EcoFlash

A liberal victory at the general election

ECO FLASH  
N°21-04  
22 March 2021  
NETHERLANDS: A LIBERAL VICTORY AT THE GENERAL ELECTION  
Raymond Van der Putten  
The VVD (conservative free-market  
THE MAIN PARTIES IN THE DUTCH GENERAL ELECTION  
liberals) and D66 (social liberals) were the  
Party  
Orientation  
Seats at the second chamber  
big winners at the general election held  
on 17 March, by gaining 35 and 23seats,  
respectively. However, the CDA (Christian  
Democrats) lost heavily.  
2
017  
33  
19  
20  
19  
9
2021  
35  
23  
17  
15  
9
VVD  
D66  
PVV  
CDA  
PvdA  
SP  
Party for Freedom and Democracy  
Democrats 1966  
Conservative liberals  
Social liberals  
Populist right  
Christian democrats  
Social democrats  
Radical left  
Freedom Party  
Christian Democratic Appeal  
Labour Party  
The populist right won slightly as the losses  
at the PVV were compensated by a huge  
gain by the FvD, which had campaigned  
against the lockdown measures.  
Socialist Party  
14  
2
9
FvD  
GL  
Forum for Democracy  
Green Left  
Populist right  
Greens  
8
14  
5
8
PvdD  
CU  
Party for the Animals  
Christian Union  
Animal rights  
Protestants  
6
5
5
Others  
Total  
10  
16  
150  
150  
The parties on the left suffered severe  
losses and tumbled from 37 seats in the  
old parliament to only 26. In particular, the  
losses of the Greens were surprising given  
the importance of environmental issues for  
the Dutch electorate.  
SOURCE: PRELIMINARY RESULTS ACCORDING TO THE DUTCH PRESS AGENCY ANP  
The liberal parties won the general election  
The liberals were the great winners at the Dutch general election held on 17 March. The VVD  
conservative free-market liberals) headed by prime minister Mark Rutte gained 35 seats  
(
and became again the country’s largest party. This was largely based on the prime minister’s  
management of the corona-crisis. Thanks to a rather mild lockdown, the Netherlands fared  
better in economic terms than the surrounding countries. In 2020, the economy shrank by  
As the country has been going through  
the worst crisis since World War II, the  
formation of a new and stable government  
is highly desirable. Given the election  
results, the government formation period  
can be relatively short, in particular if the  
CDA is willing to join VVD and D66. Prime  
minister Mark Rutte has already expressed  
his preference for such a coalition.  
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.8% compared with contractions of 4.9% in Germany, 6.4% in Belgium and 8.2% in France.  
A contributory factor was the good fiscal position, which gave the Dutch government more  
fiscal leeway in softening the impact of the lockdown measures. However, the health record,  
broadly similar as the one in France, was much worse than in Germany.  
The greatest surprise was the good performance of the Democrats 66 (social liberals), a  
coalition partner of the VVD in the outgoing Rutte government. In the past couple of months,  
opinion polls had predicted severe losses for this formation. However, in the final week, the  
leader of the Democrats, foreign trade minister Sigrid Kaag, turned out to be an excellent  
debater and succeeded in turning the tide for her party. In the end, it obtained 23 seats, close  
to the party’s record in 1994 (24 seats).  
However, the CDA (Christian Democrats), the other major coalition partner, lost heavily. This  
was partly due to the lack of preparation by its leader, finance minister Wopke Hoekstra, who  
at the last moment stepped in for the designated leader, the health minister Hugo de Jonge,  
who was too much involved in the corona-crisis. Moreover, many traditional CDA voters  
considered the finance minister to be too close to the prime minister and lacking the social  
fibre of the Christian Democrats.  
