech
Exports <<
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0
20
40
60
80
100
-6
-4
-2
0
2
4
2009 2011 2013 2015 2017
-8
-4
0
4
8
12
16
2005 2007 2009 2011 2013 2015 2017
13
Oil price moves current account surplus up and down
Current account surplus down and then up again
% of GDP, seasonally-adjusted
Income balance dominated by “Shell-effect”
% of GDP €/barrel
Trade, services
Trade, goods
Current account
Balance in transfers Income balance Income balance (lhs)
Oil price (rhs)
Oil prices have impacted Shell’s revenues, and thus income on Dutch FDI
Exports <<
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95
105
115
125
2013 2014 2015 2016 2017
40
60
80
100
120
140
2001 2003 2005 2007 2009 2011 2013 2015 2017
Dutch exports rose faster than world trade volume
Index, 2010 = 100, seasonally-adjusted
14
In volume terms, Dutch exports have outpaced world trade
Sharp rise in re-exports, recent minor slowdown in ‘made in NL’
Index, 2014 = 100, seasonally-adjusted
World trade volume
Exports of goods, constant prices, Netherlands Re-exports volume, the Netherlands
World trade volume
Exports <<
Domestically-produced exports volume, the Netherlands
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Transport
Wholesale
0
2
4
6
Ireland Malta NL Belgium Germany
15
Risk: NL could be hit relatively hard by Brexit
Sensitivity to UK: NL ranks third within EU
% of total added value dependent on demand from UK
EU average
Dutch sectors that are most exposed to the UK
Business services
Industry
Exports <<
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-15
-10
-5
0
5
10
15
1997 2001 2005 2009 2013 2017
30
40
50
60
70
2001 2003 2005 2007 2009 2011 2013 2015 2017
16
For now, exporters are still very positive on outlook
Industrial export order books are continuing to fill up
Index
Base case: steady growth in main export markets
Change year-on-year, constant prices, in %
NEVI/Purchasing Managers' Index – export orders
Industrial production in main Dutch export markets*
Merchandise exports, the Netherlands
forecast
Long term average
* Proxied by Eurozone, UK, US and China. Approximate share in Dutch exports used as weights
Exports <<
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17
International competitive position has improved
Since mid-2017, euro up against USD and slightly against GBP
Currency per euro Index, 2010 = 100
Dutch competitiveness has, on balance, improved since 2008
Index, Q1 1999 = 100, an increase means worsening of price competitiveness
90
94
98
102
106
0,6
0,8
1,0
1,2
1,4
2012 2013 2014 2015 2016 2017
USD per euro (lhs)
Nominal trade-weighted euro, Netherlands (rhs)
85
90
95
100
105
110
115
2005 2007 2009 2011 2013 2015 2017
ECB Harmonised Competitiveness Index, based on CPI
ECB Harmonised Competitiveness Index, based on unit labour cost
GBP per euro (lhs)
Exports <<
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Non-financial businesses
18
In 2017 all major market sectors increased their production levels further.
Most sectors have recovered to pre-crisis levels. The main exception is the construction sector, which is still some 4% smaller than in
2008. The gas sector (35% below 2008) was hit by the decision to lower the maximum allowed production in 2015. In ‘gas year’ 2017-
2018 and years ahead, the production will be lowered further.
The financial situation of companies is improving. The number of bankruptcies has dropped back to levels last seen in 2000. Pre-tax
profits of non-financial companies hit a record high at the start of 2017. These numbers are, however, skewed by income from
foreign affilliates. The gross operating surplus – which excludes FDI income – paints a clearer picture of profitability in the Dutch
domestic market. The profit ratio – operating surplus as % of valued added – has improved too, but it’s still below 2008 levels.
Indicators show that the economic recovery is gaining a firmer foothold among SMEs. Smaller firms now also report higher
profitability, but their growth lags that of larger companies.
Investment levels have increased strongly in recent years. Private investment (as a percentage of GDP) excluding dwellings is close to
its previous peak. The combination of higher output levels and rising profits encourages companies to continue to step up
investment, but at a slower pace than in previous years. Spending on vehicles and machines has just surpassed 2008 levels, while ICT-
and R&D-related investment is even 38% higher, mainly driven by investments in software.
Credit conditions improved while credit demand is no longer falling.
