Decline in long-term strategies due to policy uncertainty

The Dutch economy is being hit by turbulence from both abroad and at home. From the re-escalation of U.S. trade tariffs to ongoing domestic political instability, understanding where uncertainty comes from and how it trickles down into business decisions is more urgent than ever. To that end, we have developed two indices: a general EPU index that reflects global developments through Dutch media, and a domestic EPU-NL index that captures uncertainty linked specifically to Dutch policymaking.

Domestic developments increasingly driving policy uncertainty 

The results are striking. In the spring of 2025, economic policy uncertainty in the Netherlands reached its highest level since the early days of the COVID-19 pandemic. While looming U.S. tariffs currently dominate the international headlines, our analysis shows that a growing share of uncertainty stems from domestic events. The once-strong correlation between global and Dutch policy uncertainty is weakening. Between 2003 and 2020, the two indices moved in near lockstep. But from 2021 to 2025 more divergence emerged, revealing a new pattern: policy uncertainty in the Netherlands is increasingly ‘homegrown’.

So why is the EPU index especially relevant now? First, it allows us to quantify the domestic impact of international shocks -like new U.S. tariffs -on the Dutch economy. Second, it offers a benchmark for Dutch policy communication against that of international peers. Third, the index acts as a high-frequency up-to-date feedback tool for forecasters, budget planners, and risk managers when the policy environment becomes volatile. And finally, businesses can use the EPU as a risk signal, translating macro-level uncertainty into firm-level response strategies. 

Businesses respond to current tariff threats

But the firm-level impact of policy uncertainty isn’t just theoretical. We analysed to what extent companies are impacted by and react to the current tariff threats. For this purpose, PwC assessed earnings calls and analyst reports from all AEX-listed companies. The findings show an exponential increase in tariff exposure in recent months. In Q4 2024, only eight per cent of companies mentioned tariffs. By Q2 2025, that number had jumped to 34 per cent. This suggests that economic policy uncertainty is directly impacting corporate boardrooms.

The way companies respond to this uncertainty is also telling. While many previously made structural adjustments - such as reorganising supply chains - such long-term strategies have declined since April 2025. Instead, businesses are now turning to short-term or tactical measures such as pricing changes or simply postponing decisions. The explanation is straightforward: when the policy environment becomes too erratic, the risks of acting outweigh the benefits.

A broader paralysis in the investment climate

This behavioural shift is troubling. It signals a broader paralysis in the investment climate. Without clarity, firms are hesitant to make the very moves that future-proof their business and the economy. At a time when the Netherlands faces ambitious societal goals - on housing, climate, and public services - a stable and predictable policy landscape is vital.

With our new index policymakers and businesses have a powerful tool to detect and respond to rising uncertainty. The report also underscores that poor communication - or simply the absence of clear, timely decision-making - can be just as damaging as the policies themselves. When plans lack clarity, when decisions are delayed, or when political debate stalls action, the consequences are quickly felt across the economy.