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A win by the anti-austerity Socialist Party could threaten to unravel a cost-cutting plan agreed under the current government in April, and could also derail stringent budget targets for 2013 set by the European Commission and fiercely advocated by Prime Minister Mark Rutte.
As one of the eurozone's richest members, the Netherlands is an important contributor to the rescue packages for struggling Southern European countries. It is also a member of the German-led bloc that propagates austerity as the cure for the debt crisis. The September 12 elections will test Dutch voter support for this strategy.
The Netherlands is still widely considered one of the stronger countries in the eurozone, with a competitive economy, low unemployment and decade-long track record of fiscal prudence. But the EU expects the country to be one of the region's weakest economic performers this year, as government spending cuts and weak private consumption squeeze domestic demand. Falling home prices are prompting households to rein in spending, and consumer confidence has reached a historic low.