THE MINORITY coalition government in the Netherlands, among the most vocal advocates of fiscal rectitude in the EU, collapsed in disarray yesterday after failing to agree a programme of cuts aimed at controlling its budget deficit — delivering another major blow to a beleaguered eurozone.
Prime minister Mark Rutte is expected to tell parliament today that his Liberal-Christian Democrat coalition will remain in a caretaker capacity until a general election is held – and will continue to seek agreement on savings aimed at bringing its deficit to within three percent of GDP by 2013.
Although September was initially mentioned as the soonest an election could be scheduled, there were suggestions last night of the date being brought forward to avoid a lengthy period of uncertainly which could be economically damaging.
A spokesman for Mr Rutte’s Liberals named June 27th as one possible date.
The euro hit a 20-month low against sterling and the Amsterdam stock exchange, the AEX, fell more than 2.5 per cent after Mr Rutte tendered his resignation to Queen Beatrix, adding to market concerns about the survival of Holland’s triple-A credit rating and, more generally, about a Socialist win in the first round of the French presidential election.
The collapse of the battered 558-day-old coalition came as a landmark moment in the history of the Eurozone – the first time that a northern European government at the political heart of the European currency union has been brought down since the crisis began.
Its fate was sealed after an early-morning cabinet meeting failed to find any means of survival following the announcement on Saturday by Freedom Party (PVV) leader Geert Wilders, that he could not support a politically explosive multi-billion-euro programme of cuts drawn up over the past seven weeks.
However, finance minister Jan Kees de Jager – who in the past has taken a tough line with eurozone “budget sinners” such as Greece — said he believed that the Netherlands could still hit its budget target by seeking the support of other political parties, even without the PVV.
“The important thing is to give a message to the financial markets that the Netherlands will continue to strive for budgetary discipline no matter what the circumstances,” he said.
“There is no correlation whatsoever between the Netherlands and the countries of southern Europe. Our sovereign debt is in the region of 65 percent of total economic output, which is way below the Eurozone average.”
Mr Wilders, who has called for a referendum on withdrawal from the euro and a return to the guilder, warned however that Europe would be at the centre of the forthcoming election campaign – declaring that the PVV was “against Europe, against the three per cent, and against the euro”.
There were other signs of dissent too last night when the leader of the Socialist Party – according to a weekend poll now the second most popular party in the country – Emile Roemer, declared that he was not willing to support attempts to bring the deficit below the three per cent mark.
However, the president of the European Commission, Jose Manuel Barroso, insisted there could be no compromise despite the political crisis.
“We fully expect that the Dutch authorities will find a solution that ensures both the financial stability of the country and the wellbeing of its citizens,” he said.
