Major macro economic indicators
| | 2010 | 2011 | 2012(e) | 2013(f) |
|
GDP growth (%)
|
1.6
|
1.1
|
-0.9
|
-0.7
|
|
Inflation (yearly average) (%)
|
0.9
|
2.5
|
2.8
|
2.7
|
|
Budget balance (% GDP)
|
-5.1
|
-4.5
|
-4.1
|
-3.7
|
|
Current account balance (% GDP)
|
7.7
|
9.7
|
9.0
|
8.3
|
|
Public debt (% GDP)
|
63.1
|
65.5
|
71.2
|
74.5
|
| |
| (e) Estimate (f) Forecast |
- Port operations (Rotterdam, leading European port)
- Diversified exports (refined oil, natural gas, automotives, electrical equipment, IT equipment)
- External accounts in surplus
- Unemployment relatively low by international standards
- Public debt under control
- Very open economy, dependent on European economic conditions
- Banking sector shaken by the crisis
- Substantial household debt
- Ageing population, threatening the solvency of pension funds
Risk assessment
Severely weakened domestic demand
Hit by fiscal austerity, a slowdown in world trade and depressed private consumption, the country did not escape the recession in 2012. The economic gloom is expected to continue in 2013. Internal demand will remain depressed due to the weakness of real household income (limited wage rises, reductions in pension payments by some pension funds, high inflation), rising unemployment, the worsening property market, continued fiscal consolidation and under-utilisation of production capacity. Moreover, sales abroad will remain constrained due to weakening demand from the euro zone. The contribution of foreign trade to growth is, however, expected to remain slightly positive because of slower import growth. In this context, the Liberal and Labour party coalition government formed in November 2012 has abandoned the idea of complying with the European requirement of a deficit of 3% of GDP in 2013. The VAT rise in October 2012 has pushed up inflation, which is above the euro zone average.
Highly exposed to the external environment
Although the economic fundamentals remain sound (external accounts in surplus, public debt still contained), the country was considerably shaken by the financial crisis in 2008-2009, given its financial and commercial openness. Burdened by the cost of the American mortgage crisis, several banks had to be rescued by the government. In January 2013, the banking and insurance group, SNS Reaal, which ran into difficulty because of its property commitments, has joined the ranks of the banks nationalised in the wake of this crisis (ABN Amro and Fortis). As regards trade, the country has a satisfactory level of competitiveness and has gained market share in Europe (though this gain largely resulted from re-exporting). It remains, however, very sensitive to the international economic situation, given the economy’s high degree of openness (exports of goods and services represent over 80% of GDP) and the high geographic concentration of exports (63% go to the Eurozone).
Households over-indebted, banks and businesses bruised by the worsening of the economic situation
Property prices continued to fall and many property owners are seeing the value of their assets fall below that of their mortgages. This is particularly damaging in the Netherlands, where household debt has reached record levels (128% of GDP at the end of September 2012) due to the mortgage debt boom, itself favoured by tax deductions. The banking sector is facing a fall in its profits and a surge in non-performing loans because of the housing market deterioration and the recession. Finally, businesses, whose financial situation was rather sound in the past, are also seeing their profits sink. Bankruptcies grew by 21% in 2012, with construction and trade leading the way. At the same time, payment incidents recorded by Coface substantially increased.
MEANS OF PAYMENT AND COLLECTION METHODS
Bills of exchange are rarely used in the Netherlands because it is not standard business practice to do so. As in Germany, they signal mistrust on the part of the supplier and so are incompatible with the climate of trust needed to maintain a stable business relationship.
Cheques too are little used. They are an unreliable means of payment as they can be cashed only if covered. Consequently, issuing an uncovered cheque is not a criminal offence and those on the receiving end of a bounced cheque incur rather high bank charges.
Under Dutch law, bills of exchange and cheques serve mainly to substantiate the existence of a debt.
By contrast, bank transfers (Bankgiro) are by far the most common means of payment. All leading Dutch banks are linked to the SWIFT electronic network, which provides low-cost, flexible, and speedy processing of international payments.
Centralising accounts, based on a centralised local cashing system and simplified management of fund repatriation, are also widely used.
The collection process begins with the debtor being served with a formal demand for the payment of principal plus accrued interest. This is followed, where necessary, by the service of a summons to pay by bailiff or solicitor.
Where the sales agreement makes no mention of the interest rate, from 1st December 2002 the rate of interest applicable is the European Central Bank’s refinancing rate, marked up by seven percentage points. The rate in force before the first day of the six-monthly period concerned applies throughout that period.
In the absence of payment or an agreement, creditors may engage a local lawyer to initiate legal proceedings. The Dutch legal system allowed lawyers to act as both barristers and solicitors: as solicitors they practised within the jurisdiction of their registration, whereas as barristers they may plead cases before any court in the country.
Since 1st September 2008, the function of “solicitor” has been abolished, and lawyers themselves are now allowed to present the requisite documents before any court in the Netherlands. This change is intended to speed up court proceedings and reduce their cost.
At this stage of the legal action, effective pressure can be brought to bear on a debtor by means of a winding-up petition. Such petition can succeed without much difficulty provided two conditions are met: the applicant has submitted evidence of payment default on an undisputed debt claim to the civil court – there are no commercial courts – and a second claim of any kind (commercial, alimony, tax debt, and so on) exists.
Another procedure, also reserved for undisputed claims, involves recourse to a simplified fast track procedure (kort geding) in relatively widespread use, especially for civil claims.
With that procedure, the parties often accept the provisional award granted by the judge as final, thereby putting an end to additional dispute. The summary ruling thus obtained results in provisional execution even if the debtor lodges an appeal.
Ordinary proceedings in which both parties are heard are for the most part based on written submissions, with a simplified procedure before the cantonal court (kantongerecht) – a separate division within the court of first instance – for claims under 5,000 EUR or for employment disputes.
Larger claims are heard by the court of first instance itself (Rechtbank), whereby both parties argue their case via written submissions.
Unless the parties expressly request the right to make an oral submission, which is rarely the case, the judge bases his ruling on the principal case documents provided by the parties after they have appeared in court (notably to seek an out-of-court settlement).
For complex cases requiring special investigation, the judge will follow a more formal procedure based on the respective examination of briefs (conclusie van repliek) and counter-briefs (conclusie van dupliek) of each opponent.
Then, he will hand down its judgment.
In such matters, the judge will carefully assess the parties’ compliance with the general terms and conditions of sale appearing on invoices and purchase orders, since they form the legal framework of the commercial contract and thus play a crucial role in the proceedings.
Finally, recourse to arbitration is common in the Netherlands. Most arbitration bodies work in specific fields and arbitrators are often selected from among specialist lawyers. Arbitral awards tend to be based on equity rather than on legal considerations.
