PUBLISHED June 28, 2026
Inflation Climbs to 2.7%, But Nothing Like 2022
According to De Nederlandsche Bank’s Spring Projections, inflation is expected to reach 2.7% in 2026 — lower than in 2025, but slightly higher than DNB had projected back in December. Households are facing higher costs, largely due to higher energy bills. Crucially, there will be no spike in inflation like the one seen during the energy crisis in 2022, when gas prices were extremely high and the economy was booming. Economic growth is now lower and the labour market is cooling down, meaning prices and wages are rising at a slower rate than they did four years ago. For the coming years, DNB expects inflation to ease to 2.3% in 2027 and 2.4% in 2028.
Growth Slows to 0.8% as Firms and Households Turn Cautious
The Dutch economy is expected to grow by 0.8% in 2026, one percentage point below the growth rate seen in 2025. Geopolitical tensions are hampering global trade and putting pressure on exports, while exports of domestically produced goods are losing market share due to higher labour and energy costs at home. Firms are postponing investment due to uncertainty, rising energy costs and increasing interest rates, while households are tightening their belts and saving more. Consumption is not expected to pick up again until 2027 and 2028, with the government continuing to drive growth this year through increased spending on healthcare and defence. From 2027 onwards, growth should rise to 1.2% and later 1.3% as energy prices fall and confidence returns.
Budget Deficit Breaches the EU’s 3% Limit
The budget deficit is set to rise to 3.3% of GDP in 2026, exceeding the European limit of 3%. This is largely due to the reform of the military pension system, which will cost the government a one-off amount of €8.5 billion, compounded by deteriorating growth projections. The deficit should recede to around 2.6% in 2027 and 2.3% in 2028, but budgetary room for manoeuvre remains limited. In the longer term, public finances are set to deteriorate further, partly because planned additional spending on defence, climate action, nitrogen pollution and housing construction beyond the current government’s term is not fully covered. Public debt will remain well below the European 60% limit during this government’s term, but is expected to rise sharply thereafter.
Prices of owner-occupied homes are set to rise by 3% to 4% annually over the coming years — markedly less than in previous years — held back by higher mortgage rates and lower consumer confidence. Growth in house prices is roughly keeping pace with rising borrowing capacity, meaning affordability shows no improvement despite the slower pace of increases. Fewer homes are being built as fewer planning permits are issued and uncertainty and interest rates remain elevated, while investors are selling more ex-rental properties — slightly widening supply on the owner-occupied market while reducing the supply of rental properties.
Prices of owner-occupied homes are set to rise by 3% to 4% annually over the coming years — markedly less than in previous years — held back by higher mortgage rates and lower consumer confidence. Growth in house prices is roughly keeping pace with rising borrowing capacity, meaning affordability shows no improvement despite the slower pace of increases. Fewer homes are being built as fewer planning permits are issued and uncertainty and interest rates remain elevated, while investors are selling more ex-rental properties — slightly widening supply on the owner-occupied market while reducing the supply of rental properties.
Wage growth in the private sector is projected to reach 4.0% in 2026, below previous years, as the labour market becomes slightly less tight. Wage growth will be tempered further in 2027 and 2028. Unemployment is set to rise to 4.2% in 2027 and 4.3% in 2028 — numbers that remain relatively low by historical standards, but the rise reflects job growth slowing more than the workforce itself. While no large-scale job losses are projected, the number of job vacancies per unemployed person is set to fall slightly, meaning it will be marginally harder for job seekers to find work quickly.
Because the duration and intensity of the war in the Middle East remain a major source of uncertainty, DNB built two alternative scenarios into its Spring Projections rather than relying on a single baseline. Rather than predicting what will happen, these scenarios show what might happen if oil and gas prices stay high for longer, or rise further still. In an adverse scenario, prolonged energy disruption would push inflation higher and weigh more heavily on growth than the baseline assumes; in a more severe scenario, a further escalation in prices could meaningfully deepen the slowdown and delay the recovery currently projected for 2027 and 2028.
This entire forecast rests on the Jetten government’s coalition agreement — but given that this is a minority coalition, full implementation of all policy intentions is less certain than usual. DNB’s approach was to consider all measures set out in the coalition agreement unless there was demonstrable parliamentary opposition before 21 May 2026, the cut-off date for these projections. Accordingly, the proposed increase in the state pension age was not factored in, though the recent energy support package was incorporated. This caveat matters: if the coalition’s plans unravel or are renegotiated, the entire trajectory described in these projections could shift meaningfully in either direction.
Wage growth in the private sector is projected to reach 4.0% in 2026, below previous years, as the labour market becomes slightly less tight. Wage growth will be tempered further in 2027 and 2028. Unemployment is set to rise to 4.2% in 2027 and 4.3% in 2028 — numbers that remain relatively low by historical standards, but the rise reflects job growth slowing more than the workforce itself. While no large-scale job losses are projected, the number of job vacancies per unemployed person is set to fall slightly, meaning it will be marginally harder for job seekers to find work quickly.
Because the duration and intensity of the war in the Middle East remain a major source of uncertainty, DNB built two alternative scenarios into its Spring Projections rather than relying on a single baseline. Rather than predicting what will happen, these scenarios show what might happen if oil and gas prices stay high for longer, or rise further still. In an adverse scenario, prolonged energy disruption would push inflation higher and weigh more heavily on growth than the baseline assumes; in a more severe scenario, a further escalation in prices could meaningfully deepen the slowdown and delay the recovery currently projected for 2027 and 2028.
This entire forecast rests on the Jetten government’s coalition agreement — but given that this is a minority coalition, full implementation of all policy intentions is less certain than usual. DNB’s approach was to consider all measures set out in the coalition agreement unless there was demonstrable parliamentary opposition before 21 May 2026, the cut-off date for these projections. Accordingly, the proposed increase in the state pension age was not factored in, though the recent energy support package was incorporated. This caveat matters: if the coalition’s plans unravel or are renegotiated, the entire trajectory described in these projections could shift meaningfully in either direction.
