On 12 February 2008, the Council examined the updated stability programme of the Netherlands, which covers the period 2007 to 2010. Since 2006, Dutch GDP growth again significantly outpaces potential growth. The current upturn is generally assessed to be a regular cyclical upturn and is not widely mistaken for higher potential growth, as was the case during the rather long boom period at the end of the 1990s. Furthermore, it is more broadly based on both domestic and external sources of growth. However, given the good starting position, the tightness of the labour market may exert upward pressures on wages and prices rather early.

The main goal of the programme's budgetary strategy is to attain a structural surplus, that is, a cyclically- adjusted surplus net of one-off and other temporary measures, of 1 % of GDP at the end of the planned government term, in 2011. Hence, throughout the programme period, the Netherlands plans to fully respect its medium-term objective (MTO) for the budgetary position, which is a structural deficit ranging from 0,5 to 1 % of GDP. After the significant deterioration in 2007, the programme projects a return to small, broadly stable headline surpluses. The primary balance follows a similar path, stabilising at 2,75 % of GDP in 2008-2010. The previous update of the stability programme assumed a growth slowdown in 2008 rather than in 2009 and targeted a broadly balanced general government budget until 2008 and a surplus of almost 1 % of GDP in 2009.

In view of this risk assessment, the budgetary stance in the programme seems sufficient to maintain the MTO by a sizeable margin throughout the programme period, as envisaged in the programme.

The overall conclusion is that the programme aims at achieving and maintaining a broadly stable surplus, thereby ensuring a sound budgetary position throughout the period. While fiscal policy was pro-cyclical in good economic times in 2007, the budgetary stance in the programme from 2008 onwards is in line with the Pact. The risks to the budgetary targets seem broadly balanced in 2008. From 2009 onwards, if economic growth turns out better than the cautious economic scenario envisaged in the programme, this should be  reflected in a better budgetary outcome than planned.

Netherlands is invited to improve the long-term sustainability of public finances by securing the budgetary consolidation as planned in the programme.