Rating action

Scope Ratings GmbH (Scope) has today affirmed the Netherlands’ long-term local and foreign currency issuer and senior unsecured debt ratings at AAA. Scope has also affirmed the short-term issuer ratings at S-1+ in local and foreign currency. All Outlooks are Stable.

The Netherlands’ AAA ratings are underpinned by the following credit strengths: i) the country’s wealthy, diversified and competitive economy; ii) sound public finances and moderate levels of public debt; and iii) a solid external position, driven by consistent current-account surpluses, increasing the country’s resilience to economic shocks.

Challenges relate to: i) vulnerabilities in the Dutch financial system, associated with elevated housing prices and high levels of household debt; ii) sensitivity of the economy to global developments as a highly open economy; and iii) labour-market dualities with a high share of persons employed part-time.

For the updated rating report, click here.

Key rating drivers

A wealthy and competitive economy. The Netherlands’ AAA credit ratings are anchored by a wealthy, highly diversified and competitive economy. After a decline in real GDP growth of -0.6% in 2023, driven by high inflation and rising interest rates curbing domestic private consumption and investment, the economy recovered in 2024, with real GDP growing by 1.1%¹. This was mainly driven by an increase in household consumption supported by strong wage growth and tax cuts, as well as higher public spending, which continued to support growth in the first half of 2025.

Scope expects real GDP to grow by 1.6% in 2025 and 1.1% in 2026. Despite this resilience, the Dutch export-oriented economy faces headwinds amid heightened global trade uncertainties, including higher US tariffs. While only 5.9% of total goods export are to the US², broader disruption in global trade and the consequent economic slowdown in trading partners is likely to reduce demand for Dutch goods and lead companies to postpone investments.

HICP inflation declined from 4.1% in 2023 to 3.2% in 2024 as pressures on food and energy prices eased. However, elevated nominal wage growth and higher excise taxes contributed to inflation remaining at 2.5% in July 2025, above the 2.0% euro area average. Scope projects HICP inflation to gradually decline over the coming years, but remain above euro area averages, reaching 2.9% in 2025 (EA: 2.1%) and 2.4% in 2026 (EA: 1.9%).

The Dutch labour market has remained tight in recent years, as many employers retained workers despite the economic slowdown. This resulted in a decline in labour productivity while the employment rate remains high at 73% as of Q1 2025, well above the EU-27 average of 61.9%. At the same time, the unemployment rate stayed low at 3.7% in 2024. While staff shortages persist, the number of vacancies has constantly declined over the past two years, signalling a gradual easing in labour market tightness. Still, the job vacancy rate remains high at 4.2% in Q1 2025, almost double the EU-27 average of 2.2%. Scope projects the unemployment rate to rise moderately to 3.8% in 2025 and 4.1% in 2026, amid increasing labour supply.

Sound public finances and excellent capital market access. Netherlands’ AAA credit ratings are further anchored by robust public finances, with moderate government debt. Prudent fiscal management and significant government underspending helped to contain budget deficits after the pandemic at only 0.4% of GDP in 2023 and 0.9% in 2024. Increases in government spending focussed on support measures against high inflation and energy prices, as well as higher social and wage expenditure. Scope expects the headline fiscal deficit to widen to 2.2% of GDP this year and 2.9% in 2026, before reaching almost 3% of GDP by 2030. This is mostly driven by an increase in spending on healthcare and social security amid an ageing population, higher defence expenditure as well as rising financing costs. In 2026 one-off spending of around EUR 8bn (0.7% of 2024 GDP) will weigh particularly on the deficit, due to accounting changes for military pensions, which will now be financed directly through the fund for employees in the government and education sectors.

The 2025 Spring Budget Memorandum presented in April outlined a package of fiscal measures aimed at preserving Netherlands’ trend-based budgeting approach, thereby supporting continued control of public finances amid economic uncertainty. Proposed policy measures include the phasing out of selected tax reliefs by 2030, increased funding for childcare and housing, targeted cuts in higher education, and increases in defence spending to 3.5% of GDP in the medium-term.

General government debt declined steadily from 53.3% of GDP in 2020 to 43.7% in 2024. Scope expects the debt-to-GDP ratio to remain stable at around 43.5% this year, before increasing to 44.6% in 2026 and to 49.6% by 2030. The increase is driven by rising public expenditure pressures and gradually declining public underspending. The Annual Progress Report presented in May 2025 reported an estimated cumulative net expenditure growth for the Netherlands of 26.9% between 2023 and 2028, above the 21% limit recommended by the European Council. However, continued prudent fiscal management ensured that the country remains compliant with the European fiscal rules³.