Business <<
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60
70
80
90
100
110
120
130
2005 2010 20152005 2010 2015
19
All sectors, bar construction and gas, have recovered to 2008 levels
Goods-producing sectors: mixed picture
Output, index, 2008 = 100
60
70
80
90
100
110
120
130
2005 2010 2015
Mining/gas Agriculture
Construction Manufacturing
Gov’t has lowered maximum allowed gas production
Wholesale* Real estate ICT
Transport Other Retail*
Hospitality
Commercial services: trending up Public services: stable
Education* Government*
Health care* Culture, sport & recreation*
* No quarterly data available
Business <<
55
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36
38
40
42
44
46
2002 2007 2012 2017
0
20
40
60
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
20
Higher profits for non-financial companies
Pre-tax profits of Dutch non-financial companies
Profits of foreign affiliaties of Dutch non-financial companies
Profit ratio, non-financial companies
Business <<
Total profits (incl. foreign affiliates) in euro’s at a record high, but…
In euro billions, seasonally-adjusted
…margins on domestic operations still average
Gross operating surplus as percentage of gross value added
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60
70
80
90
100
110
120
2010 2011 2012 2013 2014 2015 2016 2017
-40
-30
-20
-10
0
10
20
2009 2010 2011 2012 2013 2014 2015 2016 2017
21
Recovery is filtering through to smaller firms
SMEs: more confidence and improved finances
Net % of firms reporting improvement (+) or deterioration (-), NSA
Positive trend in profitability, also among SMEs
Net % of firms reporting higher (+) or lower (-) profitability in last 3 months
ING Sentiment Index for SMEs (ING OndernemersIndex)
Financial situation in last 12 months
Business <<
5 to 20 employees
20 to 50 employees
50 to 100 employees
100 or more employees
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22
Much fewer bankruptcies
Number of bankruptcies at multi-year lows
Per month, seasonally-adjusted
Declines in all sectors, strongest in com. services and trade
Bankruptcies per month, 6M moving average
0
200
400
600
800
1000
2001 2005 2009 2013 2017
Bankruptcies per month
0
50
100
150
200
250
300
2007 2009 2011 2013 2015 2017
Construction Commercial services Trade
Industry Transport Hospitality
Public services (incl. health)
Business <<
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23
Business investment rate has recovered, construction not yet
Business <<
5
10
15
20
25
1997 2001 2005 2009 2013 201760
80
100
120
140
2007 2009 2011 2013 2015 2017
Total investment rate recovering, private investment near peak...
As % of GDP
Private investment, excluding dwellings
Total investment (private + public)
Machines and transport vehicles
Dwellings and other buildings (including roads, waterways, etc)
Software, computers and R&D
…helped by trend in ICT investments and recovered equipment
Index, 2008 = 100
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
4
8
12
1997 2002 2007 2012 2017
Expected increase in investment manufacturers
-30
-20
-10
0
10
20
30
1997 2002 2007 2012 2017
-24
-12
0
12
24
-60
-30
0
30
60
2002 2007 2012 2017
24
Further investment growth, but at slower rate
Manufacturing expects to invest more…since need for extra capacity has went up
% change in fixed investment % of firms
Growth in comm. services normalises
Index, dev. from LT-average Change YoY, in %
Actual investment manufacturers
Business confidence services (lhs)
Investment volume com. services excluding retail and wholesale (rhs)
Business <<
Industrial firms reporting shortage of materials and/or equipment as main limit to production
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-100
-50
0
50
100
2007 2009 2011 2013 2015 2017
-100
-50
0
50
100
2007 2009 2011 2013 2015 2017
Credit demand stable, some pick up among SMEs
Net percentage of banks reporting stronger (+) or weaker (-) demand
Large firms
SMEs
25
Demand for bank credit stable
Credit standards have been eased slightly
Net percentage of banks reporting tighter (+) or eased (-) standards
Large firms
SMEs
easing
tightening
weaker
stronger
Business <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
Consumers
26
Spending power has risen strongly in the past few years, helped by more jobs, higher wages and low inflation. Not all households
reacted by boosting their spending at an equal rate. Part of the income increase was put aside or used to pay down mortgages.
Spending power will continue to rise due to economic momentum and fiscal stimulus.
Debt is still rising, but at a much lower rate than previously. Households are deleveraging the ‘soft’ way (also see slide 57). Total net
wealth of households has hit the highest level ever recorded. However, most of the increase is in non-liquid assets, such pension
assets and housing wealth. Some but not all of the lost housing wealth has recovered. As a result of pension policies ensuring the
continuation of contributions and the increase in the statutory pension age, accumulated pension wealth continued to increase
during the crisis and has never been higher. Yet, also pension liabilities increased.
Confidence is high among consumers. The increase in confidence is most prevalent among younger people. Consumers are more
optimistic than normal about the general economic climate and willingness-to-buy is also high. Consumers currently view this as a
very good time to make large purchases.
As a result of strong consumer confidence and increasing income, households are stepping up the pace of spending. Spending on
both goods and services is rising. Within the goods category, electronics are the standout performer. The long-lagging housing-
related spending is now also finally starting to pick up, while the recovery in home sales took off much earlier. While all durables are
clearly on the rise, the recovery in car sales has remained muted compared to before the crisis. Consumption of hospitality &
recreation services as well as food rose above pre-crisis levels.
