The introduction of social conscription in health care could be an option to deal with crises in the future. Klaas Knot, president of the Dutch Central Bank (DNB), said this in News hour.
The pandemic has shown that the Netherlands has too few care buffers for a time of crisis, says Knot. “It is not necessarily about new hospitals that we keep empty and where we turn on the lights once every twenty years. But it is about capacity, being able to scale up in crises. Apparently that capacity is not there either.”
Staff is the biggest bottleneck, and extra people “we cannot pull out of the ground all at once”, Knot admits. He thinks there are solutions to be able to scale up faster. “Of course, just as we used to have military service in the army, you could consider something of a social conscription towards nurses. But that requires preparation.”
‘Wait to cut back’
Knot is less concerned about the country’s finances. “The fact that we were able to support the Dutch economy so generously during corona is due to the fact that we had built up good buffers. Buffers in public finances, but also at banks. They had much better buffers this time.”
“The concern is the only exception. The vulnerability of this has been exposed and that seems to me to be something that should definitely be given attention in the cabinet formation.”
Outside of healthcare, Knot especially emphasizes the importance of not hastily cutting back on government spending. For example, wage support for companies should not be stopped too quickly, he believes. He is not so concerned about the growing budget deficit or the national debt. “If we look at the deficit in 2020 (about 6 percent, ed.), We estimate that about four percentage points is related to the current support measures. stop. “
“For the time being, we have to accept the rise in government debt due to corona as long as the economy is vulnerable. As long as interest rates are low, there is no need to accelerate repayments.”
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Knot is much more concerned about the housing market, where prices continue to rise rapidly despite the crisis. “The situation in the Dutch housing market is the consequence of a significant imbalance in the market: a major shortage of homes in all segments and we still have the policy in the Netherlands that the demand for houses is boosted financially as much as possible. both tax regulations, broad borrowing standards and here and there also well-intentioned initiatives towards the start-ups that ultimately only end up in higher prices. “
With the latter, Knot is referring to the abolition of transfer tax. Notaries and banks fear that this measure will be starters does not help in finding a home, but actually increases prices.
‘Interest rate low due to structural factors’
The high house prices are also partly the effect of the policy of the European Central Bank (ECB), in which Knot himself is involved. The ECB keeps the main interest rate at which banks can borrow money low in order to encourage people and companies to buy and invest more and thus increase inflation. Low interest rates are one of the factors that keep house prices high.
According to Knot, the interest on, for example, mortgages is mainly so low due to structural factors. “There are simply a lot more people who want to save at the moment than there are companies who are willing to invest. Those are changes that have actually been taking place for decades.”
Watch the entire conversation with Knot here:
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That is how the Netherlands stands economically
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