The five key figures on the Dutch economy

Inflation is expected to reach 2.7% in 2026. This is lower than in 2025, but slightly higher than we expected in December. Households are facing higher costs, largely due to higher energy bills.

There will be no spike in inflation like the one seen during the energy crisis in 2022, when gas prices were extremely high and the economy was booming. Economic growth is now lower and the labour market is cooling down. As a result, prices and wages are rising at a slower rate than they did four years ago.

For the coming years, we expect inflation to be 2.3% in 2027 and 2.4% in 2028. However, the duration and intensity of the war in the Middle East and its impact on energy prices remain a major source of uncertainty. That is why we have included two scenarios in our projections:

The Dutch economy is expected to grow by 0.8% in 2026, one percentage point below the growth rate seen in 2025. One major cause is the current global turmoil. Geopolitical tensions are hampering global trade, putting pressure on exports. Furthermore, exports of domestically produced goods are losing market share due to higher labour and energy costs in the Netherlands.

Firms and consumers are becoming more cautious. The former are postponing investment due to uncertainty, rising energy costs and increasing interest rates, while the latter are tightening their belts and saving more. Uncertainty about the economy and the war is denting consumer confidence. In addition, higher energy prices are squeezing disposable income. Consumption is not expected to pick up again until 2027 and 2028, assuming that energy prices fall and uncertainty eases.

The government will continue driving economic growth this year by increasing spending, including on healthcare and defence.

From 2027 onwards, the economy will gradually recover. Growth will then rise to 1.2% and later to 1.3%. This recovery is linked to falling energy prices and growing confidence, while global trade will also pick up.

3. At 3.3%, this year’s budget deficit will be above the European limit

The budget deficit is set to rise to 3.3% of gross domestic product in 2026, thereby exceeding the European limit of 3%. This is largely due to the reform of the military pension system, which will cost the government a one-off amount of €8.5 billion. In addition, our economic growth projections have deteriorated.

The deficit should recede to around 2.6% in 2027 and 2.3% in 2028, but the budgetary room for manoeuvre remains limited. In the longer term, public finances are set to deteriorate further, in part given the plans as set out in the coalition agreement. The planned additional expenditure on areas such as defence, climate action, nitrogen pollution and housing construction beyond the current government’s term of office is not fully covered.

Public debt will remain well below the European limit of 60% during this government’s term of office, but is expected to rise sharply thereafter. Some specific policy choices need to be made to strike a balance between urgently needed public investment and the affordability of government spending.

4. House prices are rising moderately by 3-4% a year

Prices of owner-occupied homes are set to rise by 3% to 4% annually over the coming years, which is markedly less compared with previous years. The rise in prices is being held back by higher mortgage rates and lower consumer confidence. Rising interest rates are acting as a drag on growth in the borrowing capacity of households, although it will continue to increase as wages are also rising. Growth in house prices is roughly keeping pace with rising borrowing capacity, however, meaning that affordability shows no improvement.

The composition of the housing supply is also expected to change. On the one hand, fewer homes are being built as fewer planning permits are issued, uncertainty is greater and interest rates are higher. At the same time, investors are selling more ex-rental properties, which slightly widens supply on the owner-occupied market, while reducing the supply of rental properties. The affordability of owner-occupied housing remains comparatively low.

5. Wage growth is levelling off to 4.0%

Wage growth in the private sector is projected to reach 4.0% in 2026, which is below previous years. The labour market is slightly less tight than in previous years. Wage growth will be tempered further in 2027 and 2028.

Unemployment is set to rise to 4.2% in 2027 and to 4.3% in 2028, numbers that are still relatively low. These rises are mainly due to the fact that the number of jobs is growing at a slower rate than the number of people seeking work. While no large-scale job losses are projected,

pressure on the labour market will ease. The number of job vacancies per unemployed person is set to fall by a fraction. This means it will be slightly harder for job seekers to find a job quickly.

Conclusion: slowdown in growth will be followed by recovery, but surrounded by uncertainty

Dutch economic growth is slowing down this year. The war in the Middle East and movements in energy prices will continue to shape the outlook for the coming period.

According to our projections, energy prices will ease from 2027, providing a renewed impetus to confidence and spending. However, if energy prices remain high for longer, growth and inflation could come under further pressure, as illustrated in two scenarios.

The coming years will call for carefully balanced action. The government, businesses and households must cope with higher costs and greater uncertainty, while investment remains essential, both now and in the future, to make the economy more sustainable and boost labour productivity growth. This means that the economic outlook is moderate, but not gloomy.