Dutch business climate continues to decline, hindering innovation in tech sector

Unpredictability and instability

According to the report, two-thirds of Dutch companies have rated the Dutch business climate with a pass, and one-third with a fail. Companies with international operations and companies active in sectors such as agriculture, heavy industry, energy, and construction, are generally less positive than companies that focus on the domestic market or are active in the so-called office sectors, such as the IT sector and business and financial services.

While factors such as quality of life, digital, physical, and knowledge infrastructure, and proximity of stakeholders contribute to a higher rating, the availability of physical space, financing options, and sentiment about the business community are predominantly rated neutral or just below that. Although the presence of talent has been rated positively, this has decreased significantly compared to two years ago, the report adds.

Factors such as tax climate, facilitating legislation, and energy infrastructure have seen the greatest decrease, and are also among the least positively valued elements. This year, the research also included the stability and predictability of government policy, which immediately scored the lowest of all factors. This is also reflected in in-depth questions about the tax climate, in which the unpredictability of tax arrangements is the most important factor in the low rating, the report adds. 

Hindering technological innovation

The Dutch business climate will have implications for the development of the Dutch technology sector, experts warn. With more funding, more opportunities, and fewer rules, countries such as the United States make it easier for entrepreneurs to scale up their businesses.

Earlier this year, former CEO of the European Central Bank Mario Draghi already warned about the departure of start-ups from Europe in his report on European competitiveness. As geopolitical stability is waning, our dependencies have turned out to be vulnerabilities, Draghi pointed out in the report.

The productivity gap between the EU and the US is largely explained by the tech sector, the report added, which is mainly caused by the fact that Europe already largely missed out on the digital revolution led by the internet and the productivity gains it brought. In an era where technological change is accelerating rapidly, Europe’s need for growth is therefore rising.

However, the EU is weak in the emerging technologies that will drive future growth. Only four of the world’s top 50 tech companies are European. Between 2008 and 2021, at least 40 of the 147 very successful start-ups left Europe, companies that eventually became worth more than a billion dollars. The vast majority of these companies settled in the US.

It is up to Europe to stimulate the start-ups with a lot of growth potential, as they are an important element for the European economy in the long term, Draghi highlighted.

Taking action

The importance of stimulating innovation is also recognized by the Dutch Minister of Economic Affairs, Dirk Beljaarts, who organized a first business summit in Eindhoven yesterday. Beljaarts stated that he is coming up with an action plan together with the business community, in which he will look at how the business climate in the Netherlands can be improved in the coming years.