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Europe
Dutch opposition rejects PM's budget cuts
Call to reject austrity measures deepens political turmoil after government lost support of main ally and resigned.
Last Modified: 24 Apr 2012 18:50
Wilder's Freedom Party withdrew its support for the government over the weekend [Reuters]

The biggest Dutch opposition parties have said they would not back the prime minister's budget cuts, deepening a political crisis after the government lost the support of its main ally and collapsed.

"I understand that you have to bring finances in order but you cannot cut rigorously because it hurts the economy and people. Three per cent is not feasible," Emile Roemer, Socialist leader, said in parliament on Tuesday.

The country was thrown into political turmoil on Monday when the government tendered its resignation following an abrupt split with Geert Wilders' populist Freedom Party.
 
The Netherlands must show how it will meet the European Union's deficit limit or it risks creating new turmoil in
financial markets. It must also pick a date for new elections, the fifth in ten years.

The eurozone's fifth-largest economy has been a haven of stability during the regional debt crisis and the officials criticised countries struggling to get their budgets in order.

But there is growing resistance to austerity in Europe and some economists are questioning whether drastic spending cuts will help the region get back on its feet.

Several opposition leaders rejected Prime Minister Mark Rutte's appeal for help in getting his $18 to 20bn savings package through.

'Weak Greeks'

It was not clear exactly why the Freedom Party, which backed the government for the past 18 months, suddenly withdrew its support. Wilders said he was fed up with Brussels' demands.

"We don't want to cut spending by $18.4bn and at the same time transfer billions of dollars to Brussels for the horrible ESM emergency fund and the weak Greeks," Wilders said.
 


Al Jazeera's Jonah Hull reports on how anger over austerity is boosting support for populist parties

The Dutch media have characterised Wilders as irresponsible with one cartoonist depicting him as a toddler in diapers playing with matches and setting the country on fire.

The Netherlands must bring its deficit to 3 per cent of gross domestic product, the EU's limit, next year but it is forecast to be 4.6 per cent unless extra cuts are made.

Rutte said the package had been pretty much stitched up by Friday night to produce a budget deficit of 2.8 per cent of GDP and that would have left about a billion dollars of wiggle room to address Wilders' concerns about weaker purchasing power.

He said Wilders changed his mind overnight and the deal was off by Saturday.

Some opposition parties argued that the Netherlands could be given more time to achieve the budget deficit goal.

But Rutte said he must send his plans to Brussels by April 30 and that the Netherlands was unlikely to be allowed extra time to meet the goal, or be shown any leniency.

Election calls

Rutte must also try to agree an election date with other political parties. Some are pushing for one as soon as June
while most have said September is the earliest possible.

A poll at the weekend showed that many Dutch are fed up with their politicians.

The crisis has also attracted the attention of credit ratings agency Moody's which said on Monday the government
crisis was a negative factor for the country's credit but maintained its AAA rating with a stable outlook.

But it said if the country weakened its commitment to fiscal discipline, the rating could face downward pressure.

"This development is clearly credit-negative for the Dutch sovereign given that it generates both political and policy uncertainty," Moody's analysts wrote.

"Having said that, the Netherlands is entering this testing period from a position of relative strength."

Source:
Agencies
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