Dutch Prime Minister Mark Rutte said 4.3 billion euros ($5.6 billion) in budget cuts for 2014 that were postponed last week may be implemented after all if the economy doesn’t grow fast enough the coming months.
“We’re sticking to our goal to bring the budget deficit to 3 percent for next year,” Rutte said in parliament in The Hague today. In August, the government will look at the latest forecasts to determine whether the whole package or part of it should take effect to meet that target, Rutte said.
Rutte last week delayed the additional austerity measures for next year and urged people to start spending in an effort to boost economic growth. The Netherlands has been in breach of the European Union deficit threshold of 3 percent of gross domestic product since 2009.
The government needs 1 percentage point of additional economic growth this year and next to meet 3 percent limit in 2013, according to a letter sent to parliament by the government this week. The Netherlands, in its third recession since 2009, had the outlook on its AAA credit rating cut to negative in February by Fitch Ratings, which cited problems in the banking system and difficult economic conditions.
“This package will be back on the table once it’s August,” Geert Wilders, the leader of the opposition Freedom Party, said in parliament. “The people of the Netherlands have come to realize what Rutte doesn’t know, and that is that nobody believes him anymore.”
The government, unions and the VNO-NCW employers’ organization agreed to limit severance pay and postponed plans for easier dismissals and lower unemployment benefits until 2016. The 600 million euros a year that will cost the government annually are covered, Rutte said at a press conference April 12.