Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of the Netherlands
Date: 2024-06-19
Institutions: European Commission, Secretariat-General
Subjects: Netherlands, budget policy, economic policy, economic recovery, economic reform, employment policy, energy grid, labour market, social policy, stability pact

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 19.6.2024  COM(2024) 619 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of the Netherlands {SWD(2024) 600 final} - {SWD(2024) 619 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies of the 
Netherlands 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Articles 121(2) and 148(4) thereof, 

Having regard to Regulation (EU) 2024/1263 of the European Parilament and of the Council 
of  30  April  2024  on  the  effective  coordination  of  economic  policies  and  multilateral 
budgetary surveillance and repealing Council Regulation (EC) No 1466/971, and in particular 
Article 3(3) thereof, 

Having  regard  to  Regulation  (EU)  No  1176/2011  of  the  European  Parliament  and  of  the 
Council  of  16  November  2011  on  the  prevention  and  correction  of  macroeconomic 
imbalances2, and in particular Article 6(1) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

(1) 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility,  entered  into  force  on  19  February 
2021. The Recovery and Resilience Facility provides financial support to the Member 
States  for  the  implementation  of  reforms  and  investment,  entailing  a  fiscal  impulse 
financed by the EU. In line with the European Semester priorities, it helps achieve the 
economic  and  social  recovery  and  implement  sustainable  reforms  and  investment,  in 
particular  to  promote  the  green  and  digital  transitions  and  make  the  Member  States’ 
economies  more  resilient.  It  also  helps  strengthen  public  finances  and  boost  growth 
and job creation in the medium and long term, improve territorial cohesion within the 
EU and support the continued implementation of the European Pillar of Social Rights.  

1 
2 
3 

OJ L, 2024/1263, 30.4.2024 ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
OJ L 306, 23.11.2011, p. 25. ELI: http://data.europa.eu/eli/reg/2011/1176/oj. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12  February  2021 
(OJ  L  57,  18.2.2021,  p.  17)  ELI: 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj. 

the  Recovery  and  Resilience  Facility 

EN 

1 

  EN 

 
(2) 

(3) 

(4) 

(5) 

4 

5 
6 
7 
8 

The  REPowerEU  Regulation4,  adopted  on  27  February  2023,  aims  to  phase  out  the 
EU’s  dependency  on  Russian  fossil  fuel  imports.  This  would  help  achieve  energy 
security  and  diversify  the  EU’s  energy  supply,  while  increasing  the  uptake  of 
renewables, energy storage capacities and energy efficiency. The Netherlands added a 
new  REPowerEU  chapter  to  its  national  recovery  and  resilience  plan  in  order  to 
finance  key  reforms  and  investments  that  will  help  achieve  the  REPowerEU 
objectives. 

On  16  March  2023,  the  Commission  issued  a  Communication  on  the  ‘Long-term 
competitiveness of the EU: looking beyond 2030’5, in order to inform policy decisions 
and  create  the  framework  conditions  for  increasing  growth.  The  Communication 
frames competitiveness along nine mutually reinforcing drivers. Among these drivers, 
access to private capital, research and innovation, education and skills, and the single 
market emerge as paramount policy priorities for reforms and investments to address 
current productivity challenges as well as to build up the long-term competitiveness of 
the EU and its Member States.  On 14 February  2024, the Commission  followed this 
Communication  with  the  Annual  Single  Market  and  Competitiveness  Report6.  The 
report  details  the  competitive  strengths  and  challenges  of  Europe's  Single  Market, 
tracking yearly developments according to the nine competitiveness drivers identified. 

On 21 November 2023, the Commission adopted the 2024 Annual Sustainable Growth 
Survey7, marking the start of the 2024 cycle of the European Semester for economic 
policy  coordination.  The  European  Council  endorsed  the  priorities  of  the  survey 
around  the  four  dimensions  of  competitive  sustainability  on  22  March  2024.  On  21 
November 2023, on the basis of Regulation (EU) No 1176/2011, the Commission also 
adopted  the  2024  Alert  Mechanism  Report,  in  which  it  identified  the  Netherlands  as 
one of the Member States that may be affected or may be at risk of being affected by 
imbalances, and for which an in-depth review would be needed. On the same date the 
Commission  also  adopted  an  opinion  on  the  2024  draft  budgetary  plan  of  the 
Netherlands.  The  Commission  also  adopted  a  recommendation  for  a  Council 
recommendation on the economic policy of the euro area, which the Council adopted 
on  12 April  2024,  as  well  as  the  proposal  for  the  2024  Joint  Employment  Report 
analysing the implementation of the Employment Guidelines and the principles of the 
European Pillar of Social Rights, which the Council adopted on 11 March 2024. 

