Capser de Vries: 'Without reforms, there’s hardly any scope for extra spending or tax relief.'

Trade Tensions with the U.S.

Donald Trump is threatening to impose 30% import tariffs on EU goods. Casper de Vries expects the impact to be limited due to trade diversion and advises against retaliatory measures, as these mainly hurt consumers. He argues it’s economically unwise to respond with countermeasures since they punish your own citizens rather than the source of the problem. Middeldorp, however, sees strategic value in a well-targeted response. Symbolic products like Harley-Davidsons could apply pressure without causing significant damage.

Budget cuts and aging

The Netherlands faces €7 billion in spending cuts, partly due to an aging population. De Vries stresses that this trend has long been foreseen and that the Netherlands is relatively well prepared. Still, lower public spending is needed to maintain fiscal sustainability.

Middeldorp warns that current projections are overly optimistic, as rising defense and climate expenditures are not yet factored in. 'Ultimately, the burden will fall on households,' he says.

European debt, interest rates, and CPB forecasts

De Vries highlights the positive effects of defense spending, such as technological innovation. He expects the Dutch government to adjust course in time but warns of greater risks in Southern Europe. At the same time, he sees encouraging signs as countries like Italy, Spain, and Portugal implement reforms, narrowing interest rate spreads within the eurozone. This increases investor confidence and reduces the risk of eurozone fragmentation.

Finally, both economists respond to new projections from the Netherlands Bureau for Economic Policy Analysis (CPB). The CPB expects the government deficit to rise to 2.5% of GDP by 2030, faster than previously anticipated. This leaves little room for political parties to make ambitious election promises: without reforms, there’s hardly any scope for extra spending or tax relief.