Dutch Recession Continues as Rutte Plans More Austerity Measures
The Dutch economy, the euro-area’s fifth largest, contracted more than forecast in the second quarter, extending the country’s recession and increasing pressure on Prime Minister Mark Rutte to do more to spur growth.
Gross domestic product fell 0.2 percent in the three months through June after a 0.4 percent drop in the first quarter, national statistics bureau CBS in The Hague said today. The median of eight estimates in a Bloomberg News survey was for a 0.1 percent decline. The economy has contracted in eight of the last nine quarters and isn’t expected to return to growth until next year, according to Bloomberg’s quarterly economic survey published on Aug. 9.
“Consumption has contracted for more than two years now,” CBS said. “Government consumption shrank 0.5 percent.”
The Dutch economy is in its third recession since the financial crisis started in 2008 and will contract 1 percent this year, according to Bloomberg’s quarterly survey. The country’s planning agency CPB will publish its economic forecast at about 11 a.m. local time. In June, it predicted that the budget deficit will widen to 3.7 percent of GDP in 2014, exceeding the European Union’s 3 percent limit.
Unemployment rose to 8.7 percent in July, CBS also said today, the highest since at least 2001. The annual average of Dutch joblessness hasn’t been that high since 1985. Inflation is at 3.1 percent.
Rutte’s cabinet may seal an agreement of more than 8 billion euros ($10.5 billion) of cost cuts and tax increases, Het Financieele Dagblad reported yesterday, citing unidentified people familiar with the cabinet’s thinking. This amount is in addition to a four-year, 16 billion-euro package decided on in November when the coalition government took office.
Finance Minister Jeroen Dijsselbloem is scheduled to present the 2014 budget and a detailed plan of austerity measures on September 17.
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