With an energy mix comprised of nearly 90% fossil fuels, the Netherlands have been hit by the full brunt of the sharp rise in oil and gas prices since the outbreak of the Russia-Ukraine war. As a result, the Netherlands has one of the highest inflation rates in Europe. Even so, household consumption is resilient, and the majority of companies esteem that business will remain vigorous in the months ahead. Thanks to this strong performance, the government has been able to focus on a limited series of support measures while continuing to reduce the debt of public administrations. Yet the Netherlands also faces another type of inflation that is just as alarming: house price inflation. With too few houses to cover all of the country’s needs, residential housing prices have soared 29% since year-end 2019.
Despite limited dependence on Russia (which supplies only 23% of the energy used by the Netherlands), the country faces a veritable challenge since nearly 90% of its energy mix is comprised of fossil fuels. To diversify suppliers, the Dutch government is relying on its port infrastructure (Rotterdam is Europe’s biggest port) by increasing the use of liquefied natural gas (LNG). This should help offset fewer imports from Russia as well as the October 2022 closing of the Groningen natural gas field, the biggest in Western Europe, which once covered 40% of the country’s natural gas needs.
