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Monday, 25 June 2012

Economy in the mud: Overview of the Dutch economy, based on CBS statistical data

Yesterday, I stated that PM Mark Rutte of The Netherlands drove the Dutch economy further in the mud with his indecisiveness and lack of bravery concerning domestic and European issues. Today, I want to show how deep the mud is, based on the latest statistical data from the Dutch Central Bureau of Statistics (

To be frank: it would be ridiculous to compare the current Dutch problem with the problems in the PIIGS countries and especially Greece and Spain, as these are uncomparable quantities. The Netherlands still has an economy in a relatively luxury position, that's true. However, the velocity of the deterioration process in Dutch economy is worrisome and could eventually bring the economy in the trouble-zone, if no sound government policy is deployed.

It would also be unfair to blame the currently troubled state of the Dutch economy fully on the current cabinet of PM Rutte. The European sovereign debt crisis of 2011, culminating in the current Euro crisis helped in this proces.  On the other hand, if one person – next to German chancellor – was responsible for the fact that the European Union took only halfhearted measures last year and thus aggravated the crisis to the current level of total uncertainty, it would be Rutte.

Anyway, there are some substantial differences between The Netherlands in June 2010 and June 2012 and it can for a large part be blamed on the current government.

Where the economy in June 2010 still was in a phase of building-up, the economy in June 2012 is clearly on the way down, with no relief in sight. All key figures seem to be deteriorating. I collected some key figures from the Dutch CBS to illustrate my case:

Unemployment per age category June 2010 - June 2012
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Consumer confidence June 2010 - June 2012
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Indexed consumption June 2010 - June 2012
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Housing prices June 2010 - June 2012
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Producer confidence June 2010 - June 2012
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Concerning the housing prices I have often stated that the housing prices were still to high, compared to other countries. I am still firmly behind that, although I have stated that the housing prices were not too high in 2012, if you take the current, very low interest rate and the leverage of the MID into consideration. 

In the same article, however, I stated that the current negative mood will bring the housing prices further down, as people don't have the lust to invest in a new house yet and wait for the housing prices to further drop. 
Therefore it is a good development in itself that the housing prices are still dropping to more affordable levels. 

What the current government could have done, however, is getting rid of this darn MID (Mortgage Interest Deductability) with a transitional arrangement for a limited period (5 years), as this would have given clarity about the housing market and would have given all houseowners a clear future. The government failed to do so.

I can only hope that the new elections in September, 2012 will bring a new and stable government: one that fully supports the European Union and the Euro, or does even the total opposite. Both directions concerning the EU would have given total clarity to the Dutch citizens about the political direction of their country(although I would consider the latter to be a tragic mistake). Now this clarity is still missing; instead every political party brings their soundbites in the media, mostly blaming Europe for everything that is wrong in the world.

The Dutch citizens need clarity:
  • about their future;
  • about the future of the European Union and the Dutch commitment towards it;
  • about the Euro;
  • about their economy;
  • about the Dutch housing market;
  • about their income and taxes in the coming years;
  • about their healthcare and the consequences of the aging process in The Netherlands.

This was the kind of clarity that the current cabinet of PM Mark Rutte didn’t want to give during its (continuing) stint. And that's a real shame.

1 comment:

  1. Hi
    Love your blog, you say houses prices will drop even more, what about the thousands of people who were miss sold mortgages by the banks when they knew the bubble had burst. I’m sure there are a lot of them, basically everyone who bought a house from 2006 onwards, what are these people going to do?