On  30  April  2024,  the  EU’s  new  economic  governance  framework  came  into  force. 
The  framework  includes  the  new  Regulation  of  the  European  Parliament  and  of  the 
Council  (EU)  2024/1263  on  the  effective  coordination  of  economic  policies  and 
multilateral  budgetary  surveillance  and  repealing  Council  Regulation  (EC)  No 
1466/97.  It  also  includes  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure  and  the  amended  Directive 
2011/85/EU  on  the  budgetary  frameworks  of  Member  States8.  The  objectives  of  the 

Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27  February  2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No  1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1) ELI: http://data.europa.eu/eli/reg/2023/435/oj. 
COM(2023) 168 final.  
COM(2024) 77 final. 
COM(2023) 901 final. 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024,  ELI:  http://data.europa.eu/eli/reg/2024/1264/oj)  and  Council  Directive  (EU)  2024/1265  of 

EN 

2 

  EN 

 
 
new  framework  are  public  debt  sustainability  and  sustainable  and  inclusive  growth 
through gradual fiscal consolidation  as well as  reforms  and investments.  It  promotes 
national  ownership  and  has  a  greater  medium-term  focus,  combined  with  more 
effective and coherent enforcement. Each Member State should submit to the Council 
and  to  the  Commission  a  national  medium-term  fiscal-structural  plan.  National 
medium-term  fiscal-structural  plans  contain  the  fiscal,  reform  and  investment 
commitments  of  a  Member  State,  covering  a  planning  horizon  of  4  years  or  5  years 
depending on the regular length of the national legislature. The net expenditure9 path 
in  the  national  medium-term  fiscal-structural  plans  should  comply  with  the 
requirements of Regulation (EU) 2024/1263, including the requirements to put or keep 
general government debt on a plausibly downward path by the end of the adjustment 
period  at  the  latest,  or  for  it  to  remain  at  prudent  levels  below  60%  of  GDP,  and  to 
bring  and/or  maintain  the  government  deficit  below  the  3%  of  GDP  reference  value 
over  the  medium  term.  Where  a  Member  State  commits  to  a  relevant  set  of  reforms 
and investments in accordance with the criteria set out in Regulation (EU) 2024/1263, 
the  adjustment  period  may  be  extended  by  3  years  at  most.  For  the  purpose  of 
supporting the preparation of those plans, on [21 June] 2024, the Commission is set to 
provide Member States with guidance on the content of the plans and the subsequent 
annual progress reports that they will need to submit and, in accordance with Article 5 
of Regulation (EU) 2024/1263, will transmit to them technical guidance on the fiscal 
adjustments  (reference  trajectories  and  technical  information,  where  applicable). 
Member  States  should  submit  their  medium-term  fiscal-structural  plans  by  20 
September  2024,  unless  the  Member  State  and  the  Commission  agree  to  extend  the 
deadline by a reasonable period of time. Member States should ensure the involvement 
of their national parliaments, and the consultation of independent fiscal institutions, of 
social partners and other national stakeholders, as appropriate. 

In 2024, the European Semester for economic policy coordination continues to evolve 
in  line  with  the  implementation  of  the  Recovery  and  Resilience  Facility.  The  full 
implementation  of  the  recovery  and  resilience  plans  remains  essential  for  delivering 
the policy priorities under the European Semester, as the plans help effectively address 
all  or  a  significant  subset  of  challenges  identified  in  the  relevant  country-specific 
recommendations  issued  in  recent  years.  The  2019,  2020,  2022  and  2023  country-
specific  recommendations  remain  equally  relevant  also  for  revised,  updated,  or 
amended  recovery and resilience plans in  accordance with  Articles 14, 18 and 21 of 
Regulation (EU) 2021/241.  

On 7 July 2022, the Netherlands submitted its national recovery and resilience plan to 
the  Commission,  in  accordance  with  Article  18(1)  of  Regulation  (EU)  2021/241. 
Pursuant  to  Article  19  of  Regulation  (EU)  2021/241,  the  Commission  assessed  the 
relevance, effectiveness, efficiency and coherence of the recovery and resilience plan, 
in  accordance  with  the  assessment  guidelines  of  Annex  V  to  that  Regulation.  On  4 
October 2022, the Council adopted its Decision on the approval of the assessment of 

29  April  2024  amending  Directive  2011/85/EU  on  requirements  for  budgetary  frameworks  of  the 
Member States (OJ L, 2024/1265, 30.4.2024, ELI: http://data.europa.eu/eli/dir/2024/1265/oj). 
Net expenditure as defined in Article 2 of Council Regulation (EU) 2024/1263 of 29 April 2024 (OJ L 
2024/1263,  30.4.2024.  ELI:  http://data.europa.eu/eli/reg/2024/1263/oj).  Net  expenditure  means 
government  expenditure  net  of  (i)  interest  expenditure,  (ii)  discretionary  revenue  measures,  (iii) 
expenditure  on  programmes  of  the  Union  fully  matched  by  Union  funds  revenue,  (iv)  national 
expenditure  on  co-financing  of  programmes  funded  by  the  Union,  (v)  cyclical  elements  of 
unemployment benefit expenditure, and (vi) one-offs and other temporary measures. 

(6) 

(7) 

9 

EN 

3 

  EN 

 
(8) 

(9) 

the  recovery  and  resilience  plan  for  the  Netherlands10,  which  was  amended  on  24 
October  2023  following  Article  18(2)  of  Regulation  (EU)  2021/241  to  update  the 
maximum  financial  contribution  for  non-repayable  financial  support,  as  well  as  to 
include  the  REPowerEU  chapter11.  The  release  of  instalments  is  conditional  on  a 
decision  by  the  Commission,  taken  in  accordance  with  Article  24(5)  of  Regulation 
(EU) 2021/241, that the Netherlands has satisfactorily fulfilled the relevant milestones 
and  targets  set  out  in  the  Council  Implementing  Decision.  Satisfactory  fulfilment 
presupposes  that  the  achievement  of  preceding  milestones  and  targets  has  not  been 
reversed. 

