The Dutch budget deficit will widen in 2014 amid economic growth that will be lower than forecast this year, the government’s CPB planning agency said.
The deficit will hit 3.7 percent of gross domestic product in 2014, The Hague-based CPB said in a statement yesterday. In February, it forecast a deficit of 3.4 percent. It sees a deficit of 3.5 percent in 2013.
“The international and Dutch economies look gloomy,” CPB said. “Growth of world trade is historically slow, as is GDP in the eurozone. The only positive factor is that the economy seems to be shrinking at a slower rate.”
Prime Minister Mark Rutte’s coalition government is trying to narrow its budget gap with a four-year, 16 billion-euro ($21.4 billion) austerity package on which agreement was reached in October. The Cabinet will decide in August on additional measures needed to meet the 3 percent limit in 2014.
“Private consumption will shrink in 2013 because of the low disposable income and declining house prices,” CPB said. In the first three months of this year, investments dropped almost 10 percent from a year earlier, CPB reported.
The planning agency also cut its economic outlook. It forecasts GDP will decline 1 percent in 2013, down from a previous estimate of a 0.5 percent contraction. It maintained its 2014 growth outlook of 1 percent. Unemployment is forecast to increase to 7 percent in 2014.
European Union Economic and Monetary Affairs Commissioner Olli Rehn said in The Hague on June 11 that around 6 billion euros of austerity is necessary in 2014 to get the budget deficit within the EU’s limit of 3 percent of GDP.
“Based on the current numbers, this is a heavy task,” Dutch Finance Minister Jeroen Dijsselbloem told press agency ANP today.