The bank  
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world  
Eco Flash 21-04 // 22 March 2021  
economic-research.bnpparibas.com  
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The parties on the extreme right of the political spectrum did slightly The two scouts should report to Parliament not later than on 30 March.  
better compared to four years earlier. The anti-immigration party PVV On 31 March, the newly elected Chamber will convene for the first  
lost 3 seats, but with 17 seats in the new parliament, it is still the third time. The main agenda point will be to discuss the scouts’ report and  
party of the country. The campaign against the government’s corona decide on the nomination of one or two “informateurs”. These are  
policy by Forum for Democracy, the other major populist party, paid off. normally veteran politicians coming from the major parties involved  
The Forum won 8 seats, 6 more than in the previous parliament.  
in the government formation. Their task is to work out a coalition  
agreement. Once the agreement has been established, the King will  
nominate the “formateur”, who will select the ministers for the new  
government.  
The parties on the left suffered severe losses. They tumbled from  
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7 seats in the old parliament to only 26. The Labour Party (PvdA,  
social democrats) just managed to hold on to their meagre score of 9  
seats obtained in 2017. The party had expected a much better result A formation period can be very long. In 2017, it lasted 225 days in total,  
following its strong performance in the latest European election. a historical record. However, as the country has been going through  
However, the party was severely tainted by a scandal concerning false the worst crisis since World War II, the rapid formation of a new and  
accusations of fraud with childcare benefits that was revealed a couple stable government is highly desirable. Given the election results, the  
of months before the election. The environmentalist party Green-Left government formation period could be relatively short, in particular if  
(
GL) and the Socialist Party (radical left) suffered severe losses. In the CDA is willing to join.  
particular, the losses of GL were surprising given the importance of  
environmental issues for the Dutch electorate. It is possible that many  
voters were disappointed that GL had chosen the opposition after its  
impressive gains in 2017. As a result, they might have thought that D66  
The government programme depends on the parties participating  
in the coalition. Nevertheless, it is already sure that a new coalition  
is likely to pursue a prudent fiscal policy once the recovery is well  
underway. The budget rules that were in place before the crisis are  
likely to be restored in order to lower government debt. All parties have  
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was a better bet for a strong environmental policy.  
Many new parties will enter parliament. The most remarkable debut learned from the current crisis that it pays to have a healthy budget.  
was that of Volt, a pan-European social liberal party, which obtained  
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Moreover, the increase in force of D66 should also be felt. The new  
seats.  
government is likely to be more Europe-oriented. Nevertheless, given  
his party supporters and the pressure from the populist right, Mark  
Rutte should remain a tough negotiator in Brussels. Moreover, more  
emphasis will be given to climate policies, education and social equity,  
which are all dear to D66.  
What next?  
It is now up to parliament to decide the next steps. The chair of the  
second chamber has already nominated two scouts, one member  
of the VVD and one of D66, to explore the possibility of forming a  
majority government. The most logical choice is the continuation of  
the old coalition. A coalition of VVD, D66, and CDA would have 73 seats  
raymond.vanderputten@bnpparibas.com  
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in parliament, three short of the majority . They need the support of  
at least a fourth party to get the majority. An obvious choice is the  
new party Volt. The scouts could also investigate the possibility of a  
government on the left, a so-called purple coalition. The combination  
of VVD, D66, PvdA and GL would have 75 seats in parliament.  
A minor problem with both combinations is that the government  
will not have a majority in the first chamber, the Senate. The Senate  
cannot send a government away, but can obstruct major legislation.  
The composition of the first chamber will change in 2023, after the  
provincial council elections.  
A more serious problem is that both the CDA and the left wing parties  
may be reluctant to join, as they had disappointing results. These parties  
have to balance the risk between participating or remaining on the  
sideline. In the end, traditional government parties such as the CDA or  
the PvdA have everything to gain in joining a new government. Staying  
on the opposition benches implies that their major politicians do not  
anymore enjoy the limelight that comes with ministerial responsibility.  
As for GL, it might be profitable to join, as it could achieve more for its  
voters on environmental issues, than by remaining in the opposition.  
On election night, the prime minister made it clear that he would  
prefer continuing the coalition with the Christian Democrats, who are  
closer to him in political terms.  
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The Netherlands Bureau for Economic Policy Analysis (CPB) has analysed the budgetary and economic consequences of the elections programmes. According to its calculations, the pro-  
grammes of GL and D66 are best for reducing CO2 emissions.  
The Christian Union is unlikely to re-join the new government.  
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