Dutch PM Rutte close to coalition agreement: media

Reuters News
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Posted: Oct 25, 2012 11:49 AM
Dutch PM Rutte close to coalition agreement: media

AMSTERDAM (Reuters) - The Netherlands moved closer towards forming a new pro-European government after Prime Minister and Liberal leader Mark Rutte reached a preliminary agreement with the Labor Party on the main economic policies, Dutch media reported on Thursday.

An agreement between Rutte's Liberals and Diederik Samsom's Labor Party to form a broadly pro-European coalition is widely expected within the next week or so, media said.

Rutte won the most seats in the September 12 parliamentary election, which was held against the backdrop of the euro zone crisis, rising unemployment, housing price declines and a stagnant economy.

The two party leaders have been in coalition talks ever since, a process which can typically drag on for months.

"These talks have been fast and smooth," said Famke Krumbmueller of the Eurasia political-risk consultancy.

"It shows that they are well aware of the economic environment they are operating in."

Few details have leaked out, with both Rutte and Samsom refusing to discuss the negotiations publicly.

However, Dutch media reported on Thursday that agreement had been reached on a broadly pro-European stance and on several economic policies which will now be analyzed by the Netherlands Bureau for Economic Policy Analysis (CPB) to assess their economic impact.

These include reforms of the labor and housing markets, considered important in making the Dutch economy more efficient and helping to revive a sagging property sector.

The agreement includes a limited reduction of the deductibility of mortgage interest rate costs for existing, interest-only mortgage holders, as well as measures that would make it easier for employers to fire people, and cuts in unemployment benefits, the newspaper NRC Handelsblad reported, although it said that last-minute changes were still possible.

Bernard Wientjes, head of the largest employers' organization, and Ton Heerts, head of the largest trades union confederation FNV, also met with Rutte and Samson on Thursday, fuelling talk that a broad-based agreement was close.

Wientjes warned that the Netherlands still faced further spending cuts of billions of euros when quizzed by reporters about the negotiations.

(Reporting by Sara Webb and Gilbert Kreijger, editing by Rosalind Russell)