The climate-fiscal timebomb: Netherlands

08 March 2026

Fiscal outlook

The Netherlands recorded a 0.9% deficit and a debt-to-GDP ratio of 43.7% in 2024. Fiscally hawkish and historically among the EU’s “frugal” member states, the Netherlands continues to press for strict fiscal discipline from other governments and has opposed fresh EU-level joint borrowing.

Deficit measures the level of borrowing in a given year. Debt-to-GDP compares the total public debt to the size of the economy. Both are currently used to determine how much borrowing a member state is allowed to undertake. However, neither measure in itself determines a government’s capacity to sustain higher levels of public investment. Fiscal sustainability depends on growth, the multiplier effects of investment, interest rates, inflation, the structure of the economy and external risks such as climate change. NEF advocates moving away from strict numerical debt targets.

Rising climate costs

Extreme weather events are increasingly prevalent in the country, witnessing both more frequent and extreme rainfall and an increase of dry periods. The 2019 heatwave has been estimated to cause around 400 pre-mature deaths, while the 2021 flood created damages amounting to €430m. With 26% of the country below sea level, the Netherlands Environmental Assessment Agency estimates that 55% of the country is at risk of flooding. The multi-year Delta Programme and Delta Fund finance flood safety, freshwater security, and spatial adaptation, yet official documents show a funding gap to 2050. Court judgment in the beginning of 2026 further ruled that the Netherlands was not doing enough to protect the people of Bonaire, a Dutch special municipality in the Caribbean, from the consequences of climate change, while being insufficient in cutting national greenhouse gas emissions.

What NEF’s modelling shows

Organisation for Economic Co-operation and Development (OECD) projections show the Netherlands’ GDP declining by 11% by 2050 and 15% by 2070 under current policies. Our modelling shows the following:

Under current policies (BAU – business as usual), the Netherlands’ debt is 44 pps higher than the climate-agnostic baseline in 2050 and 159 pps in 2070.

With early EU mitigation and sufficient adaptation spending, debt is 23 pps higher in 2050 and 39 pps in 2070.

Delayed EU investments and insufficient adaptation results in higher debt levels of 37 pps in 2050 and 71 pps in 2070.

EU early action combined with global cooperation results in equal debt levels to the climate-agnostic baseline in 2050 and 18 pps lower levels in 2070.

Progressive taxation, such as a wealth tax, combined with EU early action would increase debt by 7 pps in 2050 and by 6 pps in 2070 compared to the climate-agnostic baseline.