The Dutch economy is unlikely to improve over the next two years, with house prices and wages continuing to fall and unemployment rising, the Dutch central bank said in a report on Monday.

The economy is weak because household spending continues to fall and there will be a further 4% fall in disposable income by the end of 2013.
This means incomes will not have increased between 2000 and 2013, says the bank. ‘It is extremely surprising not to see any increase in wages over 13 years,’ CEO Job Swank said in a statement.
The central bank expects house prices to continue falling until sometime in 2014. This will depress spending and growth and the downward spiral will not stop until then.
The expectation is that the economy will shrink by 0.6% in 2012 and show growth of 0.6% and 1.2% in 2013 and 2014 respectively.
Unemployment will increase over the three years and reach 6.4% of the population, compared with 4.4% in 2011.
Clear policies
The central bank advises the government to make clear its policies on the jobs market, the housing market and pensions as quickly as possible. This can help restore some confidence and encourage growth over a shorter period.
The report says the five-party austerity package will see the government budget deficit fall to 2.9% in 2013. However, in 2014 government spending will increase it to 3.1%, just over the European Union maximum of 3%.
‘The new cabinet after the September 11 election will have to find an ambitious way to tackle the deficit,’ Swank said in his statement. ‘That will be painful, but we must not dramatise the effect on economic growth.’
The current spending plans will cut 0.5% from growth in 2013 and just 0.3% in 2014, says the bank.