S&P reaffirms negative outlook on Netherlands

AP News
Posted: Jan 14, 2013 5:11 PM

NEW YORK (AP) — Standard & Poor's Ratings Services affirmed its top investment-grade ratings for the Netherlands on Monday, but said the rating's outlook remains negative.

S&P said that the Netherland's prosperous, diversified and competitive economy is worthy of the "AAA" long-term credit rating.

The country has a long track record of prudent and flexible macroeconomic policy and its economy is commonly regarded as one of the strongest in Europe, S&P noted in its report Monday.

It added that the Dutch economy is highly competitive and productive, with a gross domestic product per capita of $47,000 last year. And despite an increase in layoffs since 2011, the agency noted that the Dutch have one of the lowest unemployment rates in the European Union at 5.6 percent.

However, S&P said that broader global economic pressures could weigh on the Dutch financial sector and the country's overall economy. A negative outlook suggests the country's rating could be downgraded in the future.

In the midst of Europe's crisis, it has suffered from aggressive government cost-cutting and attempts to reform the mortgage system, which have hurt housing prices and hampered the building industry. The country's economic picture is not dire but its economy is expected to shrink slightly this year.

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Additional, the Netherlands has a new government in place following elections in September that is focused on austerity with a mix of spending cuts to please Prime Minister Mark Rutte's conservative VVD party, and tax increases for the wealthy, a goal of the other coalition partner, the left-leaning Labor Party.