UPDATE DUTCH POLITICS: Coalition deal paves way for minority government

The Netherlands is entering the final phase of cabinet formation after D66 (liberal democrats), VVD (conservative liberals) and CDA (Christian democrats) reached a coalition agreement titled Aan de slag (“Getting to work”). The parties plan to form a minority government led by Rob Jetten (see photo), requiring support from opposition parties on a case-by-case basis. The agreement outlines a clear strategic and fiscal framework, with security, defence, economic resilience and competitiveness as key priorities, alongside strict budget discipline and structural reforms.

Coalition agreement: what it means for business and trade

• The coalition commits to keeping the budget deficit below 2% of GDP, signalling a strong focus on fiscal stability and predictability, a key consideration for investors and financial markets.
• Large-scale investments in defence, security and strategic technologies (including digitalisation, AI and semiconductors) are prioritised. This creates opportunities for industry, suppliers and international partners, particularly in defence, high-tech manufacturing and cybersecurity.
• While households carry a relatively larger share of fiscal adjustments, businesses are expected to contribute as well, including through a new “freedom contribution”. At the same time, the agreement emphasises the importance of a competitive investment climate, with measures aimed at maintaining stability, regulatory predictability and growth potential.
• Several measures are explicitly business-friendly, including:
  • the abolition of the national CO₂ levy for industry, to ensure a level playing field with other EU countries;
  • continued support for start-ups and scale-ups, including equity-based compensation;
  • a strong push to reduce regulatory burden, with an ambition to simplify hundreds of rules annually;
  • no changes to the expat tax regime, preserving international talent attractiveness.
• On trade and international positioning, the coalition underlines the importance of a strong European Union, with the Netherlands positioning itself as an active and pragmatic EU partner, particularly on security, trade and industrial policy.
• Notably, the coalition will introduce a practical lobbying register and improve transparency, alongside efforts to make open government rules more workable through better information management.
• Due to the minority nature of the cabinet, several proposals remain open-ended or conditional. For businesses, this means that while strategic direction is clear, policy details and timelines may evolve, depending on negotiations with opposition parties in parliament.

The full text of the agreement (in Dutch) can be found here.

Why a minority government?

• A majority coalition involving D66 (liberal democrats), VVD (conservative liberals) and CDA (Christian democrats) proved unfeasible, leading the parties to opt for a minority cabinet without a fixed support partner.
• This model requires continuous dialogue with parliament, but also allows for flexible, issue-based coalitions, potentially leading to broader and more stable long-term agreements on key economic and societal challenges.
• According to the informateur, this approach fits a fragmented political landscape and may enhance parliamentary involvement in policy design.

Next steps (indicative)

• The House of Representatives will debate the coalition agreement and the informateur’s final report next week.
• Rob Jetten, leader of D66 (liberal democrats), is expected to be formally appointed as formateur and tasked with assembling the cabinet.
• Ministerial portfolios will be allocated and candidates vetted in the coming weeks.
• The new cabinet is expected to be sworn in by the King in late February, followed by a parliamentary debate on the government’s policy statement.