The Dutch economy has shown strong resilience to recent global shocks, but faces mounting structural challenges that risk undermining long-term growth, the OECD said in its latest survey on the Netherlands.
While the Netherlands continues to outperform many European peers, labour shortages, electricity grid congestion, and an acute housing shortage are having an effect on productivity and investment, the OECD said.
At the same time, growing dependence on global trade is exposing the economy to external shocks and geopolitical fragmentation.
As in previous reports, the OECD singled out Dutch housing market policy for action, pointing out that the shortage of homes remains at some 400,000.
Current policy, the agency said, favours home ownership over renting and the Netherlands needs to develop a long term strategy to encourage investment in the rental sector, streamline the construction permit procedures, and reduce speculation on land value.
“The Netherlands offers one of the most generous tax reliefs for homeowners in the OECD, contributing to rising inequalities between homeowners and renters,” the Paris-based agency said. “Addressing tax distortions that favour homeownership is essential to create a more balanced housing market in the
Netherlands.”
Budget
The report also singles out the government’s September 2024 budget for pushing up inflation and widening the budget deficit, which is expected to reach 2.8% of GDP in 2026.
The OECD said the shift towards higher spending on defence, housing and healthcare – combined with tax cuts and reduced investment in skills and innovation – also risks breaching EU fiscal rules and eroding long-term competitiveness.
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