On  29  April  2024,  the  Netherlands  submitted  its  2024  National  Reform  Programme 
and,  on  30  April  2024,  its  2024  Stability  Programme,  in  line  with  Article  4(1)  of 
Regulation  (EC)  No  1466/97.  In  accordance  with  Article  27  of  Regulation  (EU) 
2021/241,  the  2024  National  Reform  Programme  also  reflects  the  Netherlands’ 
biannual reporting on the progress made in achieving its recovery and resilience plan.  
The Commission published the 2024 country report for the Netherlands12 on 19 June 
2024. It assessed the Netherlands’ progress in addressing the relevant country-specific 
recommendations  adopted by the Council  between 2019  and  2023 and  took stock of 
the  Netherlands’  implementation  of  the  recovery  and  resilience  plan.  Based  on  this 
analysis, the country report identified gaps with respect to those challenges that are not 
addressed  or  only  partially  addressed  by  the  recovery  and  resilience  plan,  as  well  as 
new  and  emerging  challenges.  It  also  assessed  the  Netherlands’  progress  on 
implementing the European Pillar of Social Rights and on achieving the EU headline 
targets on employment, skills and poverty reduction, as well as progress in achieving 
the UN’s Sustainable Development Goals.  

(10)  The  Commission  carried  out  an  in-depth  review  under  Article  5  of  Regulation  (EU) 
No  1176/2011  for  the  Netherlands.  The  main  findings  of  the  Commission’s  staff 
assessment of macroeconomic vulnerabilities for  the Netherlands  for the  purposes of 
that Regulation  were  published  in March  202413. On 19 June 2024, the Commission 
concluded  that  the  Netherlands  is  experiencing  macroeconomic  imbalances.  In 
particular, the Netherlands faces vulnerabilities related to high private debt in a context 
of  an  overvalued  housing  market,  which  have  cross-border  relevance  and  remain 
relevant despite some improvements. Vulnerabilities associated with the large current 
account  surplus  have  been  mitigated  through  the  relatively  strong  domestic  demand 
growth.  The  large  current  account  surplus  has  been,  and  is  expected  to  remain, 
elevated  on  the  back  of  a  substantial  surplus  in  goods  and  services  trade,  which 
reflects  a  surplus  of  domestic  savings  over  investment  for  the  economy  as  a  whole. 
However, domestic demand has been growing more robustly than in the euro area in 
recent  years,  which  suggests  that  the  spillovers  of  the  current  account  surplus  to  the 
rest  of  the  area  are  becoming  less  of  a  concern.  The  significant  presence  of  multi-
national  enterprises  in  the  Netherlands,  the  statistical  impact  of  retained  corporate 
earnings,  and  the  role  of  pension  funds  accumulating  large  savings  that  are  invested 

10 

11 

12 
13 

Council Implementing Decision of  4 October 2022 on the approval of the  assessment of the recovery 
and resilience plan for the Netherlands (ST 12275//22; ST12275//22 ADD1). 
Council Implementing Decision of 24 October 2023 amending the Implementing Decision of 4 October 
2022  on  the  approval  of  the  assessment  of  the  recovery  and  resilience  plan  for  the  Netherlands  (ST 
13613/1/23). 
SWD(2024) 619 final. 
SWD(2024) 82 final. 

EN 

4 

  EN 

 
abroad are all features that contribute to the large savings-investment gap. Private debt 
continued declining considerably in 2023, and further reductions can be expected, but 
debt  remains  high.  The  high  level  of  debt  coupled  with  large  holdings  of  illiquid 
assets,  principally  housing  and  pension  savings,  makes  households  vulnerable  to 
changing  economic  conditions,  especially  given  the  overvalued  housing  market. 
House  prices  showed  some  correction  for  most  of  last  year  against  a  backdrop  of 
tighter  financing  conditions  but  remain  overvalued  even  if  less  than  before.  Some 
measures have been taken to address the identified vulnerabilities, but  further efforts 
are  needed.  Several  options  could  be  pursued  to  tackle  housing  shortages  more 
forcefully  by  means  of  higher  housing  investment  and  removing  obstacles  to  the 
construction  of  new  dwellings,  while  further  addressing  tax  incentives  for  debt-
financed homeownership. Recent  reforms in the private rental market are unlikely to 
be conducive to housing availability.   

(11)  Based  on  data  validated  by  Eurostat  14,  the  Netherlands’  general  government  deficit 
increased from 0.1% of GDP in 2022 to 0.3% in 2023, while the general government 
debt fell from 50.1% of GDP at the end of 2022 to 46.5% at the end of 2023.  
(12)  On  12  July  2022,  the  Council  recommended15  that  the  Netherlands  take  action  to 
ensure in 2023 that the growth of nationally financed primary current expenditure is in 
line  with  an  overall  neutral  policy  stance16,  taking  into  account  continued  temporary 
and  targeted  support  to  households  and  firms  most  vulnerable  to  energy  price  hikes 
and to  people  fleeing  Ukraine.  The Netherlands  was recommended to  stand ready to 
adjust  current  spending  to  the  evolving  situation.  The  Netherlands  was  also 
recommended  to  expand  public  investment  for  the  green  and  digital  transitions,  and 
for  energy  security  taking  into  account  the  REPowerEU  initiative,  including  by 
making use of the Recovery and Resilience Facility and other Union funds. In 2023, 
according  to  the  Commission  estimates,  the  fiscal  stance17  was  contractionary,  by 
0.8%  of  GDP,  in  a  context  of  high  inflation.  The  growth  in  nationally  financed 
primary current expenditure (net of discretionary revenue measures) in 2023 provided 
a  contractionary  contribution  to  the  fiscal  stance  of  0.9%  of  GDP.  This  includes  the 
increased  cost  of  the  targeted  emergency  support  measures  to  households  and  firms 
most  vulnerable  to  energy  price  hikes  by  0.4%  of  GDP.  The  growth  of  nationally 
financed  primary  current  expenditure  in  2023  was  in  line  with  the  Council 
recommendation. Nationally financed investment amounted to 3.1% of GDP in 2023, 
representing  a  decrease  of  0.1  percentage  points  as  compared  to  202218.  The 
Netherlands  financed  public  investment  for  the  green  and  digital  transitions,  and  for 
energy security, such as expanding the congested electricity grid, undertaking energy 

