The 2026 budget, presented by the caretaker government, presented limited new policy and focused on tax adjustments, minimum wage increases and support for families. It features higher income tax bracket thresholds, increased general and employed people’s tax credits, higher minimum wages, reduced business owner allowances and more childcare support, alongside changes to capital gains tax, excise duties and R&D tax credits. According to the estimates, the budget deficit should reach 2.7-2.9% of GDP in 2026. 2025 (from 1.8% in 2024). Business insolvencies were already on track for a noticeable downside trend reversal in 2025, with most sectors contributing to the decrease, except professional services and information and communication. Around 3,700 cases (-15% y/y) are expected for the full year, slightly less than observed prior to the pandemic in 2016-2019. However, we expect a limited decrease from there as the delayed effects of trade challenges, due to Dutch integration in global supply chains, and fiscal uncertainties, due the continued political fragmentation, should weigh on the economy. At this stage, we anticipate the decrease in insolvencies to soften in 2026 (-2% to 3,560 cases) before regaining traction in 2027 (-4% to 3,420).

The Netherlands maintains one of Europe's strongest business environments, consistently ranking at the top of global competitiveness indices. The country benefits from world-class logistics infrastructure centered on Rotterdam port and Schiphol airport, a highly skilled multilingual workforce, excellent digital connectivity, efficient institutions and low corruption. Its strategic position as Europe's gateway and robust innovation ecosystem continue to attract substantial foreign investment.

However, several structural vulnerabilities require attention. The housing market faces acute shortages driving unsustainable price increases, limiting labor mobility and affecting younger workers—critical concerns for a knowledge-intensive economy. Labor market tightness has created persistent skills shortages in technology, engineering and healthcare, while an aging population strains pension and healthcare systems. Energy security has become a concern following the Groningen gas field closure, increasing import dependence and exposure to price shocks. The nitrogen emissions crisis constrains construction and agricultural activities, creating regulatory uncertainty that affects investment decisions. The economy's openness, while a traditional strength, also creates vulnerability to global trade disruptions. Additionally, the favorable corporate tax regime faces increasing international scrutiny. Addressing housing, energy transition, and labor market challenges while preserving competitive advantages will be crucial for sustaining the Netherlands' economic model and business attractiveness in the coming years.

Political fragmentation means the government remains fragile and will face challenges in its term. Longstanding political fragmentation means that government formation takes several months of intense negotiations, leading to governments which remain fragile and face continuous challenges throughout their term. The Dutch political landscape is characterized by a highly proportional electoral system that consistently produces multi-party coalitions, often requiring four or more parties to achieve a parliamentary majority.