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24 April 2012

FT: Netherlands in turmoil after PM quits


The government's collapse after far-right politician, Geert Wilders, pulled out of budget talks threatens to move the political battle over austerity from Europe's peripheral south to the heart of the eurozone.

Concern is focused on whether the Netherlands will now be able to cut its budget deficit to the 3 per cent of gross domestic product mandated in the new European fiscal pact. The European Commission on Monday wasted no time in pointing out that the Netherlands itself had pushed for the strict 3 per cent rule last autumn, and insisted that Amsterdam present a deficit reduction programme within seven days. Jan Kees de Jager, finance minister in the outgoing government, promised to meet the deficit reduction target. “The 3 per cent limit is still feasible”, he said.

Although, at 65.2 per cent the Netherlands has a relatively low ratio of national debt to output, its economy entered a sharp recession at the end of last year and the government posted a deficit of 4.7 per cent for 2011.

It is not clear how Mr Rutte can win a mandate in parliament for a cuts package. Having pulled his support for the government, Mr Wilders has taken to attacking fiercely any EU-imposed budget cuts, vowing not to let “our pensioners bleed for Brussels’ diktats”. At a meeting of parliamentary party leaders, a majority appeared to support elections on June 27. “My party is for elections as soon as possible”, said Diederik Samsom, leader of Labour, who accused Mr Rutte of “dropping the ball at the worst possible moment” for the Dutch economy. “We need to give our country certainty”, he said.

Full article (FT subscription required)



© Financial Times


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