The state of the Dutch economy

Growth against expectations

The economy has suffered less from international trade tensions than expected. Government spending is an important contributor to economic growth. Household consumption also remains a stable growth driver. The labour market remains tight, prompting wages to rise by 5.3% in 2025. This means households have more to spend and can save more, for instance to pay off their mortgage loan or to buy a home. Wage growth will gradually ease in the coming years.

Despite higher US trade tariffs, world trade continues to flow steadily. Companies pushed imports forward to remain ahead of the tariffs. This boosted Dutch exports in 2025, but we do not expect this effect to continue in the coming years.  We expect GDP growth to slow down to 1.2% in 2026 and 1.1% in 2027.

Inflation remains relatively high

It is projected to decrease from 3.0% this year to 2.4% in 2026 and 2.3% in 2027. This is still higher than the euro area average. The cause is mainly homegrown: domestic demand for products and services is running into the limits of production capacity, which results in higher prices. In other words, demand for products and workers in the Netherlands is relatively strong, and this drives up prices and wages. 

House prices to rise less sharply

In 2026 and 2027, house prices will rise by about 4%. In recent years, house prices rose by more than 8%. Housing thus remains expensive. House prices will continue to rise faster than household income and the amount people can borrow. This means that owner-occupied houses will be somewhat less affordable. By 2027, it is estimated that only one in three households will have enough income to finance a median home with a mortgage loan. By comparison,  almost half of households earned enough to buy a median house in 2019. More often than before, households therefore need extra savings, greater home equity or financial support from family.

Budget deficit approaches 3% threshold

While public spending contributes positively to economic growth, it also increases demand for goods, services and labour and keeps inflation on the high side. The budget deficit is projected to be 2.9% in 2026, close to the 3% threshold. New expenditure, including public investment, must be covered structurally. Indeed, the ageing population will mean greater spending on healthcare and state pensions, while revenues from payroll taxes will fall due to fewer people working.