Entrepreneurs delay investments as costs rise, profits shrink

Small and medium-sized businesses in the Netherlands are holding off on new investments, as rising costs and shrinking profits leave them with less to spend, a new report by the accountancy association SRA has found.

SRA analysed 7,061 company accounts for its annual sector report and found turnover rose 6.4% in 2025 while profits grew by just 3.4%. Half of all firms earned less than the year before, and nearly a quarter of those saw profits fall by 50% or more.

The squeeze comes after recent CBS figures showed wages outpaced profits across Dutch business in 2025.

Rising staff and purchasing costs have hit margins hardest in construction, hospitality and retail, according to SRA. Firms that are still profitable are choosing to hold on to the money rather than spend it, board member Pieter van der Kwaak told public broadcaster NOS.

Uncertainty over government policy is also deterring investment. Van der Kwaak pointed to the on-off plans for low-emission zones in city centres, which he said had left some firms out of pocket after buying electric vans they turned out not to need.

Investment in the sector has been falling for years, with serious consequences, Lex van Teeffelen, a professor of small business financing, told NOS: firms lose skills and expertise, fail to modernise, and struggle to compete abroad. Unpredictable subsidy schemes also made it hard for entrepreneurs to plan ahead, he said.