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-50
-25
0
25
50
2007 2009 2011 2013 2015 2017
-3
-2
-1
0
1
2
3
2001 2005 2009 2013 2017
Especially younger people are full of confidence
Consumer confidence, index
18-45 years
All ages
27
Consumers confidence strikes post-crisis high
Consumer confidence highest in 9 years
Standardised index
Economic climate
Consumer confidence index
Willingness to buy 65+
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-2
0
2
4
6
2000 2004 2008 2012 2016 2020
forecast
85
100
115
2005 2007 2009 2011 2013 2015 2017
28
More spending power on the back of recovery and public spending
Increase in overnight deposits points to higher spending
Inflation-adjusted index, 2010 = 100
Non-food retail sales, excluding fuel
Overnight deposits, total balance of households (3M lead)
Purchasing power is rising due to recovery and policy
Change year on year, in %
Dynamic (adjusted for changes in type of income)
Static
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
88
92
96
100
104
108
2007 2009 2011 2013 2015 2017
57
15
17
6 4
Services Food, beverages & tobacco Durable goods Energy & fuel Other goods
Breakdown of consumer spending, 2016
% of total
29
Private consumption growth is steaming ahead
Increased spending on both goods and services
Private consumption by type, volume index, 2008 = 100
Goods
Total
Services
clothing
furniture
electronics
vehicles
other housing
hospitality & recreation
transport & comm.
health
financial other services
energy & water
fuel
beverages & tobacco
food
Consumers <<
other goods
€311 billion (100%)
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
80
100
120
140
2007 2012 2017
30
Consumer spending trends: pickup in durables
Services: more on housing and health
Index, constant prices, 2008 = 100
Housing
Health
Electronics surge, food edging higher
Hospitality & recreation
Financial
Durables: cyclically-driven uptrend in clothing and housing-related
90
100
110
120
130
140
150
2007 2012 2017
Food
Electronics
Energy & fuel
60
70
80
90
100
110
2007 2012 2017
Vehicles
Clothing
Housing-related
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
20
40
60
80
100
120
140
160
2007 2009 2011 2013 2015 2017
-10
0
10
20
2011 2012 2013 2014 2015 2016
31
More and more online
Number of web shops up, traditional stores down
In thousands
Traditional shops
Double-digit rise in online sales volumes
Retail sales volume, change year-on-year, in %
Non-food (excl webshops)
Food
Post order/webshops
Post order / web shops
-5k
+30k
Change since 2007
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-4
-2
0
2
4
6
8
2002 2007 2012 2017270
290
310
330
2010 2011 2012 2013 2014 2015 2016 2017
32
Income has increased slightly faster than spending
…leaving ‘free’ savings rate in positive territory
% of disposable income
Free savings (income less spending)
Household income has increased faster since 2014…
In billions of euros
Consumer spending
Total household disposable income
Mandatory savings (pension premiums less payouts)
Income > spending = higher saving rate
Positive saving rate = increase in wealth
forecast
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-60
-30
0
30
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
33
Households are taking up much less debt
Change in financial assets, excluding pensions (i.e. bank accounts, stocks, bonds, etc.)
For a long period, debt increased much faster than liquid assets, but that has changed
In billions of euros
Change in debt (mostly mortgages)
Change in net financial wealth (excluding pensions)
Consumers <<
Line shows changes in wealth due to financial transactions (price/valuation change are excluded)
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
500
1000
1500
2000
2500
3000
3500
2001 2006 2011 2016
34
Total net wealth increased further during crisis
Total net wealth (financial and non-financial)
-1000
-500
0
500
1000
1500
2000
2000 2002 2004 2006 2008 2010 2012 2014 2016
Non-financial wealth (mostly dwellings and land)
Increase in pension assets has offset temporary decline in housing wealth
In billions of euros
Insurance and pension entitlements
Other financial assets
Debt
Total net wealth at record high
In billions of euros
Consumers <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
Labour market
35
Employment growth has maintained its high pace in recent quarters. The number of people employed is now much higher than it was
when the crisis hit the economy. In terms of total hours worked, the labour market is even stronger.
Leading indicators point to further employment growth. The number of unfilled vacancies is the highest since early 2009, but it is not
yet as high as before the crisis.
Sector-wise, temporary job agencies have been the largest contributor to the increase in jobs. Nevertheless, the number of fixed
contracts has finally started to grow, with considerable numbers in 2017 Q3.
The public sector (incl. health) and construction sector started hiring again. That is a positive development, after many years of low
employment in these sectors.
The unemployment rate is falling rapidly and has already passed its long term average. All age groups show a decline.
Despite the strong improvement in the labour market, there is no sign of serious overheating yet. Wage growth is moderate and there
is more slack in the labour market than the unemployment data suggests. In addition to the near 400k unemployed, there appears to
be potential labour supply of at least 300k men and women, if participation rates were to return to pre-crisis levels. Nevertheless, the
share of businesses reporting a shortage of workers as factor limiting activity has started to increase in industry, construction and
particularly in the IT sector.
Since the start of the crisis, the gross participation rate has declined and not yet fully recovered. The decline in labour market
participation has been strongest amongst males of 25 to 45 years old. Before the crisis, there was a very strong uptrend in
participation.
