Budget deficit shoots up to over 4%, spending cuts inevitable

The Netherlands is already in recession and the budget deficit is set to hit 4.1% next year, according to crucial forecasts from the government’s macro-economic policy unit CPB.


In last year’s coalition agreement, the government used a deficit figure of 2.7% in 2012. If this forecast was wrong by more than one percentage point, extra cuts would be made, the right-wing coalition said.
The CPB also says the economy will contract by 0.5% next year.
Coalition
The coalition – the Christian Democrats and right-wing Liberals – together with the anti-Islam PVV have already agreed an €18bn package of cuts. The PVV has said several times it will not support any more spending cuts unless €4bn is shaved of spending on development aid.
CPB director Coen Teulings urged the government not to make major cuts at a time of recession. Instead, the government should take the time to make structural reforms to deliver money and growth.
This could include moderation, a faster introduction of a higher pension age and a reduction in mortgage tax relief.
PVV leader Geert Wilders said again on Tuesday his party will not support changes to mortgage tax relief.

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