Ernst & Young recently issued a Barometer on the Dutch Business Climate, which reveals that the Netherlands is now financially underperforming its European neighbours.

Fall from glory

Throughout the 1990s, the Netherlands maintained steady business growth and a strong position in Europe's financial rankings. This was principally because of its strategic position; with two of the world's busiest ports (Amsterdam and Rotterdam), this country effectively became a major "gateway" to Europe - in terms of both material trade and financial markets.

However the last decade has seen the Netherlands' global standing go into steady decline, as countries such as Germany have come to take centre stage.

In 2013, the European Commission estimates that the Dutch economy will shrink by 0,8%. Furthermore, unemployment levels show no sign of declining, while spending levels will continue to decline.

These problems are being blamed on a combination of issues in the Dutch banking, housing, and pension sectors. Experts say that an overhaul of these systems will pave the way for a better economy and business sector in the Netherlands.

Glass half-full

However, Ernst & Young’s findings should not be taken as a sign that the Netherlands is financially doomed.

These statistics are in keeping with a wider narrative of European business struggles and financial decline. Since the recession hit in 2008, other countries have been much worse affected - Greece, Ireland and Portugal to name a few.

Importantly, despite this slip, the Netherlands continues to play a principal role in the European economy. It is globally renowned for its high quality of life, which is attractive for foreign businesses looking for potential relocations or investment destinations.

The Netherlands is also respected for its entrepreneurial culture, political stability, and strong logistical infrastructure.

Consequently, in 2012 the country landed 161 foreign investment projects; only a small decline on 2011’s 170. 

Which companies are choosing the Netherlands?

The majority of these investments came from American businesses, and were mostly technology-focused (the Netherlands earnt almost 20% of all investment in Europe’s internet data centres).

The Netherlands was especially popular for new business. Four fifths of all foreign companies investing here were involved in "greenfield" operations: starting a new enterprise from scratch abroad.

Unsurprisingly, Amsterdam was revealed to be the most popular hub for foreign investment. Almost 40% of foreign companies operating in this country chose Amsterdam as their destination, with The Hague and Rotterdam closely following suit.

Source: Ernst & Young