14 
15 

16 

17 

18 

Eurostat-Euro Indicators, 22.4.2024. 
Council Recommendation of 12 July 2022 on the economic policies of the Netherlands and delivering a 
Council opinion on the 2022 Stability Programme of the Netherlands, OJ C 334, 1.9.2022, p. 154. 
Based  on  the  Commission  Spring  2024  Forecast,  the  medium-term  potential  output  growth  of  the 
Netherlands in 2023, which is used to measure the fiscal stance, is estimated at 9.7% in nominal terms, 
based on the 10-year average real potential growth rate and the 2023 GDP deflator. 
The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure  net  of  discretionary  revenue  measures  (and  excluding  temporary  emergency  measures 
related to the COVID-19 crisis) and including expenditure financed by non-repayable support (grants) 
from the Recovery and Resilience Facility and other Union funds.  
Other nationally financed capital expenditure increased by 0.2 percentage points as compared to 2022.  

EN 

5 

  EN 

 
efficiency  improvements  of  public  buildings  and  expanding  access  to  high  speed 
internet in rural areas. The Netherlands has submitted a first payment request under the 
Recovery and Resilience Facility on 24 May which the Commission is in the process 
of assessing.  

(13)  The key projections in the 2024 Stability Programme can be summarised as follows. 
The  macroeconomic  scenario  underpinning  the  budgetary  projections  foresees  real 
GDP  growth  at  1.1%  in  2024  and  1.6%  in  2025.  The  general  government  deficit  is 
expected  to  increase  to  2.0%  of  GDP  in  2024  and  2.1%  of  GDP  in  2025,  while  the 
general government debt-to-GDP ratio is set to increase to 46.8% by the end of 2024 
and 48.1% by the end of 2025. After 2025, the general government deficit is projected 
to increase to 3.3 of GDP in 2026, 2.6% of GDP in 2027, and 3.2% of GDP in 2028. 
Therefore, the general government balance is not planned to remain below the 3% of 
GDP  deficit  reference  value  over  the  programme  horizon.  In  turn,  after  2025,  the 
general government debt-to-GDP ratio is projected to increase gradually to 52.0% in 
2028. 

(14)  The  Commission  Spring  2024  Forecast  projects  real  GDP  to  grow  by  0.8%  in  2024 
and 1.5% in 2025, and HICP inflation to stand at 2.5% in 2024 and 2.0% in 2025. 

(15)  The Commission Spring 2024 Forecast projects a government deficit of 2.0% of GDP 
in 2024, while the general government debt-to-GDP ratio is set to increase to 47.1% 
by  the  end  of  2024.  The  increase  of  the  deficit  in  2024  mainly  reflects  shortfalls  in 
revenue due to exceptionally high dividend distribution in 2023 in anticipation of an 
increase  of  dividend  income  tax  in  2024,  increased  spending  on  social  benefits  to 
restore purchasing power of low-income households, increased aid to Ukraine, as well 
as  public  investments  through  the  government’s  climate,  infrastructure  and  defence 
funds.  Based  on  the  Commission’s  estimates,  the  fiscal  stance  is  projected  to  be 
expansionary, by 0.4% of GDP, in 2024. 

(16)  Expenditure amounting to 0.1% of GDP is expected to be financed by non-repayable 
support  (“grants”)  from  the  Recovery  and  Resilience  Facility  in  2024,  compared  to 
0.1%  of  GDP  in  2023,  according  to  the  Commission  Spring  2024  Forecast. 
Expenditure  financed  by  Recovery  and  Resilience  Facility  grants  will  enable  high-
quality investment and productivity-enhancing reforms without a direct impact on the 
general government balance and debt of the Netherlands. 

(17)  On  14  July  2023,  the  Council  recommended19  that  the  Netherlands  ensure  a  prudent 
fiscal policy, in particular by limiting the nominal increase in net nationally financed 
primary  expenditure20  in  2024  to  not  more  than  3.5%.  When  executing  their  2023 
budgets  and  preparing  their  Draft  Budgetary  Plans  for  2024,  Member  States  were 
invited  to  take  into  account  that  the  Commission  would  propose  to  the  Council  the 
opening  of  deficit-based  excessive  deficit  procedures  based  on  the  outturn  data  for 
2023.  According  to  the  Commission  Spring  2024  Forecast,  the  Netherlands’  net 
nationally  financed  primary  expenditure  is  projected  to  increase  by  6.6%  in  2024, 
which  is  above  the  recommended  maximum  growth  rate.  This  excess  spending  over 

19 

20 

Council Recommendation of 14 July 2023 on the 2023 National Reform Programme of the Netherlands 
and  delivering  a  Council  opinion  on  the  2023  Stability  Programme  of  the  Netherlands,  OJ  C  312, 
1.9.2023, p. 176. 
Net primary expenditure is defined as nationally  financed expenditure net of  (i) discretionary revenue 
measures, (ii) interest expenditure, (iii) cyclical unemployment expenditure, and (iv) and one-offs and 
other temporary measures. 

