The Budget Memorandum: What does it mean for construction and industry

Last Tuesday was Prince’s Day. The Budget Memorandum was presented by the cabinet and it is unclear what the Dutch government will spend money on in the near future. In this article, we discuss what to expect this year, summarize the main points and discuss the impact on construction and industry.

What we can expect in the coming year

The Dutch government is doing everything it can to prevent us from ending up in a new recession. Although it is hard to believe with the rising costs for just about everything, our financial system is currently running normally. This is in contrast to the credit crisis of 2008.

The catch-up after the corona crisis is also causing scarcity and, in combination with the war in Ukraine, the supply of raw materials and energy is under pressure.
High demand + scarcity = rising prices. In other words, inflation. This in turn leads to less economic growth, which in turn leads to a tight squeeze. Quotations, orders and assignments for companies will (temporarily) come in less and will also yield less due to the high costs.

High unemployment is not expected at the moment. This is because the labor shortage is currently unprecedentedly high and the shortage of personnel is visible and tangible in every sector. There are currently 143 vacancies available for every 100 job seekers.

The main plans

  • EUR 17.2 billion will be made available for improving purchasing power.

The Budget Memorandum mentions various causes of low purchasing power. For example, the war in Ukraine, its influence on energy prices and the high costs of groceries and basic maintenance are culprits.

  • The minimum wage will increase by 10%.
  • The rent allowance will increase by EUR 16.94 per month and the healthcare allowance will increase by EUR 412 once.
  • There will be a one-off energy surcharge of 1300 euros for vulnerable households.

Vulnerable households are thus compensated for the high prices of energy and food.

  • The child budget will increase for all families with children.

In this way, the government wants to contribute to reducing the high costs that everyone is currently experiencing.

  • Students living away from home receive an extra 165 euros per month, on top of their current grant for living away from home.

Life has also become a lot more expensive for students and with the current rents, this is a much-needed extra.

  • As of November 1, a price cap on energy will be introduced.
  • There will be a reduction in energy tax.
  • The temporary reduction in fuel excise duties will be extended until June 2023.

Due to the war in Ukraine, among other things, there are enormous energy prices and households sometimes see an increase of 300%. With the setting of a price ceiling, an average household will spend a maximum of 290 euros per month on energy costs. This is estimated to save an average of 2000 euros per year.

What does it mean for construction

The housing shortage has been high in the Netherlands for years, especially when it comes to affordable housing for people with a middle income. Over the next 10 years, the government will release 7.5 billion euros to improve affordable owner-occupied and rental homes.

An additional 300 million euros will also be released over the next 2 years for insulating homes. This is to limit energy bills for existing homes. Municipalities can use this as they see fit to make homes more sustainable.

Knowing more? Read the article from the Financieele Dagblad here .

However, the current measures to make homes affordable make the ambition to build 900,000 homes a lot more difficult. At the moment, not much is known about the further influences of the decisions on current building plans or plans for the near future.

The government is also releasing 234.3 billion euros to solve the problems with climate, water and nitrogen up to and including 2035. This will be done on a regional scale and the provinces must indicate by July 203 at the latest what measures will be taken. The government’s aim is to use this to restore nature, to provide farmers with clarity and to grant building permits for new roads and homes.

What does it mean for the industry

The memorandum states that climate change is the challenge of our generation.

The government is therefore taking measures to make the Netherlands climate neutral by 2050. Although billions of euros are currently being spent on improving purchasing power, the Netherlands will continue to invest in the Climate Fund in the coming years. The Budget Memorandum shows that 35 billion euros will be available here over the next 10 years. In the coming years, this money will be spent on, among other things, improving the use of green gas and improving the energy efficiency of social rental homes.

In the coming year, the government will mainly spend money on stimulating the production of sustainable hydrogen (145 million), offshore wind (180 million) and heating networks (200 million). The government is also investing 12.9 billion euros in making public transport more sustainable and in the maintenance and sustainability of motorways.

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