The damage of the economic crisis is permanent...

...predicts Bas Jacobs, professor of economics. And these are the reasons why.

‘[The Dutch economy] is improving, but it’s still neither fish nor fowl. A substantial growth of more that 2 percent per year, that would be good. But it seems like the damage of the crisis has become permanent.’

The Dutch newspaper De Volkskrant asked seven economics experts, among whom professor of economics Bas Jacobs (Erasmus School of Economics), to give their vision on the economic year 2017. ‘From 1970 to 2008, the Dutch economy grew with an average of 2,5 percent per year. The growth before the crisis was partly embellished by the housing bubble. But to cheer for 2 percent growth is ludicrous. We lost about 15 percent of the gdp, 10 percent of which is structural. That has been a policy choice. The losses could have been prevented if we would have cut back less, hadn’t raised taxes and would have made sure that the financial sector cleaned up its act.

‘There are many insecurities this year: elections, policy under Trump, but also: what’s going to happen with the monetary policy in the EU? The policy rate is still zero, inflation is extremely low. That’s a sign that Europe still isn’t doing well. You want governments to stimulate European economy, not the European Central Bank. Only then monetary policy can be normalized. But it doesn’t happen, because of the budgetary rules.’

‘It’s important to start investing more and save less, to keep the spending up. Think about investing in infrastructure, education, research and development and the energy transition from fossil fuel to sustainable energy.’

Source: de Volkskrant.

More information

More by Bas Jacobs on his weblog.