€14 bn government surplus after first three quarters

© Hollandse Hoogte / Laurens van Putten
The Dutch central government realised a budget surplus of more than 14 billion euros over the first three quarters of 2019. This brought the interim government balance to 1.7 percent of gross domestic product (GDP). This is measured on an annual basis, from Q4 2018 up to and including Q3 2019. At the end of Q3 2019, government debt as a percentage of GDP amounted to 49.3 percent. The last time it dropped below 50 percent was in 2008. Statistics Netherlands (CBS) reports this on the basis of new figures on public finances.

The budget surplus realised over the first three quarters of 2019 is nearly 3 billion euros higher than the surplus over all of 2018. In 2018, the general government balance amounted to 1.5 percent of GDP. For all of 2019, the Autumn Memorandum of the Ministry of Finance assumes a surplus of 10.4 billion euros or 1.3 percent of GDP. The provisional figure over the first three quarters is nearly 4 billion euros higher.

Government balance, moving annual total (% of GDP)
   BalanceEMU criterion
'06Q1-0.3-3.0
Q2-0.2-3.0
Q3-0.2-3.0
Q40.1-3.0
'07Q10.4-3.0
Q20.1-3.0
Q3-0.4-3.0
Q4-0.1-3.0
'08Q10.1-3.0
Q20.2-3.0
Q30.4-3.0
Q40.2-3.0
'09Q1-0.8-3.0
Q2-1.8-3.0
Q3-3.4-3.0
Q4-5.1-3.0
'10Q1-5.4-3.0
Q2-5.6-3.0
Q3-5.8-3.0
Q4-5.2-3.0
'11Q1-4.6-3.0
Q2-4.7-3.0
Q3-4.1-3.0
Q4-4.4-3.0
'12Q1-4.3-3.0
Q2-4.0-3.0
Q3-4.3-3.0
Q4-3.9-3.0
'13Q1-3.7-3.0
Q2-3.3-3.0
Q3-2.9-3.0
Q4-2.9-3.0
'14Q1-3.0-3.0
Q2-2.9-3.0
Q3-2.5-3.0
Q4-2.2-3.0
'15Q1-2.0-3.0
Q2-2.0-3.0
Q3-2.0-3.0
Q4-2.0-3.0
'16Q1-1.8-3.0
Q2-1.1-3.0
Q3-0.5-3.0
Q40.0-3.0
'17Q10.8-3.0
Q20.9-3.0
Q31.1-3.0
Q41.3-3.0
'18Q11.6-3.0
Q21.8-3.0
Q32.0-3.0
Q41.5-3.0
'19Q11.7-3.0
Q21.8-3.0
Q31.7-3.0

High tax and social security burden

From Q1 to Q3 2019, public revenue rose by nearly 12 billion euros compared to the same period last year. This is entirely attributable to taxes and social security contributions. In Q3, the tax and social security burden remained at 38.6 percent of GDP, the highest percentage since CBS started measurements. Other public revenues fell by 1 billion euros, mainly due to the fact that these revenues were higher in the autumn of 2018 following a settlement with ING Bank to the amount of 0.8 billion euros.

Public expenditure continues to rise

Government expenditure over the first three quarters of 2019 was up by more than 9 billion euros year-on-year. Half of this increase - nearly 5 billion euros - was on account of higher spending on social security and care. Spending on unemployment benefits declined. Expenditure on remuneration of government employees rose by 2 billion euros. Investments and remittances to the EU contributed to the increased expenditure as well, both 1 billion euros. Furthermore, expenditure rose as a result of a state capital injection into transmission system operator TenneT to an amount of 0.4 billion euros within the framework of the energy transition.

Government revenue and expenditure, moving annual total (bn euros)
JaarKwartaalRevenueExpenditure
'06Q1235.9237.8
Q2241.6242.6
Q3246.5247.4
Q4251.7251.2
'07Q1256.4254.2
Q2258.0257.1
Q3257.2259.4
Q4261.6262.1
'08Q1267.6266.9
Q2272.4271.2
Q3277.1274.3
Q4280.3279.0
'09Q1278.6283.7
Q2274.4286.1
Q3271.3292.7
Q4265.5297.3
'10Q1265.1298.9
Q2269.0304.1
Q3268.7305.2
Q4272.4305.9
'11Q1276.0305.7
Q2275.0305.2
Q3278.8305.1
Q4275.5304.3
'12Q1276.3304.4
Q2278.5304.8
Q3277.1305.1
Q4279.7305.3
'13Q1282.8306.8
Q2285.2306.9
Q3288.6307.7
Q4287.9307.3
'14Q1287.5307.1
Q2288.9308.1
Q3289.9306.9
Q4292.7307.2
'15Q1294.5308.1
Q2294.0307.9
Q3294.0308.0
Q4293.9307.8
'16Q1295.9308.2
Q2301.3308.9
Q3306.4310.2
Q4308.8308.7
'17Q1314.0308.6
Q2315.7309.4
Q3318.4310.3
Q4322.6313.3
'18Q1327.9315.7
Q2331.9318.1
Q3335.9320.6
Q4337.1325.5
'19Q1342.5328.9
Q2346.0331.4
Q3348.8334.8

Debt-to-GDP ratio below 50 percent for the first time since 2008

At the end of September, public debt stood at nearly 395 billion euros, almost 11 billion less than at the end of 2018. This reduction was achieved as a result of a 14-billion surplus in the first three quarters of 2019. Relative to Q2, public debt was reduced by 9 billion euros. Government surplus funds deposited abroad by the government at the end of June were used for further debt redemption in Q3.

Since the end of 2018, public debt expressed as a percentage of GDP has fallen by 3.1 percentage points to 49.3 percent of GDP. Slightly less than half of the reduction was on account of debt redemptions, while the remaining part resulted from GDP growth (the so-called denominator effect). The Autumn Memorandum assumes a debt ratio of 49.1 percent of GDP by the end of 2019.

Debt-to-GDP ratio (% of GDP)
JaarKwartaalDebt-to-GDP ratioEMU criterion
'06Q149.260.0
Q248.660.0
Q347.460.0
Q445.260.0
'07Q145.460.0
Q245.660.0
Q344.560.0
Q443.060.0
'08Q143.960.0
Q243.860.0
Q344.160.0
Q454.760.0
'09Q157.560.0
Q256.660.0
Q357.260.0
Q456.860.0
'10Q157.660.0
Q259.260.0
Q359.060.0
Q459.260.0
'11Q159.460.0
Q260.460.0
Q361.160.0
Q461.760.0
'12Q162.560.0
Q263.960.0
Q364.960.0
Q466.260.0
'13Q166.660.0
Q268.260.0
Q367.860.0
Q467.760.0
'14Q167.160.0
Q268.560.0
Q368.060.0
Q467.860.0
'15Q168.960.0
Q266.760.0
Q365.860.0
Q464.660.0
'16Q164.360.0
Q263.260.0
Q361.660.0
Q461.960.0
'17Q159.760.0
Q258.860.0
Q357.060.0
Q456.960.0
'18Q155.160.0
Q253.960.0
Q352.960.0
Q452.460.0
'19Q150.960.0
Q250.960.0
Q349.360.0

The government balance and the debt-to-GDP ratio are important indicators for the state of public finances in a country. The Netherlands has complied with the 3-percent deficit criterion of the European Union already since 2013 and with the European standard of fault of 60 percent since 2017.