The number of persons unemployed per vacancy went from 7 in 2013 tot 2 in 2017. This signals tightening of the labour market.
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
11,8
12,0
12,2
12,4
12,6
12,8
13,0
13,2
9,0
9,2
9,4
9,6
9,8
10,0
10,2
10,4
2005 2007 2009 2011 2013 2015 2017
Du
ize
nd
en
36
Employment is rising
Number of jobs strongly increasing, in hours worked even faster
Millions
Total employment, number of employees and self-employed people (lhs)
Employment in total hours worked (rhs)
4
15
8
2614
32
311
7
24
20
36
Comm. Services +6% Financial, IT, advice (legal/mgt./tech), temp job agencies
Public +4%-point Health, government, education
Agriculture -1% Farming, forestry, fishing
Industry (incl. energy) -5% Food, metal, chemical, machinery
Trade -2% Retail (incl. auto), wholesale, hospitality
Construction -2%
1995 vs 2016: more jobs in services
Share in total employment, in %
1995 2016
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-0,8
-0,4
0,0
0,4
0,8
2014 2015 2016 2017
-4
-2
0
2
4
2007 2009 2011 2013 2015 2017
37
More work in fixed contracts
Number of fixed contracts increasing at substantial pace
Contribution to quarterly change in labour force, in percentage points,
seasonally adjusted
Job growth driven by commercial services, public hiring again
Contribution to yearly change in employment, in percentage points
Total employed labour force
Employee, flex
Employee, fixed Self-employed w/o pers. (“zzp”)
Other (e.g., self-employed with employees)
Industry Public Construction
Trade/transport Temp agencies
Other sectors (eg, business services, IT, finance, real estate)
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-9
-6
-3
0
3
6
-3
-2
-1
0
1
2
2005 2007 2009 2011 2013 2015 2017
-2
-1
0
1
2
3-3
-2
-1
0
1
2
1996 1999 2002 2005 2008 2011 2014 2017
Leading indicators point to further job growth
Consumers and firms have positive employment expectations
Index, standardised
Unfilled vacancies and temp hours are rising
Index Quarterly change, in %
Consumers’ unemployment expectations (rhs, inverted)
Businesses’ employment expectations* (lhs) Vacancy indicator (left)
Temp hours worked (right)
38
* Weighted average of manufacturing, construction, retail and services
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
2
4
6
8
10
1980 1985 1990 1995 2000 2005 2010 20150
5
10
15
2005 2007 2009 2011 2013 2015 2017
39
Steady drop in unemployment while below long term average
Unemployment still markedly above previous lows
Share of unemployed in labour force, in percentage
Lower unemployment in all age groups
Share of unemployed in labour force, in percentage
Unemployment rate (harmonised)
Long-term average (1970-2015) Aged 25-45
Aged 15-25
Aged 45+
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
1
2
3
4
5
6
7
8
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
40
Labour market is getting tighter
Number of unemployed persons per open vacancy has fallen significantly, but not yet as low as in 2008
Ratio of number of unemployed persons and number of unfilled vacancies
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
0
30
60
90
2005 2009 2013 2017
0
10
20
30
2005 2009 2013 20170
5
10
15
20
2005 2009 2013 2017
0
25
50
2005 2009 2013 2017
0
10
20
30
2005 2009 2013 2017
0
5
10
15
20
2005 2009 2013 2017
41
Labour shortages more prevalent
Percentage of firms reporting shortage of workers (note: charts do not have same axes)
Industry
Agri
Construction
Real estate services
Wholesale
Transport (over land)
Retail
Hospitality
IT
Legal serv.
Mgt. consult.
Temp job agencies
Rental serv.
Marketing
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
66
68
70
72
2005 2007 2009 2011 2013 2015 2017
42
Lower labour participation points to ‘hidden’ potential supply
Potential labour force has outpaced actual labour force
Index, 2009 = 100
Since start of crisis, participation rate has, on balance, fallen
Actual labour force as percentage of potential labour force aged 15-74
Gross labour participation rate, aged 15-74
Actual labour force (aged 15-74)
Potential labour force (aged 15-74)
Reasons for withdrawal:
- Discouraged
- Study/re-training
- Care-taking
- Sick/disability
71%
70%
68%
Labour <<
98
100
102
104
106
2009 2011 2013 2015 2017
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
4.4
4.6
4.8
5.0
2004 2006 2008 2010 2012 2014 2016
Mil
lio
ns
3.4
3.9
4.4
2004 2006 2008 2010 2012 2014 2016M
illi
on
s
56
60
64
68
2004 2006 2008 2010 2012 2014 201674
76
78
2004 2006 2008 2010 2012 2014 2016
43
Extra potential labour supply of around 300k people
Male participation rate has dropped
Actual labour force as percentage of potential labour force aged 15-74
Strong upward trend in female participation rate stalled
Actual labour force as percentage of potential labour force aged 15-74
+150k
65%
59%
150K extra men if participation returned to 77%
Number of males active (and potential) on the labour market, in millions
77%
75%
Assuming part. rate of 77%
Actual
150K extra female if participation rose to 68% based on trend
Number of females active (and potential) on the labour market, in millions
+150k Assuming part. rate of 68%
Actual
Labour <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
Inflation
44
Headline consumer price inflation (CPI) fell in the first half of 2017 on the back of decreasing core inflation. Core inflation showed a
similar but less volatile pattern. In the second half of 2017, both CPI and core inflation remained rather flat, ending the year only
slightly higher. CPI increased somewhat in the second half of 2017 due to increasing energy and fuel prices.
