Domestic turbulence drives Dutch policy uncertainty upward again

We published our first EPU, which is based on an analyses of thousands articles from Dutch media, in June. 

September marked a notable spike in the EPU-NL. The key driver was Prinsjesdag, the day on which the (outgoing) cabinet publishes its plans for next year in the Budget Memorandum. Because this year's Miljoenennota contained few policy announcements, it triggered widespread uncertainty about future taxes, subsidies, and fiscal stability. Media coverage revealed explicit distrust in the government’s budget plans.

This spike did not occur in isolation. The broader backdrop of a double-demissionary cabinet heading into elections amplified the sense of unpredictability. Across multiple sectors — from infrastructure to healthcare and climate — articles where the analysis is based on pointed to policy paralysis, a lack of strategic direction, and the fading reliability of government commitments. The demissionary status has become a symbol of political drift, undermining confidence in the country’s ability to make long-term policy choices. Barbara Baarsma, chief economist: 'The Dutch investment climate has clearly deteriorated as a result of this uncertainty. In July, Statistics Netherlands (CBS) published figures showing that corporate investments are lagging behind their income. Hopefully, the formation of a new cabinet after the elections at the end of October will lead to a stable political and, consequently, investment climate." 

Adding to uncertainty were developments in climate and energy policy. An official report by the PBL confirmed that the Netherlands is not on track and will probably miss its legally binding 2030 climate targets. This report raises the risk of lawsuits and intensified concerns about policy credibility. The situation was compounded by growing confusion and reversals in the climate and energy policy, leaving investors without clarity on the future direction of the green transition. PwC-partner and sustainability expert Alexander Spek: 'Companies need, above all, stable regulation by governments to commit to investing in business initiatives that create value in the long term and thereby contribute to a resilient society. Our analysis of the different political stances shows a wide divergence of plans when it comes to climate action and related policies, incentives and levies, including reversals of existing regulations. This is anything else than the stability that is so much needed.'

Barbara Baarsma: 'A stable investment climate is essential for business investments in sustainability. After all, these are often long-term investments. Nevertheless, it is important to emphasise that making business processes and supply chains more sustainable can yield major benefits for companies themselves, for example in terms of security of supply.'  

While international uncertainty is easing as tariff tensions stabilise (for the time being), the Dutch policy environment remains volatile. This divergence highlights that the current wave of uncertainty is increasingly homegrown. Barbara Baarsma, chief economist: 'The last three cabinets fell prematurely. Moreover, the formation of these cabinets was a long and complicated process. In fact, since 2021, when the Rutte III cabinet fell, no policy choices have been implemented that benefit structural growth capacity. This political standstill has a domestic cause and is therefore reflected in the EPU for the Netherlands.'

The message is clear: domestic governance and (a lack of) policy stability are now primary levers shaping the Dutch investment climate. Without a stable and credible framework, the risk is that firms once again delay the very decisions needed to drive sustainable growth.