By Gilbert Kreijger and Thomas Escritt
THE HAGUE (Reuters) - The Dutch prime minister said his country faced a crisis and asked parliament to push through budget cuts after his government lost the support of its main political ally and tendered its resignation.
But the main opposition parties signaled they would not back the 14 to 16 billion savings package he must present to the European Union next week to show the Netherlands is on track to meet its stringent budget limit.
The Netherlands has been one of the euro zone's most stable members but the minority coalition's split with the populist Freedom Party has created a political vacuum, worrying financial markets and the Moody's credit rating agency.
A Dutch bond sale went smoothly on Tuesday, calming financial markets but investors are waiting to see whether he can find new backers for the cuts and agree an election date with other political parties.
"Standing still is not good for the Netherlands. The problems are serious, the economy is stalling, employment is under pressure and government debt is growing faster than the Netherlands can afford," Prime Minister Mark Rutte told parliament on Tuesday.
"Those are the facts and nobody can run away from them. I'm standing here without pretences, it is up to parliament and the voters."
Geert Wilders' Freedom Party had backed the government for the past 18 months but said he was no longer willing to be dictated to by Europe.
"It is the government, not the citizen, not Henk and Ingrid, who spent too much. Either we choose to act in the interests of Henk and Ingrid or we act in the interests of Brussels," Wilders said.
The Netherlands must bring its deficit to 3 percent of gross domestic product, the EU's limit, next year but it is forecast to be 4.6 percent unless extra cuts are made.
Comments from opposition politicians on Tuesday suggested Rutte will find it difficult to win backing for his plans.
"The 3 percent deficit target exists with the addition that you don't need to comply if there are exceptional circumstances in the economy," Labour leader Diederik Samson said during the parliamentary debate.
The government had taken a tough line with euro zone "budget sinners" such as Greece and had been seen as a haven of stability among euro zone members.
But 10-year spreads over safe-haven German bunds reached their widest in three years on Monday after the crisis blew up before rallying again on Tuesday.
The debt agency sold nearly 2 billion euros of government bonds and although yields crept up, demand was strong as investors focused on reasonable economic fundamentals such as a trade surplus and relatively low unemployment and debt.
The Dutch media have characterized Wilders as irresponsible with one cartoonist depicting him as a toddler in diapers playing with matches and setting the country on fire.
"We don't want to cut spending by 14 billion euros and at the same time transfer billions of euros to Brussels for the horrible ESM emergency fund and the weak Greeks," Wilders said.
Rutte must also try to agree an election date with other political parties on Tuesday. Some politicians are pushing for one as soon as June while others have suggested the earliest possible date is in September.
A poll at the weekend showed that many Dutch are fed up with their politicians.
"There have to be cuts" said Geert Hogema, a 66-year-old pensioner, as he read a newspaper in a cafe in Amsterdam.
"But instead of taking difficult decisions, they sat there just talking for seven weeks, telling the outside world nothing, until one of them decided to leave the table. We've had four cabinets in five years and none of them have acted," he said.
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."
(Additional reporting by Will James, Robert-Jan Bartunek, Anthony Deutsch and Sara Webb; editing by Anna Willard)
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