Wage grew, but at a modest pace in 2017. Underutilisation of the economy, such as hidden unemployment, kept a lid on the increase
in core inflation. Inflation excluding food and energy remained at 0.8% on average in 2017.
The European harmonised inflation measure (HICP), which excludes the cost of owning a home, rose at similar pace as CPI in recent
months, after a period of lagging behind CPI.
Inflation expectations among businesses remained flat for the next three months to come. In contrast, consumers expect hefty
increases in the twelve month ahead, most likely anticipating the intended increase in the low-VAT rate from 6% to 9% in January
2019.
After 1.4% in 2017 on average, headline consumer price inflation is set to rise only a little to 1.5% in 2018, which hides an underlying
pattern of increasing monthly inflation rates partially due to moderate labour market tightening. Core inflation is forecast to edge up
to 1.2% in 2018. HICP is forecast to rise from 1.3% in 2017 to 1.6% in 2018.
Inflation <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-1
0
1
2
3
4
2012 2013 2014 2015 2016 2017
-20
0
20
40
60
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
45
Inflation expectations increasing among consumers
Inflation is creeping higher from low levels… …and consumers expect a considerable increase anticipating VAT-hike
% year-on-year Net % of respondents
Headline consumer price inflation
Companies’ selling price expectations for next 3 months
(weighed average of industry, retail and services sector)
Consumer price expectations for next 12 months
Core inflation
Inflation <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-60
-30
0
30
60
90
2014 2015 2016 2017
46
Inflationary pressures are building only slowly
Commodity price increases could to feed through…
Change year-on-year, in %
0
1
2
3
4
5
2008 2010 2012 2014 2016
…and hourly wage costs rising at moderate but increasing pace
Change year-on-year, in %
Energy
Agricultural
Raw materials Metals & minerals
Manufacturing
Construction
Commercial services
Non-commercial services
Catch-up after period of wage freeze
Inflation <<
ING Orange
RGB= 255, 98, 0
ING Light Grey
RGB= 168, 168, 168
ING Indigo
RGB= 82, 81, 153
ING Sky
RGB= 96, 166, 218
Colour Guidelines
ING Fuchsia
RGB= 171, 0, 102
ING Lime
RGB= 208, 217, 60
ING Leaf
RGB= 52, 150, 81
ING Mid Grey
RGB= 118, 118, 118
Text Colour
RGB= 51, 51, 51
No content below the grey line
-1
0
1
2
3
4
2012 2013 2014 2015 2016 2017 2018
47
Rising core inflation will push headline inflation upwards
Headline inflation was rather stable, but is forecasted to increase
Contribution to consumer price inflation, in percentage points
rent
other
energy
food/bev/alc
‘core’
forecast
fuel
Total CPI
Inflation <<
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Housing market
48
The housing market has been an important driver of economic activity during the crisis. Since the trough of 2013, the economy has
expanded by 10%. The pick-up of the housing market explains more than a quarter of this recovery and more than half of the growth
in private consumption. Investment in dwellings has surged 74%, benefitting builders, industry and DIY stores. The number of home
sales has more than doubled between 2013 and 2017. Estate agents, surveyors, notaries, lenders, mortgage advisors and furniture
shops reap the benefits of this.
Home buying activity hit a new record high in 2017 and this has pushed supply of existing homes to very low levels. Currently, existing
supply is only four times as large as the number of monthly transactions.
Regionally, all provinces have shown double-digit increases in home sales since the low point of 2013. In regions where the population
is ageing faster, the increase has been held back. Meanwhile, in large cities, the very low supply has already led to fewer transactions,
but the level of transactions is still high.
Demand for housing remains strong in the years ahead, as a result of strong growth momentum, record high confidence and further
forthcoming fiscal boosts to disposable income. New supply is not enough to counter foreseen household growth. The mixture of
strong demand and low supply warrants further house price increases. In 3Q17, prices rose on average by close to 8%YoY. Compared
to pre-crisis levels, most regions have room for further increases. Nationwide, in November 2017 prices were still 4% below the 2008
peak. The largest cities lead the price increases. In Amsterdam, prices are already over 25% above the previous peak, but there, the
foundation for significant price increases is eroding.
