In 2018 the Dutch current account surplus, which is the key indicator of the savings surplus, hit a new record level at 11% of gross domestic product (GDP). Savings are concentrated among firms, with non-financial corporations accounting for roughly 80% of the Dutch savings surplus between 2000 and 2017. As reported by DNB earlier in 2019 (link naar Engelstalige versie), the savings surplus is located in both LCs and SMEs. The Occasional Study (link) which appeared today discusses savings motives in more detail and outlines various policy avenues for reducing economic imbalances that must be further explored.
Dutch firms achieve high profits but distribute low dividends
The Dutch corporate savings surplus has increased primarily due to dividend distributions and investments failing to keep pace with profit increases. Among SMEs, profits from domestic production have gone up in particular, which is reflected in a declining labour income share. In the LC sector, profits grew mostly due to higher income from foreign investment. On average, the Dutch corporate sector distributed 49% of net profits as dividends between 2000 and 2017, substantially below the 83% euro area average. SMEs distribute relatively little profits as dividends. On average, they distributed 30% of their profits as dividends between 2000 and 2007, against 30% for LCs (see Chart).