Tax increases will be unavoidable to fill a major hole in the government’s finances, prime minister Mark Rutte said on Thursday, after the weekly cabinet meeting.

Talks on exactly how to make up the shortfall, put at between €10 billion and €15 billion, will continue on Thursday evening between the four coalition parties.

‘I am assuming there will be tax increases,’ Rutte said. ‘That is unavoidable… the major problems which we are now seeing, cannot simply solved by looking at the spending side.’

‘It is not yet clear what the exact impact will be on people and we are looking at [dividing the burden] between the general population and companies.’

The biggest shortfall is the €7 billion in lost revenues following a Supreme Court ruling last year that the tax on savings and investments – known as the ‘box 3 tax’ – was calculated illegally.

Ministers will also have to implement a decision by the Senate to raise the state pension in line with the minimum wage, which will cost an estimated €2.4 billion in the first year alone.

The war in Ukraine has also brought new liabilities in the form of compensation for higher fuel costs, which will cost €6.2 billion, and a commitment to increase defence spending.