Housing affordability has already started to weaken on average, but it remains favourable compared to 2008 levels. Price-to-income
levels are on the rise, but not anywhere near the levels seen in the Netherlands in 2008.
Housing <<
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60
80
100
120
140
160
2005 2007 2009 2011 2013 2015 2017
49
Home buying activity still near record levels
Housing market sentiment still strong…
Index, 2008 = 100
…keeping homes sales close to record high levels
Monthly sales, seasonally-adjusted, in thousands
Housing Market Indicator VEH (homeowners’ association)
Google searches for ‘hypotheek’ (= mortgage)
0
5
10
15
20
25
2005 2007 2009 2011 2013 2015 2017
Existing homes
New homes
Housing <<
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'70 '80 '90 '00 '10
1
2
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4
5
6
7
'05 '07 '09 '11 '13 '15 '17
50
Affordability has started to weaken, but still better than in 2008
Housing affordability has deteriorated slightly
After-tax mortgage cost as % of income, directly after purchase*
Mortgage rates have edged higher from historic low levels
In %, by fixed interest duration
Mortgage rate, average all durations
Up to 1yr
1 to 5yr
5-10yr
>10yr
0
10
20
30
40
1997 2002 2007 2012 2017
Annuity mortgage
100% interest-only
Repeat home buyers
First-time home buyers
Good affordability
Bad affordability
* Using average house price and average household income. Since 2013, interest on new mortgages is only tax deductible for ammortising mortgages.
Housing <<
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50
100
150
200
250
300
2001 2005 2009 2013 2017
51
Broad-based surge in home sales, but main urban areas lose steam
North & east: trend is still up except for Groningen
Index, 2013 = 100
South & west: fewer sales in Randstad
Index, 2013 = 100
Friesland
Groningen
Drenthe
Overijssel
Flevoland
Gelderland
50
100
150
200
250
300
2001 2005 2009 2013 2017
Noord-Holland
Utrecht
Zuid-Holland
Zeeland
Noord-Brabant
Limburg
Housing <<
Fall in sales in Utrecht and N-Holland (A’dam)
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0
10
20
30
40
2005 2007 2009 2011 2013 2015 2017
Supply is becoming tighter
Unsold existing supply at pre-crisis lows…
Available housing supply versus monthly rate of sales, in months
…while new supply picked up slowly from record lows
In 000s
For sale
0
50
100
150
200
1955 1965 1975 1985 1995 2005 2015
Du
ize
nd
en
Total building permits
52 Housing <<
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Historical house price trends
In real terms, Dutch house prices are still significantly below the last peak
Index, adjusted for consumer price inflation, 1970 = 100
0
50
100
150
200
250
300
350
400
1927 1933 1939 1945 1951 1957 1963 1969 1975 1981 1987 1993 1999 2005 2011 20171628
Herengrachtindex
1700 1800 1900
National house price index
-79%
-51%
-29%
53 Housing <<
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2007 2009 2011 2013 2015 2017
70
80
90
100
110
120
130
2007 2009 2011 2013 2015 2017
54
Large cities lead house price recovery
Western & southern provinces Largest cities
Friesland
Groningen
Drenthe
Overijssel
Gelderland
Flevoland
Northern & eastern provinces
Index, 2008 = 100
Noord-Holland
Utrecht
Zuid-Holland
Zeeland
Limburg
Noord-Brabant
70
80
90
100
110
120
130
2007 2009 2011 2013 2015 2017
The Hague
Amsterdam
Rotterdam
Utrecht
National average
Housing <<
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House price-to-income ratio increasing again
Price-to-income in Sweden and the UK far above long-term average, NL and Denmark somewhat
House price-to-income, deviation from long-term average, 1980-2016 = 100
55
40
60
80
100
120
140
160
1980 1985 1990 1995 2000 2005 2010 2015
US
UK
Sweden
Euro area
Netherlands
Denmark
Housing <<
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Measures have been taken to curtail mortgage debt growth
56 Housing <<
Interest payments resulting from mortgage equity withdrawal cannot be included in the tax deduction
Intro. code of conduct (cost of living ratios, reference rate for mortgage with interest rate <10yr)
2001 2007
2011 2013
Households are only allowed to deduct interest payments on the mortgage up to a maximum period of 30 years
2004
Tightening code of conduct (max 50% interest-only)
2014
Interest on new mortgages only tax deductible for amortising mortgages (annuity/linear mortgage) Max loan-to-value gradually lowered from 106% to 100% in 2018
For the higher income tax bracket, tax deduction will be gradually reduced from 52% to 38% in 2042
2020
Maximum interest deductibility lowered in steps of 3%-points from 49% in 2019 to 36,93% in 2023
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57
Mortgage debt is falling, in relative terms
Debt levels are falling as income rises and households have increased pre-payments
Mortgage debt as % of household disposable income
0
50
100
150
200
250
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Housing <<
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Government
58
Government finances are improving. They continue to benefit from the fast growing economy. Ahead of forecasts, the budget already
showed a surplus last in 2016 (+0.4% of GDP); the first since 2007. Debt is dropping fast, too. In the first quarter of 2017, government
debt fell below 60% of GDP.
