UPDATE DUTCH POLITICS: Budget Day 2025 overshadowed by upcoming elections

Last Tuesday, 16 September, marked Budget Day, or ‘Prinsjesdag’, when the King delivers the Troonrede, outlining the government’s plans for the coming year. This year, King Willem-Alexander not only presented the government’s agenda, but also explicitly addressed mounting concern in the Dutch business community and underscored the importance of political cooperation. He remarked that “entrepreneurs are becoming increasingly negative about the Dutch investment climate” and stressed that, in light of the government’s demissionary status, political parties must be held accountable and act jointly to safeguard a sustainable budget.

Political backgroup: a weakened caretaker Cabinet
The political backdrop to this year’s Prinsjesdag is unusually tense. The current government, the Schoof cabinet, has lost two coalition partners after both Geert Wilders’ PVV/Freedom Party and NSC/Social Conservatives withdrew, leaving only VVD/Liberal Conservatives and BBB/Farmer’s Party in place. This has weakened the cabinet’s authority and made its role less decisive. As elections approach, opposition MPs are seizing the opportunity to push their own policy priorities, sometimes by forging temporary coalitions to get proposals through. Disquiet is evident across the economy: from SMEs to large corporations such as ASML, as well as employer organisation VNO-NCW. The King’s warning was clear: if companies reduce investments or even consider leaving the Netherlands, the country’s long-term earning capacity will be undermined. Ensuring that the Netherlands remains a place where businesses feel confident to invest and thrive has become a central challenge.

2026 Budget plans: modest steps, few new policies
The draft budget for 2026 reflects this difficult balance. According to the cabinet, the economy is currently in a favourable position, with growth, low unemployment, and manageable public debt. Purchasing power is expected to rise by 1.3% (1.5% for pensioners), partly because of government measures and wage growth outpacing inflation.

Key announced measures include:

• Nitrogen crisis: €2.6 billion to reduce nitrogen emissions, including voluntary buyouts for farmers and innovation programmes.

• Defence: €3.4 billion in extra defence spending to meet the NATO 2% GDP target.

• Technology & industry: €430 million for the tech sector, including €230 million for semiconductor companies and €200 million for startups (via the European Tech Champions Initiative).

• Housing: €79 million for flexible homes for people in urgent need, including refugees with residence status.

• Public safety: €35 million for easing prison overcrowding, €20 million for safety at railway stations, and €12 million for train staff bodycams.

• Tax & purchasing power: continuation of fuel tax cuts (costing €1.6 billion), while scrapping the planned reintroduction of low-tax red diesel for farmers.

At the same time, the Raad van State (Council of State) has voiced sharp criticism, warning that the budget defers bills to future governments and risks undermining collective services in the long term, particularly in light of an ageing population. It issued five recommendations, including placing societal challenges in a coherent framework, steering towards productivity growth, and looking beyond the current cabinet term.

Dutch media were broadly critical, describing the budget as “sterile accounts” and “breadcrumbs” with little new policy — understandable for a caretaker government, but risky in times of economic and geopolitical uncertainty.

Next steps: Parliament hold the initiative

With the 2026 budget now presented, the Tweede Kamer is entering a decisive phase. Because the Schoof cabinet is in a caretaker role and lacks a firm majority, parliament has more room than usual to shape or amend the plans. This is fuelling a political battle that goes well beyond technical budget details: parties are already positioning themselves for the upcoming elections.

Following Prinsjesdag, the Dutch parliament holds the General Political Reflections (Algemene Politieke Beschouwingen). This is the main debate where party leaders respond to the government’s plans and outline their political priorities, making it a key moment in the run-up to the national elections.

In this year’s debate, discussions focused on migration, purchasing power, housing, defence, climate, and global tensions. Campaign dynamics dominated the tone, with sharp exchanges between figures like Geert Wilders (PVV) and Frans Timmermans (GL-PvdA). The PVV (Anti-immigrant Party) pushed for strict migration limits and lower living costs, while the VVD (Conservative Liberals) focused on tax relief, housing, and stricter migration rules. GL-PvdA (Greens/Social Democrats) called for a socially responsible and sustainable government, and D66 emphasized social cohesion, culture, and climate action while criticizing the VVD’s stance on migration. BBB (Farner-citizen Movement) promoted trust restoration and elderly care, NSC (Social Conservatives) opposed neoliberal policies, and CDA (Christian Democrats) advocated collaboration and a new defence tax.

Prime Minister Dick Schoof maintained a neutral stance, presenting himself as a non-partisan administrator and stressing fiscal discipline and future-proof investments, while leaving political direction to parliament. His reserved approach contrasted with the increasingly campaign-like tone among party leaders. With parties from across the spectrum gaining ground in the polls, the coming months are set to be defined by intense competition over who will shape the next cabinet — and, with it, the Netherlands’ future economic and investment climate.

Photo: Rijksoverheid