Economic growth for competitiveness and innovation Update on economic developments in the Netherlands
This outline is on the Netherlands, where many prominent Irish companies have operations, which the Netherlands Foreign Investment Agency - or NFIA - greatly appreciates. It is good to take stock. The Netherlands is recovering from one of the biggest global financial and economic crises ever. Furthermore, in line with many Western European countries, an aging population and now - since 4 months - a new government. In Europe, the Euro remains stable. Globally, there are climate, food and energy issues far from solved. However, businesses in the Netherlands are optimistic about the future. Economic status The Netherlands is punching above its size; it is the 16th economy in the world, we have a high share in international trade and investment and we have a high number of international companies having their headquarters in the Netherlands. It is the second largest exporter of food, plants and flowers and is within the top five in Europe measured against competitiveness and business climate. Indisputably it has lost a portion of the prosperity as a result of the crisis. However, the Netherlands is coming out of the crisis comparatively strong and is regarded by ING analysts as in the best financial shape to weather a crisis compared to other European countries. Just to give some figures about the current status of the Dutch economy: •
The Dutch economy grew with 1.9% in 2010 as compared to the previous year. On a quarterly basis, compared to last year the fourth quarter of 2010 presented a growth in consumption of 1.1% and the growth of both import and export of products and services of 10.8%.
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The unemployed labour force is currently 401,000, which is just 4.8% of the total labour force and therewith the lowest in Europe.
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The budget deficit is currently 4.4% with a national debt of 58% of GDP, mainly due to the bank bailouts in 2009.
A new government in place In October, after a very lengthy formation process, the new government was sworn in. The new coalition is formed by the Liberals and the Christian Democrats and is a minority government, which for some policies relies on the silent support of the Freedom Party. These particularly relate to a package of budget cuts amounting to 18 billion Euros. Besides this focus on financial restraint, the new government clearly focuses on economic growth. The government will seek the prospect of a balanced budget by 2015. The government has proposed an ambitious package of measures that will significantly improve the long-term sustainability of public finances and strengthen the economy.
Business climate A large part of the Netherlands' income and employment is generated by international investment, trade and exports. The country earns 30% of it’s gross domestic product abroad. In an open global economy, it is essential that we strengthen the competitiveness of the Dutch economy. Economic development and growth underpin employment, prosperity and public services. The Netherlands is well positioned thanks to enterprises and industries that operate and export worldwide, its advantageous location and business climate and its well-educated labour force. The ambition is to secure, enlarge and consolidate this position for the future. The government is to work towards this goal by implementing a facilitating policy and providing incentives in the fields of infrastructure, education, the labour market, taxes and the regulatory burden. The corporate tax rate has been reduced to 25% as of 1 January 2011. Administrative and regulatory burdens on businesses must be 10% lower in 2012 than in 2010. After 2012 administrative burdens will be reduced by 5% per annum. To this end, the definition of salary will be standardised, payroll tax will be addressed (new plans will be open for consultation per 1 April 2011), corporate income tax returns will be shortened and regulations on private limited liability companies will be simplified (as of 1 July 2011).
Innovation To strengthen business competitiveness, the government will also implement a targeted policy to promote innovation and enterprise, in part by encouraging cooperation between enterprises, academic and research institutions, and the government. Innovation is vital to product development and exports in all sectors of industry. The combination and concentration of general and specific economic policy, agri-food policy and innovation policy in a single ministry will provide a platform for more integrated and effective policies to strengthen the competitiveness of the Dutch economy in the EU and the world. This combined Ministry of Economic Affairs, Agriculture and Innovation - of which the NFIA is an
operational unit - will be responsible for facilitating a competitive general business climate and - in addition - developing policy that encourages current and future spearheads of the Dutch economy: •
water,
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food,
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horticulture,
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high tech,
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life sciences,
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chemicals,
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energy,
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logistics and
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creative industry.
To enhance economic development and innovation, clusters like Food Valley or the mainports Amsterdam and Rotterdam will be stimulated. Existing funds for export, innovation and international business will be combined Grants will be awarded only in the case of proven effectiveness to improve focus and mass. The implementation of the Research and Development (Incentives) Act (WBSO) will be broadened, as will that of the Innovation Performance Contracts and the Knowledge Workers Scheme. Looking forward The Netherlands has a strong position on which we can build for the future: The strategic location in combination with world-class sea ports and an airport, the centuries-old trading spirit, orientation on the outside world and hence relatively good knowledge of other languages and cultures in combination with an internationally oriented tax system, international tax treaties and a strong international business services sector. Moreover, by strengthening strong knowledge bases in key areas such as water, food, high tech, chemicals, energy and logistics, the Netherlands will be strong in the future and prove a good base for operations of your companies.
Dublin, 17 February 2011 Liesbeth Staps, Executive Director UK & Ireland, Netherlands Foreign Investment Agency