Revenues increased, while expenditures were merely stable. This hides a pattern of the increasing cost of ageing (health and pension).
On the other hand, the share of expenditures on interest payments is low and still decreasing. Both interest rates and the interest
differential with Germany faced by the Dutch government are low.
In the interest of the rest of the Eurozone and internal rebalancing, international organisations such as the European Commission, the
IMF, the OECD and the European Central Bank in recent years have encouraged the Dutch government to increase spending. Despite
little fiscal room in terms of sustainability balances, the Rutte III cabinet decided on a more expansive fiscal stance. It will spend more
money on defence, education, R&D, civil service and infrastructure in 2018 and on tax cuts in 2019.
The output gap appears to be closed, meaning that the expansionary fiscal policy will be pro-cyclical.
Despite additional public spending and tax cuts, budget surpluses are expected to remain during the entire term of the third
government with Mark Rutte at the helm. Public finances are and will remain in line with European norms. Government debt has
already dropped below the 60% GDP norm and will continue decreasing as a result of cumulating surpluses and the continuation of
the sale of the ABN AMRO bank and insurer ASR.
Due to the looser fiscal stance of the government, public finances are no longer sustainable, according to strict definitions of the
sustainability gap as calculated by CPB a.k.a. Netherlands Bureau of Economic Policy Analysis. Nevertheless, they still appear
favourable in international comparisons.
Gov’t <<
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0
2
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12
14
1815 1835 1855 1875 1895 1915 1935 1955 1975 1995 2015
-0,5
0,0
0,5
1,0
1,5
jan-16 jan-17 jan-18
Yield on Dutch 10yr government bond ‘Long-term’ rate
Dutch government bond yield still at historically low levels
Yield on Dutch 10-yr government is still very low… …with a stagnating pick-up
Yearly average, %
59 Gov’t <<
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-3
-2
-1
0
1
2
3
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Low spread versus Germany
Yield spread with Germany back at low levels
%
60
0,0
0,5
1,0
2011 2014 2017
Fall of Rutte-I
Gov’t <<
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40
50
60
70
80
90
2001 2003 2005 2007 2009 2011 2013 2015 2017
-6
-5
-4
-3
-2
-1
0
1
2008 2010 2012 2014 2016 2018
Small budget surplus
Government revenue
Government expenditure
ING forecast
Actual balance
Income has exceeded expenditures again…
In euro billions, per quarter, seasonally-adjusted
…pushing the fiscal balance back into positive territory
As % of GDP, seasonally-adjusted
European target
62 Gov’t <<
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0
20
40
60
80
2005 2008 2011 2014 2017
Revenues have increased
Income & company taxes are surging… …as are social contributions… …but gas revenues have plunged
4Q sum, in billion euros. Note that chart on right-hand size has different axis
0
10
20
30
40
2005 2008 2011 2014 2017
VAT/excises
Other taxes
Income and company tax
0
20
40
60
80
2005 2008 2011 2014 2017
Contributions, employees
Contributions, employers Income on wealth (mainly gas revenues)
Sale of products and other income
63 Gov’t <<
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0
20
40
60
80
2005 2008 2011 2014 2017
0
20
40
60
80
2005 2008 2011 2014 2017
Government expenditures have, on balance, been stable
Old-age costs are rising… …civil servant wages have picked up… …but interest payments are in decline
4Q sum, in billion euros. Note that chart on right-hand size has different axis
Health
Other Income support
Old-age
Compensation of employees
Investment & consumption
* Proceeds are booked as negative expenditure
4G-auction*
0
10
20
30
40
2005 2008 2011 2014 2017
Other spending and subsidies
EU budget bill
Interest payments
64 Gov’t <<
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0
10
20
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40
50
60
70
2006 2008 2010 2012 2014 2016 2018
-6
-5
-4
-3
-2
-1
0
1
2
3
2006 2008 2010 2012 2014 2016 2018
Compliant with the rules of the Stability and Growth Pact
Government debt
Structural balance above Medium Term Objective…
As % of GDP
…and government debt back below 60%
As % of GDP
65
Headline balance
Underlying primairy balance (structural less interest and excl. gas)
Structural balance (headline adj for cycle and one-offs)
forecast
MTO
European target
Gov’t <<
forecast
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-5
-4
-3
-2
-1
0
1
mrt
2006
mrt
2010
sep
2010
mrt
2012
jun 2012 sep
2012
nov
2012
jun 2014 aug
2017
okt 2017
Long-term of government finances nearly sustainable
Long-term fiscal surplus achieved by reforms spent by new government
As % of GDP
66
Sustainability balance*
*The sustainability balance shows how much policy
measures need to be taken (in % of GDP) to ensure that
future generations can benefit to a similar degree from
public services at a constant tax burden (as a percentage of
GDP) as is faced by present generations. This balance shows
whether future tax revenues are sufficient to cover future
government expenditures. The current modest
sustainability surplus means that the debt level will stabilise
under the assumption of consistent arrangements.
