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Corona pushes public finances into the red for the first time in five years | NOW

In 2020, the Netherlands posted a budget deficit of 34 billion euros, compared to a surplus of 14 billion euros a year earlier. It is the first time in five years that our country spends more than it receives, reports the Central Bureau of Statistics (CBS) on the basis of preliminary figures.

The budget deficit is thus stranded at 4.3 percent of the gross domestic product (GDP), the most commonly used measure of a country’s economy. The debt grew by 40 billion euros to 435 billion euros. That is 54.5 percent of GDP.

In normal times, the European Commission insists that the deficit should not exceed 3 percent of GDP and that the debt should remain below 60 percent. The Netherlands therefore has a greater deficit than would normally be allowed, but due to the corona crisis, Brussels has temporarily suspended those rules.

Government spent more on aid measures

The budget surplus has increased annually over the past five years, but fell dramatically last year. The government therefore spent much more in 2020. Expenditure rose by 44 billion euros to 384 billion euros. Most of that increase, 30 billion euros, was due to the various support packages following the corona crisis.

Half of that amount went to the NOW aid that companies can apply for to pay their wages. The other support measures included the TOZO support for self-employed entrepreneurs and the TVL support for fixed costs of companies.

Benefits increased less quickly

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As a result of these support measures, fewer people lost their jobs and the rise in benefit costs was limited. It did increase by 4 billion euros, but that was mainly the result of higher AOW taxes. Almost a third of the increase was due to higher expenditure on benefits, such as for care or for children. Social assistance benefits barely contributed to the increase.

Revenues then fell again by EUR 4 billion. This is mainly because public companies paid less dividends due to the corona crisis, so that less money ended up in the treasury. And the monster loss of Air France-KLM has been attributed to the State for almost 1 billion euros.

Because of the substantial government deficit and because many companies and private individuals were given a delay to pay their taxes, the State had to borrow more. The debt amounted to EUR 40 billion, or 54.5 percent of GDP. That is almost 6 percentage points higher than in 2019, but not yet the highest debt ratio in the last twenty years. This was achieved in 2014 when the debt amounted to 68 percent of GDP.



Source site www.nu.nl

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