Moreover, Scope considers the Dutch government to retain fiscal flexibility, including strong market access despite the marked rise in funding costs. Benchmark 10-year yields averaged 2.8% over the first eight months of 2025 – near 2010-11 highs, reflecting tighter global funding conditions. Outstanding Dutch state securities carry a long weighted-average maturity of around 9 years, resulting in only gradual feed-through of higher market rates to interest payment burdens.

Solid external position. The current account surplus increased from 6.8% of GDP in 2022 to 9.4% in 2023, remaining stable in 2024 (+9.1% of GDP)⁴. The increase was mostly due to an improvement in the goods trade balance, driven by a decline in imports amid lower energy prices and a partial recovery in the export performance in 2024. This was complemented by elevated, though stabilising, primary income inflows from higher global interest rates and robust FDI-related earnings. Goods and services exports are the biggest contributors to the positive current account balance, compensating the negative contribution from primary and secondary income. External resilience is furthermore bolstered by the country’s net external creditor position, reflected in a positive NIIP of 56.1% of GDP as of Q1 2025.

Rating challenges: high household debt, high sensitivity of the economy to global developments and labour market duality.

Private-sector indebtedness has declined steadily over the past five years, from 248% of GDP in 2020 to 202% in 2024, remaining well below the 2014 peak of 274%. High inflation and low net credit growth contributed to this decline, although private debt in the Netherlands remains one of the highest in Europe.

Vulnerability is particularly acute for households whose debt amounted to 93% of GDP as of Q1 2025 – almost entirely composed of mortgage loans – well above the euro area average of 51% of GDP. However, the ratio has declined since 2021 due to a steady rise in house prices since early-2024 and voluntary repayments of mortgage debt resulting in lower loan-to-value ratios. Low financing costs over the previous decade, a generous tax deductibility of mortgage interest, as well as the possibility of mortgages up to 100% of the property value have encouraged debt accrual. Since the second half of 2022 the share of mortgages with interest rates fixed for more than 10 years has been declining steadily, from a peak of 62.1% of total mortgages in May 2022 to 16.9% in June 2025, most likely due to households’ anticipation of lower interest rates at the time of refinancing. Nevertheless, the prevailing interest rate fixation period remains relatively long, between 5 and 10 years, accounting for 58.3% of total mortgages as of June 2025. This helps limit the risk of increasing non-performing loans for banks. Potentially higher credit risks for banks could stem from the exposure to companies in sectors particularly vulnerable to heightened global trade uncertainty and more restrictive US trade policy. This applies in particular to the manufacturing industry, accounting for around 18% of the total non-financial corporate loan portfolio of Dutch banks. However, the share of total sales directly destined to the US for this sector remains low at 5%⁵.

Housing prices have recovered strongly, increasing by 8.7% in 2024 and 10% in the first seven months of 2025. Solid wage growth, slightly lower mortgage interest rates and continued tightness in the housing market supported the price increases. The strong growth could be a sign of potential overvaluation as heightened economic and financial uncertainty could result in a market correction. Nevertheless, the Dutch banking system is well-positioned, retaining a strong capital position (Tier 1 ratio at 18.7% as of Q1 2025), good asset quality (overall NPL ratio stable at 1.6%) and solid liquidity. Banks’ profitability has also been supported by higher interest margins (64% of gross income over 2023-24) and stronger return on equity averaging around 12%.

The Netherlands, as a highly open economy, is integrated within regional and global markets, raising its sensitivity to economic and financial-market shocks. Exports of goods and services represented around 84% of GDP in 2024, well above the share of most AAA-rated peers’ economies. External debt is elevated – 354.6% of GDP as of Q1 2025, having nevertheless decreased substantially over recent years, from 2015-16 highs of around 600%. Most external debt is owed by non-monetary financial institutions (45.3% of total), followed by monetary financial institutions (29.1%) and non-financial corporations (18.2%). 42% of total external debt is short-term. However, euro-area membership enhances the economy’s resilience to external crises, with the European Central Bank and European Stability Mechanism acting as lenders of last resort and the euro representing one of the world’s preeminent reserve currencies.

Finally, Scope observes that despite the high level of employment, the Dutch labour market displays structural dualities with many persons employed on part-time bases or self-employed, on average earning lower salaries than full-time employees and having more limited social protections. Above 40% of the Dutch workforce (aged 15-64 years) is currently employed part-time – the highest such share of the EU and twice the euro-area average. As a result, the average number of hours worked per employee in the Netherlands is the lowest of the EU: 30.8 hours a week (2024). The authorities have introduced measures aimed at tackling issues related to dualities of the labour market, such as reduction in the tax deduction for self-employment and introducing disability insurance for self-employed. Recent efforts to strengthen social protection for the self-employment – particularly through enhanced enforcement against false self-employment – are constructive. These could be complemented by further recalibration of contract-related incentives to support investment in productivity-enhancing training.