EN 

6 

  EN 

 
the  recommended  maximum  growth  rate  in  net  nationally  financed  primary 
expenditure corresponds to 1.3% of GDP in 2024. However, net expenditure in 2023 
was  lower  than  expected  at  the  time  of  the  recommendation  (by  1.3%  of  GDP). 
Therefore,  as  the  recommendation  for  2024  was  formulated  as  a  growth  rate,  the 
assessment of compliance also  needs to  take into account  the base effect  from  2023. 
Had  net  expenditure  in  2023  been  the  same  as  expected  at  the  time  of  the 
recommendation,  the  resulting  growth  rate  of  net  expenditure  in  2024  would  have 
been above  the recommended growth  rate  by less than 0.1% of GDP. Therefore, net 
nationally financed primary expenditure is assessed as at risk of not being fully in line 
with the recommendation. 

(18)  Moreover,  the  Council  recommended  that  the  Netherlands  take  action  to  wind  down 
the emergency energy support  measures in  force, using the related savings to  reduce 
the  government  deficit,  as  soon  as  possible  in  2023  and  2024.  The  Council  further 
specified  that,  should  renewed  energy  price  increases  necessitate  new  or  continued 
support measures, the Netherlands should ensure that these were targeted at protecting 
vulnerable  households  and  firms,  fiscally  affordable,  and  preserve  incentives  for 
energy savings. According to the Commission Spring 2024 Forecast, the net budgetary 
cost21 of emergency energy support measures is estimated at 1.0% of GDP in 2023 and 
projected at 0.1% in 2024, and 0.0% in 2025. In particular, reduced excise duties on 
diesel and gasoline are assumed to remain in force in 2024. If the related savings were 
used  to  reduce  the  government  deficit,  as  recommended  by  the  Council,  these 
projections  would  imply  a  fiscal  adjustment  of  0.9%  of  GDP  in  2024,  whereas  net 
nationally  financed  primary  expenditure22  provides  an  expansionary  contribution  to 
the fiscal stance of 0.5% of GDP in that year. The emergency energy support measures 
are projected to be wound down as soon as possible in 2023 and 2024. This is in line 
with  what  was  recommended  by  the  Council.  However,  the  related  savings  are  not 
projected to be fully used to reduce the government deficit. This risks not being in line 
with the Council recommendation. 

(19) 

In  addition,  the  Council  also  recommended  that  the  Netherlands  preserve  nationally 
financed  public  investment  and  ensure  the  effective  absorption  of  Recovery  and 
Resilience  Facility  grants  and  other  EU  funds,  in  particular  to  foster  the  green  and 
digital  transitions.  According  to  the  Commission  Spring  2024  Forecast,  nationally 
financed public investment is projected to remain stable at 3.1% of GDP in 2024 from 
3.1% of GDP in 2023. This is in line with what was recommended by the Council. In 
turn, public expenditure financed from revenues from  EU funds, including  Recovery 
and Resilience Facility grants, is expected to remain stable at 0.2% of GDP in 2024.  

(20)  Based on policy measures known at the cut-off date of the forecast and on a no-policy-
change  assumption,  the  Commission  Spring  2024  Forecast  projects  a  government 
deficit of 2.1% of GDP in 2025. The increase of the deficit in 2025 mainly reflects a 
further  increase  in  public  investment  planned  by  the  government.  The  general 
government debt-to-GDP ratio is set to increase to 48.4% by the end of 2025.  

21 

22 

The figure represents the level of the annual budgetary cost of  those measures, including revenue and 
expenditure and, where applicable, net of the revenue from taxes on windfall profits of energy suppliers. 
This contribution is measured as the change in general government primary expenditure, net of  (i) the 
incremental  budgetary  impact  of  discretionary  revenue  measures,  (ii)  one-offs,  (iii)  cyclical 
unemployment  expenditure  and  (iv)  expenditure  financed by  non-repayable  support  (grants)  from  the 
Recovery  and  Resilience  Facility  and  other  EU  funds,  relative  to  the  medium-term  (10-year)  average 
potential nominal GDP growth rate, expressed as a ratio to nominal GDP. 

EN 

7 

  EN 

 
(21)  Returns  from  primary  residence  properties,  pension  wealth  and  investments  held  in 
closely  held  companies  are  taxed  at  favourable  rates  compared  to  income  from 
investments in shares and bonds. Additionally, the tax on income from investments in 
shares  and  bonds  is  calculated  based  on  assumed  rather  than  actual  returns.  The 
preferential  tax  treatment  of  residential  properties  through  mortgage  interest 
deductibility coupled with low imputed rent tax fuels demand on the housing market, 
driving up prices. Additionally, pension savings enjoy  tax relief up to  comparatively 
high-income  levels.  As  a  result,  household  wealth  in  the  Netherlands  is  highly 
concentrated  in  illiquid  types  of  wealth,  such  as  housing  or  pensions.  This  exposes 
households to greater economic risk during economic shocks and may not lead to an 
optimal  consumption  pattern  over  their  lifetime  in  many  cases.  The  unequal  tax 
treatment  within and across  asset  types also gives rise to  tax arbitrage  and can skew 
the  efficient  allocation  of  capital.  As  a  result,  this  unequal  treatment  is  relevant  to 
addressing macroeconomic imbalances. 

