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Gridlock: how the Netherlands is standing still in times of turmoil

Writer's picture: Lindblom Public Affairs - Public Relations Lindblom Public Affairs - Public Relations
11 minutes ago5 min read

Dutch politics is stuck. The current cabinet, led by Prime Minister Dick Schoof, appears unable to govern effectively, as crises stack up without solutions in sight. A combination of internal political squabbling, short-term fixes, and external pressures has brought the Netherlands to a halt. Here are five key reasons for this deadlock and the mounting risks for both domestic stability and international credibility.

 

No Improvement with Housing Crisis


The Dutch housing crisis, arguably the country’s most pressing issue, is as bad as ever, and the government has little to show in the way of solutions. High taxes on new construction have become increasingly problematic for housing associations that seek to build homes, putting the brakes on much-needed development.[1] The result is an ever-worsening housing shortage, with no relief in sight.

 

Adding to the crisis is a newly introduced rental law, which caps the amount of rent that can be charged for a rental home. The law was meant to counter soaring rental prices – however, home owners that previously rented out their properties decided to sell those properties en masse in fear of losing income, causing the number of available rental units to plummet to an all time low.[2] 

 

Logically, this has placed even greater strain on the housing market. Rental properties have become nearly impossible to find. The few that are available come with high price tags, although high prices are usually not the biggest problem for home-seekers: it is not uncommon for hundreds of people to express interest in a single available rental unit.[3] Meanwhile, for those looking to buy, home prices continue to break records every month, pushing both buyers and renters further into financial distress.[4] The Dutch housing market is in gridlock, with affordability at an all-time low and seemingly little political power to reverse the trend.

 

‘Hardline’ Asylum Policy


Asylum Minister Marjolein Faber's self-titled ‘hardline’ asylum policies, meant to discourage asylum seekers from coming to the Netherlands, have yet to deliver their promised effects. Reception centres are often at capacity, the system is clogged, and municipalities are sounding the alarm over liveability.[5] The government’s ‘tough’ measures seem to have deepened the chaos it inherited. A recent, controversial push to keep refugees with staying permits out of social housing will increase the pressure on the ‘asylum chain’, with local governments struggling to figure out how to house this growing group.[6] Minister Faber’s approach has often been labelled unprofessional by both media and politicians due to her lack of communication and persistence in pursuing policies that are projected to have the opposite of their desired effects, dampening the mood among cabinet members over her unconventional way of operating.[7]

 

Doubling of Defence Budget?


As the U.S. steps back from European security, the Netherlands is under pressure to boost its defence spending. Voices are calling for the defence budget to be increased to 4% of GDP.[8] However, finding the financial means and personnel to seriously improve the Netherlands’ defence will be difficult. To illustrate: there have been ongoing debates for weeks on how to find €1,3 billion to close out the current budget.[9] Doubling defence expenditures in the future would necessitate a much more significant chunk of the budget to be reallocated, leaving the question how likely it is that this is feasible. Without urgent action, the Netherlands and the EU risk being unprepared for the shifting global security landscape.

 

Prime Minister Schoof’s Lack of International Experience


Adding to the Netherlands’ unpreparedness in the shifting global security landscape is its current prime minister. Where former PM Mark Rutte once kept the Netherlands firmly on the global map, current PM Dick Schoof struggles to make an impression. His lack of diplomatic experience is particularly glaring now, as Europe faces mounting geopolitical uncertainty.[10] Without strong leadership at the international table, the Netherlands’ formerly impressive influence is fading, adding to the growing sense of political paralysis. Even some who were once critical of Rutte’s leadership now find themselves wishing he was still in charge.

 

Looming Trade Problems


A potential trade war with the United States and a weakening German economy spell trouble for Dutch exports. As an economy highly dependent on trade, the Netherlands is particularly vulnerable. In response, Foreign Trade Minister Reinette Klever has intensified diplomatic efforts, engaging in direct negotiations with Washington to secure exemptions for key Dutch exports like steel and aluminium. She has also advocated within the EU for a united stance against U.S. tariffs and is exploring alternative markets to mitigate the potential fallout.[11] However, without a clear long-term economic strategy, concerns persist that the Netherlands is reacting rather than leading.

 

Compounding these risks is the economic slowdown in Germany, the Netherlands' largest trading partner, accounting for 23% of Dutch exports. The German industrial sector, particularly automotive manufacturing, is struggling, with Volkswagen reporting a 64% drop in profits and facing potential layoffs. Dutch businesses reliant on German demand, especially in logistics, electronics, and supply chain industries, are beginning to feel the impact. As economists warn: “When Germany sneezes, the Netherlands catches a cold.”[12] With economic uncertainty mounting on both sides of the Atlantic, the Netherlands faces a precarious future unless decisive action is taken to protect its trade interests.

 

Is a Government Crisis Imminent?


Political deadlock, economic uncertainty, housing gridlock: the current state of affairs seems bleak. In the past few weeks, messages have come out multiple times that a cabinet fall was ‘imminent’, showcasing the instability of the current situation.[13] The inexperienced PM Schoof seems incapable of getting much-needed work done domestically while failing to impress on the international stage as well. With early elections looming and public patience running thin, the cabinet seems to be running out of time to prove it can actually govern.

 

It is telling that The Netherlands Institute for Social Research (SCP) recently announced that higher-educated Dutch people have lost significant confidence in the ability of Dutch politics to truly solve problems over the past six months.

 

What This Means for International Clients


Political stagnation isn’t just a domestic issue. Companies considering investment in Dutch infrastructure and real estate now face a volatile environment, where policy flip-flops and housing shortages disrupt long-term planning. International trade partners, once confident in the Netherlands as a stable gateway to Europe, are growing wary amid economic slowdowns and policy uncertainty. Defence and technology industries relying on state-backed contracts are seeing instability creep into strategic collaborations. In short, the Netherlands is at risk of losing its reputation as a predictable, business-friendly environment. Without strong leadership and a course correction, the country risks being seen not as an investment haven, but as a liability.

 


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