Rating-change drivers

The Stable Outlook represents Scope’s view that risks to the ratings over the next 12 to 18 months are balanced.

Downside scenarios for the ratings and Outlooks are (individually or collectively):

1. Significant and prolonged deterioration in the fiscal outlook, including via a persistent steepening of the public debt trajectory over the long term.
    
2. A global or regional shock causing a significant drop in output and/or accentuated risk to Netherlands’ financial stability.

Sovereign Quantitative Model (SQM) and Qualitative Scorecard (QS)

Scope’s SQM, which assesses core sovereign credit fundamentals, signals a first indicative credit rating of ‘aaa’ for the Netherlands. Under Scope’s methodology, the indicative rating receives 1) one-notch positive adjustment from the methodological reserve-currency adjustment; and 2) no negative adjustment from the methodological political-risk quantitative adjustment. On this basis, a final SQM quantitative rating of ‘aaa’ is assigned for the Netherlands and reviewed by the Qualitative Scorecard (QS) where this rating can be adjusted by three notches up or down depending on the size of the Netherlands’ qualitative credit strengths or weaknesses compared against an SQM-assigned peer group of sovereigns.

Scope identified no QS relative credit strengths or weaknesses for the Netherlands. On aggregate, the QS therefore generates no adjustment for the Netherlands, resulting in final AAA long-term ratings.

A rating committee has discussed and confirmed these results.

Environment, social and governance (ESG) factors

Scope explicitly factors in ESG issues in its ratings process via the sovereign-rating methodology’s stand-alone ESG sovereign-risk pillar, which holds a significant 25% weighting under the quantitative model (SQM) and 20% weight under the methodology’s qualitative overlay (QS).

Environmental factors are explicitly considered in the rating process via the environment sub-category under the ESG pillar. The Netherlands receives high scores in SQM indicators measuring carbon emission per unit of GDP and exposure and vulnerability to natural disaster risks, but lower scores for greenhouse gas (GHG) emissions per capita and ecological footprint of consumption behaviour to available biocapacity. The Netherlands is at elevated risk of flooding and storm surge with half the nation lying below sea level. A long-standing environmental problem is related to high emission of nitrogen, for which further corrective measures were introduced. The Netherlands maintains legally binding climate targets, including a net reduction in GHG emissions by 55% relative to 1990 levels by 2030, before reaching climate neutrality by 2050. Nevertheless, the current government coalition has reverted to the minimum EU-mandated 2030 target, abandoning the previous more ambitious pursued buffer of 58%-60%. The reversal of key measures proposed by the previous cabinet – such as ending subsidies for electric vehicles, cancelling energy tax hikes, and granting agricultural concessions – may hinder the compliance with EU climate obligations. According to estimates from the Netherlands’ Environmental Assessment Agency (PBL) currently planned measures are likely to deliver only a 44%-52% reduction in GHG emissions by 2030 if not complemented with additional policies⁶. Beyond the SQM, Netherlands’ environmental policies and challenges are considered by a QS assessment for the ‘environmental factors’ category, evaluated at ‘neutral’ against the sovereign peer group.

Factors related to the Netherlands’ social profile are captured in Scope’s SQM, where the country shows an elevated and increasing old-age dependency ratio, although in line with the ageing developments of many western peer economies. Income inequality – as captured in the SQM by the ratio of the income share of the poorest 50% of persons – is low under an international comparison and comparable with that of Netherlands’ sovereign peer group. Furthermore, labour-force participation of around 86% of the active labour force (aged 15-64) is well above the euro-area average. Under the complementary QS assessment, the ‘social factors’ category is evaluated at ‘neutral’, indicating social outcomes in line with those of ‘aaa’ sovereign peers. This reflects a low share (15.4% in 2024) of the population at risk of poverty or social exclusion and strong educational outcomes, such as strong scholastic performance of students across mathematics, reading and sciences dimensions according to 2022 PISA results⁷. Social challenges include labour-market duality with a high share of part-time workers. Longer run, an ageing population stresses budgetary outcomes, with aggregate ageing-associated costs estimated to rise from 21% of GDP in 2022 to 23.1% by 2040⁸.

