The Dutch Elections, & The Dutch Bond Reaction
- Abrar Yousuf
- Dec 1
- 3 min read
How the Netherlands’ 2025 election can restore EU stability, and boost green investment
Executive Summary
Following the collapse of the coalition government, the Netherlands headed to the polls on Wednesday. Going into the elections, many expected the far-right, anti-Islam Freedom Party (PVV) of Geert Wilders to come out on top, after it pulled out of the coalition in June over immigration disputes. By Thursday morning, however, it became clear that the liberal D66 party was neck-and-neck with the PVV. After a rightward shift in the 2023 elections, Dutch voters appeared to signal frustration with Wilders’ polarising politics, which had left the country in political gridlock, as centrist and left-wing parties resisted his far-right agenda.
Assets to watch: NL10Y, SX5E, iShares MSCI Netherlands ETF.
Economic Importance of the Netherlands
Following the collapse of the coalition government, the Netherlands headed to the polls on Wednesday. Going into the elections, many expected the far-right, anti-Islam Freedom Party (PVV) of Geert Wilders to come out on top, after it pulled out of the coalition in June over immigration disputes. By Thursday morning, however, it became clear that the liberal D66 party was neck-and-neck with the PVV. After a rightward shift in the 2023 elections, Dutch voters appeared to signal frustration with Wilders’ polarising politics, which had left the country in political gridlock, as centrist and left-wing parties resisted his far-right agenda.
Assets to watch: NL10Y, SX5E, iShares MSCI Netherlands ETF.
Election Outcome and Coalition Prospects
Despite the PVV and D66 both securing 26 seats in the 150-seat parliament, a (GroenLinks) and the CDA ruling out collaboration with the PVV, a coalition between D66, GreenLeft, and CDA could form a minority government. If the liberal-conservative VVD were included, a majority coalition would emerge, though the ideological diversity of such a government may lead to internal disagreements—continuing a trend of political instability in Dutch politics.
Market and Policy Implications
A centrist coalition would likely restore confidence across the Dutch economy. One area of near-universal agreement among the potential partners is the need for an energy transition, favouring renewable and green policies. This marks a departure from the previous government, whose right-wing tendencies made it sceptical of such initiatives.
With strong green credentials across the coalition parties, investors can expect a Dutch government prioritising sustainability and the green economy—welcome news for Brussels. Increased public investment and regulatory support for renewable infrastructure, including wind, solar, and green hydrogen projects, could stimulate capital flows and innovation within the energy sector.
A stable centrist government would also reinforce the Netherlands’ commitment to EU climate targets, increasingly threatened by the rise of right-wing parties across the continent. In terms of fiscal policy, compliance with EU budgetary rules and continued prudence should support Dutch sovereign bonds, such as NL10Y yields, and maintain EU fiscal cohesion. Minor adjustments to agriculture and climate policy may occur but are unlikely to affect ESG-focused investments.
On the international stage, a centrist Dutch government would likely continue cooperative stances on Ukraine aid, migration policy, and broader security initiatives. Maintaining alignment with EU foreign policy would reinforce collective decision-making in the Eurozone, reducing political uncertainty and volatility in markets. This political stability could boost investor confidence in the euro and ease tensions between northern and southern EU states over fiscal responsibilities and migration.
A pragmatic coalition approach would also provide predictability for renewable energy, infrastructure, and cross-border trade investment timelines, allowing financial markets to focus on fundamentals rather than geopolitical risk.
Conclusion
In summary, the Dutch election points toward a centrist, market-friendly coalition that balances domestic policy, EU alignment, and sustainable growth. While internal disagreements within a diverse coalition remain possible, relative political stability, fiscal prudence, and a strong green agenda should bolster investor confidence and reduce systemic risk for European markets.
References
Disclaimer
This report is for informational purposes only and does not constitute investment advice or a solicitation to trade. The views expressed are solely those of the author. The information is based on public sources and is not guaranteed to be accurate or complete.
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