Dutch municipal elections

On 21March, local elections were held in 335 of the Netherlands' 380 municipalities, resulting in a complex political landscape that may hinder local-level policy development.

• The increasing diversification of the Dutch political landscape now risks hampering policymaking at the national, regional, and municipal level while making the formation of governing coalitions at all three levels challenging.
  
• Although the Netherlands' overall favourable economic performance and investment environment are unlikely to be significantly affected, businesses face a slightly heightened risk of being exposed to local contract delays and potential alterations.
  
• In the likely event that voting patterns remain similarly fragmented in the 2019 regional elections, a further shift reducing electoral support for the four governing parties would put the government at risk of losing its fragile one-seat majority in the Senate.
  

In the recent Dutch municipal elections, local parties were most successful and came first nationwide with a combined 32.7% of the vote, according to preliminary results. For instance, Leefbaar Rotterdam (Liveable Rotterdam) and Groep de Mos (De Mos List) won the most seats in Rotterdam and The Hague, respectively. The best-performing national-level party - which also forms part of the government - was the centre-right Christian Democratic Appeal (Christen-Democratisch Appèl: CDA) with 13.5% of the vote, closely followed by Prime Minister Mark Rutte's conservative and economically liberal People's Party for Freedom and Democracy (Volkspartij voor Vrijheid en Democratie: VVD) with 13.2%. The two other parties within the national-level four-pronged government, the liberal and centrist Democrats 66 (Democraten 66: D66) and the small, conservative Christian Union (ChristenUnie: CU), won 9% and 4%, respectively. The left-wing Green Party (GroenLinks: GL) managed to increase its share of the vote by 3.4 percentage points to 8.4%, coming first in Amsterdam, Utrecht, Nijmegen, and various other cities. It is likely that it benefited from a 3% decline in support for D66, particularly in urban areas among younger, well-educated, and/or comparatively affluent voters. The right-wing, Eurosceptic, and anti-immigration Freedom Party (Partij voor de Vrijheid: PVV) led by Geert Wilders ran for posts in only 30 councils. Although it came second in last year's general election with 13.1% of the vote, the PVV has struggled persistently to find candidates at the local level. In Amsterdam, the new right-wing Forum for Democracy (Forum voor Democratie: FvD) gained three seats in the city's 45-strong council. One of these was won by the FvD's increasingly prominent leader, Thierry Baudet. The overall nationwide turnout of 46.7% was slightly higher than in the last municipal elections in 2014 (45.1%).

Multi-party local governance increases risk of contract delays or alterations

The Dutch municipal election results mirror the fragmented national-level vote at the 2017 general election, in which 13 parties secured seats in the House of Representatives (lower house of parliament). Given the wide distribution of electoral support and the resulting high number of parties that won representation on many of the councils, it is likely that the formation of local government alliances over the coming weeks and months will be as challenging as at the national level, where it took seven months for Rutte to build his multi-party alliance. In many cases these coalitions will need to include a broad range of political parties to form majorities, with those involved often holding opposing policy and ideological views. For instance, in Rotterdam and The Hague at least seven and three to five political parties, respectively, will need to collaborate to form a majority; this will be highly challenging. Even if pragmatic compromise agreements can be established, such alliances are likely to be fragile and exposed to a high risk of intra-coalition disputes. As a result, there is an elevated risk of delays to policymaking across the Netherlands, with most major councils likely to be run by multi-party coalitions. Although the Netherlands' overall favourable economic performance and investment environment are unlikely to be significantly affected, businesses face a slightly increased risk of contract delays and potential alterations, for instance in the context of infrastructure and energy projects and public-private partnerships overall.

Outlook and implications

The ability of local councils to forge compromise agreements in the coming months will be a key indicator for local-level policy stability. Should multiple major councils fail to establish stable administrations, there is a heightened risk of voter frustration with local government arrangements affecting their electoral choices in the 2019 regional elections. Although the recent municipal elections did not indicate a major decrease in support for Rutte's national-level administration, changing electoral preferences over the coming year would represent an important indicator of the potential for increased political instability and greater difficulty in passing legislation. The 2019 regional elections will have a direct impact on such risks as they determine the composition of the 75-seat Senate (upper house of parliament), in which Rutte's administration holds a majority of just one seat, as in the House of Representatives. As the Senate must approve all legislation passed by the House of Representatives, a solid majority is key for the government to implement its manifesto. Since it appears unlikely that Dutch voting behaviour will become less fragmented in 2019, any shift in current voting patterns away from the government parties would be likely to leave Rutte obliged to negotiate legislative support on a case-by-case basis in the Senate. This could lead to excessively burdensome strategic manoeuvres becoming required to pass legislation given the need for ad-hoc (or more persistent) pacts with non-government parties to gain a majority for Rutte's already diverse four-party administration. During the term of the last administration, the lack of a Senate majority triggered regular legislative delays, including the postponed passage of the 2016 budget.