(22) 

In addition to the tax incentives mentioned above, overvaluation in the housing market 
has also  been driven by  a lack of supply of new  dwellings. Removing obstacles that 
are  currently  holding  back  investments,  including  in  residential  construction,  could 
allow the government to effectively advance its plans to increase housing supply and 
contribute to external rebalancing. As a result, removing such obstacles is relevant to 
addressing macroeconomic imbalances. At the same time, the private rental market is 
relatively  small,  which  results  in  a  limited  supply  of  affordable  and  available 
alternatives to homeownership. The lack of affordable rental housing also undermines 
labour mobility and social cohesion.  

(23)  The  Netherlands  has  a  well-developed  long-term  care  system.  While  expenditure  on 
long-term care in the Netherlands is already the highest in the EU, costs are expected 
to increase substantially. In 2022, total long-term care expenditure in the Netherlands 
stood  at  3.8%  of  GDP,  the  highest  value  in  the  EU  by  a  wide  margin.  The  2024 
Ageing Report projects that this figure will increase by 1.0 pps by 2040 and 1.9 pps by 
2070. In addition, unit costs for the provision of institutional care in the Netherlands 
are among the highest in the EU, even when measured as a share of GDP per capita. 
This  suggests  that  there  is  scope  for  improving  the  fiscal  sustainability  of  long-term 
care  by  reducing  inefficiencies  in  the  system  without  compromising  its  high  quality 
and coverage. An example of such inefficiencies is that municipalities, which are the 
providers of home care in  the Netherlands, have  incentives  to  shift  responsibility for 
patients  to  the  residential  care  sector  instead  of  continuing  to  provide  home-  and 
community-based  care  to  them  as  long  as  possible.  In  addition,  inefficiencies  in  the 
long-term  care  system  could  be  addressed,  for  example  by  using  more  digital  and 
innovative  solutions  or  investing  in  prevention  to  delay  the  onset  of  long-term  care 
needs and the dependence on support for daily living activities. 

(24) 

In accordance with Article 19(3), point (b), and Annex V, criterion 2.2 of Regulation 
(EU) 2021/241, the recovery and resilience plan includes an extensive set of mutually 
reinforcing reforms and investments to be implemented by 2026. These are expected 
to  help  effectively  address  all  or  a  significant  subset  of  challenges  identified  in  the 
relevant  country-specific  recommendations. Within  this  tight  timeframe,  proceeding 
swiftly  with  the  effective  implementation  of  the  plan,  including  the  REPowerEU 
chapter, is  essential  to  boost the Netherlands’ long-term  competitiveness through the 
green  and  digital  transition,  while  ensuring  social  fairness.  To  deliver  on  the 
commitments  of  the  plan  by  August  2026,  it  is  essential  for  the  Netherlands  to 
significantly accelerate the implementation of reforms and, and in particular to ensure 

EN 

8 

  EN 

the  effective  implementation  of  reforms  that  are  related  to  country-specific 
recommendations. The systematic involvement of local and regional authorities, social 
partners, civil society and other relevant stakeholders remains essential to ensure broad 
ownership for the successful implementation of the recovery and resilience plan. 

(25)  As  part  of  the  mid-term  review  of  the  cohesion  policy  funds,  in  accordance  with 
Article 18 of Regulation (EU) 2021/1060, the Netherlands is required to review each 
programme  by  March  2025,  taking  into  account,  among  other  things,  the  challenges 
identified in the 2024 country-specific recommendations, as well as its national energy 
and climate plan. This  review  forms the basis for the definitive allocation of the EU 
funding  included  in  each  programme.  The  Netherlands  has  made  progress  in 
implementing cohesion policy and the European Pillar of Social Rights, but challenges 
remain.  While  regional  differences  in  GDP  per  capita  have  remained  stable  and  all 
regions rank well above the EU average in terms of competitiveness, the transition to a 
carbon-neutral economy affects regions with clusters of emission-intensive industries 
differently.  It  is  important  to  accelerate  cohesion  policy  implementation,  and  the 
priorities  agreed  in  the  programmes  remain  relevant.  The  objectives  to  support 
innovation  related  to  the  green  and  digital  transition,  as  well  as  to  support  the  green 
economy  in  the  regions  with  industry  clusters  that  are  most  affected  by  the  climate 
transition,  are  still  particularly  important.  Support  to  societal  transitions  in  deprived 
urban areas in large cities remains relevant. Action is still needed to reduce social and 
labour  market  inequalities  by  investing  in  equal  (employment)  opportunities  and 
combating discrimination. When carrying out the mid-term review of cohesion policy 
programmes, the potential for testing and piloting solutions to  help reduce electricity 
grid congestion  should be promoted as this will contribute to  the Netherlands’ green 
transition. The Netherlands could make use of the Strategic Technologies for Europe 
Platform initiative to support industry transformation and facilitate investments in net-
zero technology manufacturing, including in upskilling and reskilling. 

(26)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan and other EU funds, the Netherlands faces several additional challenges related to 
labour market segmentation, labour and skills shortages, basic education, reliance on 
fossil fuels and excessive nitrogen deposits. 