Under governance-related factors captured in the SQM, the Netherlands scores well on a composite index of five World Bank Worldwide Governance Indicators, in line with the performance of the other AAA-rated sovereign peers, although scoring for a sixth indicator of political stability has moderately weakened over recent years. In June 2025 the government coalition led by Prime Minister Dick Schoof collapsed following the withdrawal of the far-right Party for Freedom (PVV) over disagreements on migration policies, followed by the centrist New Social Contract Party exiting the coalition due to foreign policy tensions. The current administration – led by the conservative-liberal VVD and the Farmers’ Citizen Movement (BBB) holds a caretaker status, with limited mandate for new policy initiatives. Snap elections have been scheduled for 29 October 2025. The current political environment remains highly fragmented, signalling potential challenges in forming a new government coalition.

Rating committee
The main points discussed by the rating committee were: i) Netherlands’ economic performance and outlook; ii) fiscal policy, the budget deficit and government debt levels and trajectory; iii) external risks; iv) financial stability risks; and v) peer developments.

Rating driver references
1. Netherlands Bureau for Economic Policy Analysis (CPB)
2. Dutch State Treasury Agency (DSTA)
3. Dutch Ministry of Finance
4. De Nederlandsche Bank (DNB)
5. De Nederlandsche Bank (DNB)
6. Netherlands Environmental Assessment Agency (PBL)
7. OECD
8. European Commission

Methodology
The methodology used for these Credit Ratings and Outlooks, (Sovereign Rating Methodology, 27 January 2025), is available on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The model used for these Credit Ratings and Outlooks is (Sovereign Quantitative Model Version 4.1), available in Scope Ratings’ list of models, published under scoperatings.com/governance-and-policies/rating-governance/methodologies.
Information on the meaning of each Credit Rating category, including definitions of default, recoveries, Outlooks and Under Review, can be viewed in ‘Rating Definitions – Credit Ratings, Ancillary and Other Services’, published on scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Historical default rates of the entities rated by Scope Ratings can be viewed in the Credit Rating performance report at scoperatings.com/governance-and-policies/regulatory/eu-regulation. Also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): registers.esma.europa.eu/cerep-publication. A comprehensive clarification of Scope Ratings’ definitions of default and Credit Rating notations can be found at scoperatings.com/governance-and-policies/rating-governance/definitions-and-scales. Guidance and information on how environmental, social or governance factors (ESG factors) are incorporated into the Credit Rating can be found in the respective sections of the methodologies or guidance documents provided on scoperatings.com/governance-and-policies/rating-governance/methodologies.
The Outlook indicates the most likely direction of the Credit Ratings if the Credit Ratings were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The Credit Ratings were not requested by the Rated Entity or its Related Third Parties. The Credit Rating process was conducted:
With Rated Entity or Related Third Party participation    YES
With access to internal documents                                  NO
With access to management                                            NO
The following substantially material sources of information were used to prepare the Credit Ratings: public domain and Scope Ratings' internal sources.
Scope Ratings considers the quality of information available to Scope Ratings on the Rated Entity or instrument to be satisfactory. The information and data supporting these Credit Ratings originate from sources Scope Ratings considers to be reliable and accurate. Scope Ratings does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the Credit Rating action, the Rated Entity was given the opportunity to review the Credit Ratings and Outlooks and the principal grounds on which the Credit Ratings and Outlooks are based. Following that review, the Credit Ratings and Outlooks were not amended before being issued.
 
Regulatory disclosures
These Credit Ratings and Outlooks are issued by Scope Ratings GmbH, Lennéstraße 5, D-10785 Berlin, Tel +49 30 27891-0. The Credit Ratings and Outlooks are UK-endorsed.
Lead analyst: Alessandra Poli, Analyst
Person responsible for approval of the Credit Ratings: Eiko Sievert, Executive Director
The Credit Ratings/Outlooks were first released by Scope Ratings in January 2003. The Credit Ratings/Outlooks were last updated on 11 October 2024.

Potential conflicts
See scoperatings.com under Governance & Policies/Regulatory for a list of potential conflicts of interest disclosures related to the issuance of Credit Ratings, as well as a list of Ancillary Services and certain non-Credit Rating Agency services provided to Rated Entities and/or Related Third Parties.

Conditions of use / exclusion of liability
© 2025 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Ratings UK Limited, Scope Fund Analysis GmbH, Scope Innovation Lab GmbH and Scope ESG Analysis GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5, D-10785 Berlin. Public Ratings are generally accessible to the public. Subscription Ratings and Private Ratings are confidential and may not be shared with any unauthorised third party.