Dutch Need Structural Reforms to Restore Growth, Government Says

Dutch economic growth will remain subdued for the coming years and budget cuts and structural reforms are needed to keep the deficit from getting out of control, the government said.

“The Netherlands faces challenges, requiring a structural way to deal with it,” Finance Minister Jeroen Dijsselbloem wrote in his 2014 budget plan published today. “On the one hand, the Netherlands is still suffering from the consequences of the banking crisis and the euro crisis, on the other hand, our financial situation has structural imbalances that need to be dealt with.”

The Netherlands is in its third recession since the financial crisis started in 2008 and has been in breach of the European Union’s deficit limit of 3 percent of gross domestic product since then. Next year’s budget shortfall will hit 3.3 percent of GDP, even after the government introduced an additional austerity package of 6 billion euros ($8 billion), the government’s planning agency CPB said Sept. 15. For 2013, it sees a deficit of 3.2 percent of GDP.

“The government wants to strengthen the Dutch economy’s ability to grow -- this will lay the foundation for job creation and the return of confidence to people and companies,” King Willem-Alexander said today in an address before the budget was presented in The Hague. “The necessary reforms will cost time and ask for stamina.”

Prime Minister Mark Rutte’s plan for additional cost cuts and tax increases comes on top of a four-year, 16 billion-euro package the coalition of the Liberal and Labor parties approved in November last year when they took office. Of this amount, 3.5 billion euros were already penciled in for 2014.

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