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Dutch Early Elections Likely After Wilders Opposes Budget

Dutch Prime Minister Mark Rutte said new elections “are an obvious scenario” after his minority government lost the support of the opposition party that had propped it up.

Rutte failed to come to an agreement with Freedom Party leader Geert Wilders on austerity measures to meet European Union budget rules. As a result, Wilders said today that his party no longer supports the government and that new elections should take place, “the sooner the better.”

Wilders “walked away at the very last moment,” Rutte told reporters in The Hague. The prime minister said he’ll meet with both his cabinet and Queen Beatrix to discuss the situation on April 23.

The negotiations on additional austerity measures started March 5 and foundered on Wilders’s objection to proposed social security cuts. His party had supported the minority coalition of Liberals and Christian Democrats since it took office in October 2010, allowing it to pass legislation in parliament.

“The measures would harm economic growth in the coming years and would hurt the purchasing power of many people, increase unemployment,” Wilders said.

The Dutch government has to find at least 9 billion euros ($12 billion) in additional budget cuts -- equivalent to 1.5 percent of gross domestic product -- to meet EU deficit rules by 2013 and protect the top credit rating that France and Austria lost in January. The budget shortfall is forecast to reach 4.6 percent of GDP in 2013, exceeding the 3 percent limit laid down by the EU for a fifth year.

The Dutch government has until April 30 to submit its annual stability program to the European Commission, the EU’s executive arm, in which it will outline how it plans to cut the deficit, Rutte wrote in a March 28 letter to parliament. The government vowed in 2010 to cut spending by 18 billion euros by 2015.

To contact the reporters on this story: Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net; Fred Pals in Amsterdam at fpals@bloomberg.net

To contact the editor responsible for this story: Mariajose Vera at mvera1@bloomberg.net

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