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Dutch budget deficit 4.5 percent in 2013. Slow economic recovery expected after 2012

CPB Netherlands Bureau for Economic Policy Analysis (CPB) expects that the Dutch budget deficit will be 4.5 percent, or 28 billion euros, in 2013. From that year onwards, the Dutch economy is expected to recover slowly, with a gross domestic product (GDP) growth of 1¼percent in 2013.

In 2012, the economy develops worse than expected in the December 2011 forecast. This is mainly due to the unfavourable economic developments in the fourth quarter of 2011. In addition, there has been a decrease of consumer spending levels, most likely due to lower consumer confidence levels, deteriorated (pension fund) wealth and decreasing housing prices. In 2012, the inflation rate will be 2¼percent and the median purchasing power will decrease by 1¾percent.

The forecasted budget deficit in 2013 is 4.5 percent. This means that the EMU-ceiling of 3 percent budget deficit will be passed by 9 billion euros. Should public policies remain unchanged the deficit will be 4.1 percent in 2014 and 3.3 percent in 2015. Unemployment increases to 6 percent in 2013, which amounts to 545.000 persons.

For the full cabinet period (2011-2015), average GDP growth is expected to be 1 percent, while 1¼percent was accounted at the start of the Rutte-government in late 2010. The difference is mainly caused by the economic recession of late 2011 and early 2012. The decrease in growth will not be fully recovered in later years. Therefore, the budget deficit in 2015 will be 16 billion euros higher than expected in 2010. The public debt will increase to 76 percent of GDP in 2015.

These are the draft figures for the Central Economic Plan 2012 (CEP), which contains the economic forecasts of 2012 and 2013. This year, the CEP will be complemented by an update of the economic medium-term outlook for the years 2014 and 2015. The numbers presented today are draft figures as they may still change before the final forecast will be presented at a press conference on Tuesday 20 March, 09.30 hours in press centre Nieuwspoort, Lange Poten 10, The Hague. CPB will not provide further analysis or information until that moment.