Prof. Elmer Sterken: ‘The Queen’s speech is too often without vision’

Whether or not the contents of the Dutch Budget are leaked before Prinsjesdag is barely relevant, in the opinion of Elmer Sterken. ‘What’s actually important is the question whether the cabinet has finally dared to be decisive. No more patches, but long-term investment’, according to the professor of Monetary Economics. ‘Only then will the Dutch economy be able to play a meaningful role internationally.’

Sterken does not have very high expectations of Prinsjesdag, however: ‘I think there’s going to be a bit of everything as usual. Short-term solutions like partial unemployment benefit and more social resources to support the unemployed. These are the typical results of a coalition cabinet; safe, searching for consensus. Although these things are needed too, they should also be tackling the structure of the economy. I fear that the cabinet is once again going to choose not to in the Budget. We’re going to continue eating into our capital.’

Be honest

Sterken: ‘The Queen’s speech is too often without vision. There was nothing memorable at all in last year’s. Be honest in the Queen’s speech, and above all realistic. Don’t be like last year, when the first signs of the credit crisis became clear. It was already clear that we in the Netherlands would also be affected. Nevertheless, the cabinet continued to deny it until January this year. The result was that we started to think about solutions far too late.’

Take a stand

The cabinet should learn an important lesson from this, thinks Sterken. ‘Dare to take a clear stand – that’s what we’ve learned and that’s what we’re going to do. Above all, invest in innovation and the role of knowledge.’ In Sterken’s view, that’s the way the cabinet should go. ‘And do something about youth unemployment. We’re losing a lot of capital there.’

Less important

The commotion around the secrecy of the Budget is exaggerated, thinks Sterken. ‘It’s less and less relevant for the economy to wait for Prinsjesdag. We know roughly which way things are going. In the past there was just one moment in the year when we got the figures about the Dutch economy. Nowadays I think a prognosis from two months ago is out of date. In addition, the Netherlands is no longer a major international player.’

Increasing purchasing power

Although the deficits in the budget are significant, for most people in the Netherlands the effects of the economic crisis in the Netherlands are not too bad this year, states Sterken. ‘Generally speaking, the Dutch consumer will even be a bit better off. The salaries are fixed and prices are falling. As a result purchasing power has risen by two percent.’

Breeding ground for knowledge economy

However, this is not to say that the economy is in good shape, Sterken hastily adds. ‘Here in the Netherlands we will mainly be affected by the second order effect. The worst problems for us will be that people will lose their jobs.' Even there, however, Sterken sees possibilities for the cabinet to demonstrate decisiveness by investing in the knowledge economy. ‘The returns on a degree are high. Create a breeding ground for the idea that knowledge is important. Offer people the opportunity to study, to train themselves. The Netherlands is too small for major industries, we have to concentrate on human capital.’

Curriculum Vitae

Elmer Sterken (Apeldoorn, 1961) has been Professor of Monetary Economics since 1994. He studied Econometrics in Groningen and gained his PhD in Economics at the University of Groningen in 1990. He then went on to become Assistant Professor (UD) and Associate Professor (UHD) of Macroeconomics and in 1994 he took the position of Full Professor. In addition, he also held numerous other positions, such as visiting professor at universities in Munich, Kobe and Atlanta. Sterken is also and advisor for Theodoor Gilissen N.V. Amsterdam.

Note for the press

For more information: Elmer Sterken , tel. (050) 363 38 27 (work), e-mail: e.sterken@rug.nl