(27)  The share of flexible employment (both workers on temporary contracts and the self-
employed)  in  the  labour  market  remains  high  in  the  Netherlands.  This  points  to  a 
persistent risk of labour market segmentation, with particularly distortive effects at the 
margins of the labour market. This can amplify inequality in opportunities and weigh 
on productivity. A certain degree of flexibility in the labour market can help improve 
the  adaptability  of  the  economy  and  may  also  better  accommodate  individual 
preferences.  However,  the  excessive  use  of  flexible  types  of  employment  can  have 
negative  effects  on  workers  and  the  wider  economy.  For  example,  participation  in 
training  and  lifelong  learning  is  a  challenge  for  those  with  flexible  contract 
employment  arrangements,  which,  in  turn,  reduces  investment  in  skills  and 
exacerbates the weakening of productivity. In cooperation with the social partners, the 
Dutch  government  has  announced  measures  to  address  the  differences  between 
permanent  and flexible  work arrangements. These measures include  abolishing zero-
-hours contracts, replacing ‘on-call’ contracts in their present form with a new type of 
contract providing more income security for workers, and improving the job security 
of  temporary  agency  workers.  Rapid  progress  in  adopting  and  implementing  these 
plans and effective enforcement will be important to ensure that the choice of a certain 
type of employment contract is driven by job-specific needs or the preferences of job 

EN 

9 

  EN 

holders, while also improving the employment and social position of people in flexible 
employment and reducing labour market segmentation.  

(28)  Labour and skills shortages were already prevalent in the Dutch labour market before 
COVID-19, but have since become more widespread. Sectors such as ICT, healthcare, 
education,  technical  jobs,  and  jobs  related  to  the  green  transition  face  structural 
shortages,  which  are  expected  to  persist,  partly  due  to  demographic  developments. 
Despite a high overall participation rate, the Netherlands still has an untapped pool of 
potential workers, such as people with a migrant background or those working in part-
-time employment. This underutilisation of part of the workforce, coupled with skills 
shortages,  poses  a  risk  to  Dutch  competitiveness  and  can  hold  back  investments, 
including  in  the  construction  of  new  dwellings,  which  makes  it  relevant  to  the 
macroeconomic imbalances in the Netherlands. A comprehensive approach is needed 
to tackle these challenges, while also catering to sector-specific needs and barriers. To 
increase  labour  supply,  people  could  be  incentivised  to  work  more  hours,  including 
through  policy  measures  promoting  quality  of  work  and  work-life  balance. 
Furthermore,  strengthening  upskilling  or  reskilling  opportunities  via  targeted  and 
tailored measures, in particular for those at the margins of the labour market and the 
inactive, could help alleviate labour and skills shortages and improve social outcomes. 
Given  the  existing  shortages  of  workers  across  sectors  and  the  stagnating  labour 
productivity,  policy  measures  on  the  demand  side  could  focus  on  promoting  high 
value-added sectors as well as sectors related to societal challenges, such as education 
and healthcare, fostering cross-sector mobility and increasing  productivity-enhancing 
and R&D investments.  

(29)  Despite  the  still  relatively  high,  although  decreasing,  share  of  top-performing  15-
-year--old students, the 2022 Programme for International Student Assessment (PISA) 
results show a sharp increase in the number of underachievers in mathematics, science 
and  reading  skills.  The  decline  varies  substantially  between  different  tracks  in 
secondary  education,  with  students  in  the  lowest  tracks  –  the  various  paths  of 
pre-vocational  secondary  education  (vmbo)  –  showing  the  greatest  decline  in  test 
scores. Furthermore, students with a migration background (native-born students with 
parents  born  abroad  and  foreign-born  students)  underachieve  almost  twice  as 
frequently  as  students  with  no  migration  background  in  mathematics  and  science, 
while the difference is somewhat smaller in reading. The deterioration of basic skills is 
one of the largest in the EU and undermines education and labour market outcomes as 
well as long-term  productivity and competitiveness.  Increasing  teacher shortages can 
exacerbate  challenges  in  the  development  of  skills  and  the  equity  and  quality  of 
education. Therefore, the Netherlands could evaluate the existing measures addressing 
basic  skills  and  review  them  as  necessary,  to  increase  their  impact,  especially  for 
schools with a disadvantaged student population. Furthermore, the Netherlands could 
take measures to increase the permeability of its secondary school tracks and extend its 
incentives to attract more teachers to schools with a disadvantaged school population. 

(30)  Due  to  the  progressively  increasing  congestion  of  the  electricity  grid,  network 
operators  are  frequently  forced  to  refuse  grid  access  requests  from  new  electricity 
producers  and  consumers.  Grid  congestion  risks  slowing  down  the  clean  energy 
transition  and  constrains  economic  activity,  which  makes  it  relevant  to  the 
macroeconomic imbalances in the Netherlands. Therefore, increasing the capacity and 
flexibility of the transmission and distribution grid is essential to ensure the security of 
electricity  supply,  speed  up  the  deployment  of  both  onshore  and  offshore  renewable 
energy infrastructure, meet the electricity demand, and improve competitiveness. The 

EN 

10 

  EN 

national  energy  system  plan,  adopted  in  December  2023,  calls  for  investments  in 
additional grid and  storage capacity  that must be implemented now. To facilitate the 
needed  investments  in  the  expansion  of  electricity  infrastructure,  faster  permitting 
procedures  for  electricity  transmission  and  distribution  networks  are  crucial.  This 
would  also  speed  up  the  implementation  of  onshore  and  offshore  renewable  energy 
projects.  Finally,  as  part  of  the  framework  conditions,  there  is  room  to  address 
congestion  through  technical  measures  and  regulations  (e.g.  tariff  incentives  or  peak 
hour limitations). 

