Country Report Netherlands February 2009

Outlook for 2009-10

• The governing coalition is showing cohesion and competence in addressing the financial crisis and economic slowdown, but an inquiry into Dutch political support for the Iraq war is dividing the two main parties.
• Two right-wing parties, the Freedom Party and Proud of the Netherlands, will continue to put the government on the defensive on immigration.
• A rise in value-added tax, which was to pay for a cut in unemployment benefit contributions in 2009, was postponed, and the Economist Intelligence Unit expects the budget to move into deficit in both 2009 and 2010.
• Consumer and producer confidence are particularly low, and the economic slowdown in 2009 is expected to be severe. Most GDP components are expected to see a contraction in 2009, with only a slow recovery in 2010.
• GDP is estimated to have decelerated to growth of 2% in 2008 and is forecast to contract by 2.1% in 2009 and 0.1% in 2010. Export demand and investment will be particularly weak.
• Inflation (national measure) is estimated at 2.5% in 2008, but should drop considerably, to 0.4% in 2009 and 1.1% in 2010, as price pressures fall sharply.

Monthly review

• The prime minister has reversed his earlier refusal to call an inquiry into the reasons for Dutch political support for the Iraq war in 2003, by establishing an independent commission, which will report by November 2009.
• Opposition parties, which had lobbied hard for a parliamentary inquiry into the matter, are unsatisfied with the commission option, and if the Labour Party (PvdA) joins them, a parliamentary inquiry may yet be held.
• An Amsterdam court has ruled that Geert Wilders, the leader of the right-wing Freedom Party, can be prosecuted for his anti-Islam statements.
• The government has intervened to relieve a large Dutch bank, ING, of a major part of the risk associated with its US mortgage-backed securities. In return, the bank has pledged to provide increased credit to the Dutch economy.
• The government is extending its capital support scheme to all Dutch banks and has also announced some (modest) infrastructure spending programmes to support the economy. A working hours reduction scheme will be extended.
• Consumer confidence picked up slightly in December 2008, but remains extremely weak. House prices have nonetheless held steady.
• Industrial production is falling strongly, declining by 9.5% year on year in December 2008. Producer confidence is at extreme lows, and the outlook is for further production declines in the first half of 2009.

Source: Country Report

This report covers the following industry codes:
SIC Code: 65
NAICS Code: 53