Dutch politicians agree austerity budget deal

AP News
Posted: Apr 26, 2012 1:29 PM
Dutch politicians agree austerity budget deal

The Dutch caretaker government and several opposition parties announced Thursday that they managed to strike a provisional 2013 austerity budget.

The news comes just three days after Prime Minister Mark Rutte's conservative government collapsed following the break-down of seven weeks of talks on budget cuts with its political ally, the Freedom party of euro-skeptic Geert Wilders.

Although the country's national debt is relatively low, the Netherlands is in recession and it is set to run a 4.6 percent deficit this year _ well above the 3 percent limit mandated by European rules that the Dutch government had been among the most vocal in demanding be enforced.

Prospects for a successful deal to reduce the deficit by an April 30 deadline seemed unlikely given the timing of Wilders' walkout and the fact that few political parties appeared willing to take responsibility for a round of politically unpopular cuts ahead of a general election in September.

However, all five parties involved in the talks manage to agree on a package Thursday. Measures include pay freezes and housing market reforms, but most details have not yet been released.

The agreement will now be vetted by government economists and the parliament, but it is still seen as a remarkable political achievement.

Rutte and his free-market VVD party remain partners in the caretaker government with De Jager's Christian Democrats. The other three parties who negotiated the deal had opposed Rutte's administration, mainly because of the anti-immigration and anti-Islam policies of Wilders' party.

Wilders walked out of austerity talks on Saturday, precipitating the government collapse. His departure also left Cabinet with very little time to negotiate an alternative austerity budget and avoid a humiliation in Brussels.

Alexander Pechtold, the leader of the small centrist D-66 party, said the swift agreement was evidence Rutte had been wrong to co-operate with Wilders in the first place.

"This is the other way to do things," he tweeted.

It is also not certain whether the deal will return the Dutch deficit to 3 percent by 2013, though that may depend on economic growth forecasts.

Finance Minister Jan Kees de Jager, the architect of the deal, said Thursday that the package would be "sufficient to satisfy European rules," without elaborating.