Ministers are gearing up for six weeks of tough negotiations ahead of this year’s spring budget statement, as the four coalition parties pursue different spending priorities.

Finance minister Eelco Heinen has warned that there is little room to loosen the purse-strings, even after the budget deficit for 2024 came in much lower than forecast.

According to provisional figures from the government’s economic analysis bureau CPB, the deficit for 2024 was 0.9%, far below the previous projection of 2.9%.

But much of the difference came from the fact that €6 billion of allocated funding still has to be spent. Heinen said he wanted to reduce the national debt to create a buffer against future downturns, warning: “today’s positives are tomorrow’s negatives.”

The figures mean the Netherlands is not in danger of breaching the EU’s 3% budget deficit threshold any time soon, which would trigger further spending cuts under the coalition agreement.

But Heinen will have to contend with a flurry of wish lists from ministers representing four parties with increasingly different visions of how to spend it, while having to plug several holes in the public accounts.

Defence spending

Geopolitical events have added to the pressures, as the Netherlands will almost certainly have to raise its defence spending from the current 2% Nato limit.

This week the UK pledged to raise defence spending to 2.5% of GDP in response to the Trump administration’s vow to withdraw troops from Europe and seek rapprochement with Russia over the war in Ukraine.

Though prime minister Dick Schoof has said he will adopt a wait-and-see approach, the Netherlands is hosting this year’s Nato summit in June and will not want to be seen as lagging behind its partners. Raising defence spending to 3% of GDP would cost an extra €11 billion a year.

In November opposition parties forced the cabinet to ditch plans to raise VAT on culture, sports and books to the upper rate of 21%, creating a €1.3 billion shortfall in the budget.

An alternative solution to increase the upper rate to 21.4% was proposed by coalition partner NSC, but has not been supported by its partners in the cabinet.

Meanwhile, the largest party in the coalition, Geert Wilders’ PVV, has pressed for a reduction in VAT on groceries to zero, if necessary by reinstating the upper rate on culture and sport.

Prisons and climate

But opposition parties ChristenUnie and D66, whose votes may be crucial in the Senate, have threatened to block future plans if the U-turn goes ahead.

Deputy justice minister Ingrid Coenradie has vowed to lobby hard to secure hundreds of millions of euros to address a shortage of prison cells and staff, which could include reopening jails.

The PVV-affiliated minister even risked a clash with party leader Geert Wilders, who has a low tolerance for dissent in the ranks, by suggesting some prisoners may have to be released early to ease the crisis.

While Heinen preached parsimony in his budget speech in September, some of the biggest spending demands have come from his own VVD party.

Party leader Dilan Yesilgöz launched a policy programme last month that included €1 billion of spending plans to boost working families, including €250 million to extend childcare support.

Green growth minister Sophie Hermans, meanwhile, has called for a proposed plastic levy for industry to be scrapped, which would have raised €550 million a year from 2028, and cut the national carbon dioxide levy, which would cost a further €441 million annually.

Altogether Hermans’ department says the governmnet needs to invest €8 billion to meet the Netherlands’ green energy targets.

Nitrogen reduction

Agriculture minister Femke Wiersma is expected to demand a cash injection in the billions to help farmers reduce their nitrogen compound emissions.

The issue has been given extra urgency by a Council of State ruling in December that further constrained potential nitrogen emissions from construction projects.

And in January a court ordered the government to stick to its commitments to reduce nitrogen pollution in conservation areas by 2030 or face a €10 million fine, in a case brought by environmental campaigners Greenpeace.

The government also faces a €2.6 billion shortfall from its continuing failure to devise an alternative method for calculating wealth tax after the Supreme Court struck down the previous system, which was based on notional returns.

And Heinen said the Netherlands will have to pay an extra €700 million in EU contributions this year, thanks to a higher than expected tax take.

The rules require the minister to have his budget statement approved by the cabinet by April 11, so that parliament can receive it before the Easter recess.