Netherlands economy expected to shrink 3.5 percent

17th February 2009, Comments 0 comments

Figures released by the Central Planning Bureau this morning reveal that the economy will shrink 3.5 percent this year.

THE HAGUE—The Central Planning Bureau (CPB) came out with its predictions on the economy this morning, with a new economic forecast for growth, inflation, employment and buying power.

The Dutch economy is expected to shrink 3.5 percent this year, according to the latest CPB figures.

In December the CPB predicted a shrinkage rate of .75 percent, but the world-wide economic crisis and the recession have hit much harder than expected.

The jobless rate will also reach 5.5 percent of the “working public” this year, and is expected to climb to 8.75 percent in 2010. Dutch purchasing power remains hearty, and is expected to go up 2.25 percent in 2009, after which is will stabilize in 2010.

On the Dutch current affairs program Pauw & Witteman last night, Minister Maria van der Hoeven of the Ministry of Economic Affairs announced that she couldn't rule out that the jobless rate will reach 7 or 8 percent if measures aren’t taken to counter-act the crisis.

"It isn’t for nothing that all of the departments are turning in their reports on what we need to do to curb the economic crisis,” she said on the program. According to the CDA (Christian Democrats) leader nothing is inconceivable when it comes to preventative measures. She made reference to an increase in the retirement age, the rate and duration of unemployment benefits, the so-called “kitchen-counter subsidy” (a tax deduction for partners at home), and the mortgage interest deduction.

Minister President Jan Peter Balkenende reiterated last weekend, a few days after he said that nothing could be ruled out, that the mortgage interest rate deduction wasn’t up for discussion.

Finance Minister Wouter Bos also said that nothing could be ruled out. Van der Hoeven stated that "dealing with the deductions of others” has "already been put forth," and that such a measure (mortgage interest rate deduction) would bring even more unrest to the housing market.

NRC Handelsblad/ANP/Expatica

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