Intensive  agricultural  practices  can  cause  excessive  nitrogen  deposition,  with  serious 
repercussions  on  soil  health  and  on  aquatic  and  marine  ecosystems  leading  to 
deterioration of natural  capital, while at  the same time  putting  significant  constraints 
on  the  permitting  of  nitrogen-emitting  construction  activity  and  the  deployment  of 
renewable-energy  infrastructure.  As  a  result,  these  practices  are  relevant  to  the 
macroeconomic imbalances in the Netherlands. Continuing support is needed to drive 
a  transition  to  sustainable  agriculture,  including  organic  farming,  while  ensuring 
competitiveness  and  social  fairness.  In  line  with  the  CAP  Strategic  Plan  of  the 
Netherlands23,  the  Netherlands  would  benefit  from  reducing  livestock  numbers, 
accelerating  the  transition  to  circular  and  organic  agriculture,  incentivising  rewetting 
and  taking  carbon-rich  soils  out  of  production,  and  cutting  the  use  of  chemical 
pesticides  and  inorganic  fertilisers.  Furthermore,  the  position  of  farmers  in  the  value 
chain could be improved, for example through the further development of EU quality 
signs,  greater  recognition  of  producer  organisations,  further  digitalisation  and 
innovation in agriculture, and increased availability of organic products for consumers. 
There is still scope to further increase investment in pollution prevention and control, 
and sustainable water management. 

In view of the close interlinkages between the economies of euro area Member States 
and of their collective contribution to the functioning of the Economic and Monetary 
Union,  in  2024  the  Council  recommended  that  the  euro  area  Member  States  take 
action,  including  through  their  recovery  and  resilience  plans,  to  implement  the 
recommendation  on  the  economic  policy  of  the  euro  area.  For  the  Netherlands, 
recommendations  (1),  (2),  (3)  and  (4)  help  implement  the  first,  second,  third,  fourth 
and fifth euro area recommendations. 

In  light  of  the  Commission’s  in-depth  review  and  its  conclusion  on  the  existence  of 
imbalances,  recommendations under Article 6 of Regulation  (EU) No 1176/2011  are 
reflected  in  recommendation  (1)  below.  Policies  referred  to  in  recommendation  (1) 
help to address vulnerabilities linked to high private debt in a context of an overvalued 
housing  market.  Recommendation  (1)  contributes  to  both  addressing  imbalances  and 
implementing the recommendation for the euro area, in line with recital 31. 

(31) 

(32) 

(33) 

HEREBY RECOMMENDS that the Netherlands take action in 2024 and 2025 to:  

1. 

23 
24 

Submit  the  medium-term  fiscal-structural  plan  in  a  timely  manner.  In  line  with  the 
requirements  of  the  reformed  Stability  and  Growth  Pact,  limit  the  growth  in  net 
expenditure24  in  2025 to  a rate  consistent  with  maintaining  the general  government 

C(2022) 9800 final. 
According  to  Article  2(2)  of  Regulation  (EU)  2024/1263,  ‘net  expenditure’  means  government 
expenditure net of interest expenditure, discretionary revenue measures, expenditure on programmes of 
the  Union  fully  matched  by  revenue  from  Union  funds,  national  expenditure  on  co-financing  of 

EN 

11 

  EN 

 
 
deficit  below  the  3%  of  GDP  Treaty  reference  value  and  keeping  the  general 
government  debt  at  a  prudent  level  over  the  medium  term.  Align  the  taxation  of 
different types of income from wealth, amongst others, to reduce the household debt 
bias.  Remove  obstacles  to  the  construction  of  new  dwellings,  and  ensure  the 
affordability  and  availability  of  housing  in  the  private  rental  market.  Address  the 
expected  increase  in  age-related  expenditure  by  making  the  long-term  care  system 
more cost-effective. 

Significantly  accelerate  the  implementation  of  the  recovery  and  resilience  plan, 
including the REPowerEU chapter, ensuring completion of reforms and investments 
by August 2026. Accelerate the implementation of cohesion policy programmes. In 
the context of their mid-term review, continue focusing on the agreed priorities and 
promote testing and piloting solutions to help reduce the congestion of the electricity 
grid, while considering the opportunities provided by the Strategic Technologies for 
Europe Platform initiative to improve competitiveness. 

Implement  measures  to  reduce  incentives  to  use  flexible  or  temporary  contracts. 
Address  structural  and  sector-specific  labour  and  skills  shortages,  including  by 
tapping  into  underutilised  labour  potential,  and  by  encouraging  mobility  to  high-
-productivity sectors and sectors related to societal challenges. Improve basic skills, 
including  by  addressing  teacher  shortages  and  tailored  support  to  disadvantaged 
schools. 

Improve  framework  conditions  to  boost  investment  in  the  electricity  transmission 
and distribution grids,  in  particular to  accelerate  the deployment of renewables  and 
improve competitiveness. Take further efforts for sustainable agriculture. 

2. 

3. 

4. 

Done at Brussels, 

For the Council 
The President 

programmes funded by the Union, cyclical elements of unemployment benefit expenditure, and one-offs 
and other temporary measures. 

EN 

12 

  EN