Dutch coalition agreement ‘gives certainty of direction’ in policy making

After nearly six months of negotiations since the general election in November 2023, four Dutch parties have agreed to form a coalition government, with the right-wing Party for Freedom (PVV) being the largest party in the parliament.

Policy goals of the agreement include strict measures on asylum seekers and immigration, giving the parliament more control over European legislation, lower taxes for working families, a major boost in housing, introducing a new electoral system and a new constitutional court to strengthen fundamental rights, and changing European directives on agriculture and fisheries.

Several measures aimed at increasing the control of parliament over European legislation will effectively limit the powers of the government to agree to new EU regulations. For example, the agreement sets out changes to farming and fishing policy  by reversing green policies introduced to hit EU climate targets, such as compulsory buyouts of polluting farms, and rejecting EU’s demand to reduce livestock numbers to cut pollution.

Jeroen Schouten of Pinsent Masons said that some of the policies could set the country back as a popular hub for global businesses.

“The Netherlands has for a long time been open to and a hub for international businesses but the policy prospectus outlined by the new coalition government could challenge this ,” said Schouten.

One aspect of the agreement that will have a noticeable impact on international businesses is the coalition government’s anti-migration efforts, which will limit the influx of non-EU skilled workers, cap the number of foreign students, and reduce the use of English in universities.

“Current fiscal advantages for foreign workers, such as the 30% income tax rate, will likely be reduced, making it less attractive for highly skilled workers to come to the Netherlands,” said Schouten.

The coalition government’s proposed budget measures are another area of concern for businesses according to Schouten.

“A significant chunk of the funding for plans set out in the agreement comes from reducing annual contributions to the EU. If less savings can be made, the agreement states that the resulting loss in savings will lead to a pro rata change in the expected spending budgets. Therefore, businesses will be confronted with an uncertain financial climate in the Netherlands,” he said.

The Dutch coalition is also expected to have implications at the European Parliament level. People’s Party for Freedom and Democracy (VVD), one of the four parties of the Dutch coalition, is currently part of the liberal Renew group in the European Parliament, as is French president Emmanuel Macron’s En Marche political party.

Public policy expert Mark Ferguson of Pinsent Masons said: “The Renew Group, which the People’s Party for Freedom and Democracy (VVD) is a part of, recently signed a public declaration designating the far right as a ‘threat’ to the EU. The VVD’s new coalition partner, the PVV, falls into this category according to the Renew Group. Current polling suggests that in the June European Parliament elections, the right-wing European Conservatives and Reformists Group and Identity and Democracy Group are expected to gain seats, likely taking the parliament rightwards which will have an impact on policy development in the EU over the next term.”

More details about the coalition agreement are yet to be released and it will take time for proposed changes and policies to be implemented through legislation.

“The conclusion of the coalition talks and the finalisation of the agreement provide businesses with a certainty of direction in policy making. However, the details of specific pieces of legislation will still be forthcoming and provide an opportunity for the business community to engage with new policy as it arises,” he added.