Whichever way you look at it, the economy is chained to the effects of boom and bust. This forms the balance between many factors within which we, the Netherlands and also Europe, stand within the global economy. This concerns various areas such as economic growth, jobs and the housing market. It has already been said that the new economy no longer suffers from this, but nothing could be further from the truth! What influence does a stable policy have on our economy?
Stable politics
- Different forms of business cycle
- What to test for?
- Highs and lows
- Influence of unstable politics
- Working on improvement
Different forms of business cycle
The country’s economy is in motion and this is continuously reflected in different degrees within the economic cycle. This is an up and down movement as a sine graph well depicts. Four periods can be identified within a business cycle:
- economic boom: the economy is growing, the number of jobs is increasing and consumer and producer satisfaction scores well;
- overheated economy: the economy is running too fast, causing interest rates to reach a peak, there is a money shortage and risks in investments are taken consciously or unconsciously. People have an unfair amount of confidence in the economy, which increases the risk of major losses;
- economic downturn: the economy is declining, people are being laid off and are receiving unemployment benefits en masse, interest rates are falling;
- cooled economy: the economy has reached its lowest point, meaning that a recovery is about to begin. First signs may be an increase in people with fixed-term jobs through employment agencies.
What to test for?
In the Netherlands, the Central Bureau of Statistics keeps track of the situation in the Netherlands. They keep a series of figures, which provide an indication of where the Dutch economy stands. Consider the following key points:
- producer and consumer confidence;
- major purchases and consumption;
- export;
- labor volume, unemployment and number of vacancies;
- number of bankruptcies.
Mapping these numbers on a monthly basis creates a fairly clear picture of the current state of the Netherlands. However, in recent years the picture shows a more erratic picture of growth and decline, as if there is uncertainty in the market or that politicians have made incorrect decisions.
Highs and lows
Until the turn of the century, the economic cycle often followed the distribution of seven years of high and seven years of low economic activity. In other words, that means that we have a period of growth and prosperity, which was followed by a period of decline and setbacks. Until 2000, the sky seemed to be the limit and a lot of money and capital was being earned within an increasingly hot economy. This was largely caused by the internet hype and the bubble could no longer grow until it burst. This was followed by years of recovery until 2007 saw another boom. What influence has the populist politics of recent years had?
Influence of unstable politics
After the internet bubble, several politicians came into politics one after the other, which could be labeled as populist. Think of Pim Fortuyn, Rita Verdonk and Geert Wilders. These politicians had and have different ideas for the Netherlands regarding how we should move forward with our country. This ensures that foreign countries continue to monitor our country with suspicion as to what further steps will be taken. Especially at the time when Wilders brought a minority coalition to power, the politics and economy radiated uncertainty. Unclear unstable politics ensures that the economy is also unstable, because incorrect decisions are made. It is necessary to get the country moving in the right direction again with a strong cabinet with clear agreements.
Working on improvement
Although the economy can pick up quickly, the foundation for this must be laid through unanimous politics and a clear policy. Unexpected elements such as the banking crisis and the European crisis have thrown a spanner in the works, causing the Dutch economy to falter. In order to restore a healthy economy, decisive decisions must be taken that can stimulate the economy. With the right political and economic stimulating measures, the economy can improve again, so that the country can recover. In any case, the first step has now been taken, because a more stable direction has been chosen within politics, which will allow the Netherlands to put its shoulders back on the economy again.
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