62
63
64
65
66
67
68
69
70
2013 2020 2030 2040
Strong increase in pension age
Statutory pension age in years
From 2024 onwards, the
entitlement age for state
old age will be linked to
life expectancy
Gov’t <<
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Data sources
66 Sources <<
Slide Sources Slide Sources Slide Sources
4 ING Forecasts 24 [1] DG ECFIN [2] CBS [3] DG ECFIN, CBS, ING calculations 45 DG ECFIN, CBS
5 [1] Macrobond, ING Forecasts [2] CBS [3] Rutte III agreement, ING Forecasts 25 DNB Bank Lending Survey 46 [1] Macrobond [2] CBS
6 [1] CBS [2] CBS, ING Forecasts 27 CBS, ING calculations 47 CBS, ING calculations/forecasts
7 [1] CBS, EC [2] ING calculations 28 [1] CBS, CPB [2] Eurostat, DNB, ING calculations 49 [1] VEH, Google Trends, ING calc. [2] Land registry, NVB
9 WEF, Cornell University, INSEAD & WIPO, Worldbank, Transparancy International, UNDP, Legatum Institute
29 CBS, ING calculations 50 [1] CBS, DNB, ING forecasts [2] [3] Macrobond, DNB
10 CBS, WIOD, ING calculations 30 CBS, ING calculations 51 CBS
11 CBS, ING calculations 31 CBS 52 [1] Huizenzoeker, CBS, ING calculation [2] CBS
12 CBS, ING calculations 32 CBS, ING calculations 53 Eichholtz, CBS, ING calculations
13 [1] DNB, ING cal. [2] DNB, Macrobond [3] CBS, ING calculations 33 CBS, ING calculations 54 CBS
14 [1] CPB, CBS [2] CBS, Macrobond, ING calculations 34 CBS, ING calculations 55 OECD
15 WIOD, ING calculations 36 [1] CBS [2] CBS, ING calculations 57 CBS, ING calculations
16 [1] NEVI/PMI [2] CBS, ING calculations/forecasts 37 CBS, ING calculations 59 Macrobond
17 [1] Macrobond [2] ECB 38 [1] CBS, DG ECFIN, ING calculations [2] CBS 60 Macrobond
19 CBS, ING calculations 39 [1] Eurostat [2] CBS 61 [1] CBS, ING calculations [2] CBS, CPB, EC
20 CBS 40 CBS, ING calculations 62 CBS, ING calculations
21 [1] ING [2] CBS 41 CBS, DG ECFIN, ING calculations 63 CBS, ING calculations
22 CBS, ING calculations 42 [1] CBS, ING calculations [2] CBS 64 [1] CBS, CPB, ING forecasts [2] CBS
23 [1] Macrobond, ING calculations [2] CBS, ING calculations 43 CBS, ING calculations 65 CPB
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Contact details
67
Marcel Klok Senior Economist ING Netherlands Economics Department
ACT A.11.054 Bijlmerdreef 24 Amsterdam
P.O. Box 1800 1000 BV Amsterdam
Follow us:
@INGNL_economie
www.ing.nl/economie think.ing.com
+31 (0) 20 57 60 465
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Disclaimer
68
This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any particular user's investment objectives, financial situation, or means. ING forms part of ING Group (being for this purpose ING Group NV and its subsidiary and affiliated companies). The information in the publication is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Reasonable care has been taken to ensure that this publication is not untrue or misleading when published, but ING does not represent that it is accurate or complete. ING does not accept any liability for any direct, indirect or consequential loss arising from any use of this publication. Unless otherwise stated, any views, forecasts, or estimates are solely those of the author(s), as of the date of the publication and are subject to change without notice. The distribution of this publication may be restricted by law or regulation in different jurisdictions and persons into whose possession this publication comes should inform themselves about, and observe, such restrictions. Copyright and database rights protection exists in this report and it may not be reproduced, distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. The producing legal entity ING Bank N.V. is authorised by the Dutch Central Bank and supervised by the European Central Bank (ECB), the Dutch Central Bank (DNB) and the Dutch Authority for the Financial Markets (AFM). ING Bank N.V. is incorporated in the Netherlands (Trade Register no. 33031431 Amsterdam). In the United Kingdom this information is approved and/or communicated by ING Bank N.V., London Branch. ING Bank N.V., London Branch is subject to limited regulation by the Financial Conduct Authority (FCA). ING Bank N.V., London branch is registered in England (Registration number BR000341) at 8-10 Moorgate, London EC2 6DA. For US Investors: Any person wishing to discuss this report or effect transactions in any security discussed herein should contact ING Financial Markets LLC, which is a member of the NYSE, FINRA and SIPC and part of ING, and which has accepted responsibility for the distribution of this report in the United States under applicable requirements.