Netherlands Won’t Try to Achieve EU Budget Deficit Goal in 2014

The Netherlands won’t try to keep its budget deficit within European Union limits next year, Finance Minister Jeroen Dijsselbloem said.

“We de facto let the 3 percent budget-deficit limit go for 2014,” based on the prognosis of the Central Planning Bureau, the agency that calculates the effect of budget decisions, Dijsselbloem said in a question-and-answer session with citizens in Amsterdam today. The Netherlands plans 6 billion euros ($8 billion) in budget cuts “to keep the budget deficit from running out of control next year,” he added.

Prime Minister Mark Rutte’s cabinet plans to seal an agreement on cost cuts and tax increases for 2014 within a month. That’s in addition to a four-year, 16 billion-euro package the coalition government approved in November when it took office. The deficit will widen to 3.9 percent of gross domestic product in 2014 from 3 percent this year if no extra measures are taken, the Central Planning Bureau said on Aug. 14. The bureau hasn’t given a forecast for the 2014 deficit including the 6 billion euros of measures.

The Dutch economy, in its third recession since the financial crisis started in 2008, shrank 0.2 percent in the second quarter. The economy has contracted in eight of the last nine quarters and isn’t expected to return to growth until next year, according to the CPB. GDP in the euro area’s fifth-largest economy will fall 1.25 percent this year and grow 0.75 percent in 2014, the CPB forecasts.

“The economy will definitely grow next year, I’m convinced of that,” Dijsselbloem said.

The finance minister is scheduled to present the 2014 budget on Sept. 17. He said Aug. 14 he would introduce additional budget measures not exceeding 6 billion euros.

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