The Dutch economy contracted 0.7% in the fourth quarter of 2011, putting the country officially into recession, the national statistics office CBS said on Wednesday.

The economy shrank by 0.4% in the third quarter. Recession is defined by negative growth in at least two successive quarters. Over 2011 as a whole, the economy grew 1.2%, the CBS said.
The contraction is largely due to declining household spending – which fell by 1.8% in the final quarter. However, government cuts and fewer exports also had an effect.
Reforms
In a reaction, economic affairs minister Maxime Verhagen said the economy would not necessarily return to growth without help. ‘We have to make clever cuts, strengthen the economy through reforms and support employers where necessary,’ he said.
Verhagen said earlier the CDA will not support more spending cuts without economic reforms when he, prime minister Mark Rutte and PVV leader Geert Wilders get down to new budget negotiations next month.
The minority coalition, which is supported by the PVV on economic policy, has to find up to €15bn in additional spending cuts to reduce the budget deficit and meet eurozone rules.
Reactions
Employers’ organisations called on the government to ensure new cuts do not disadvantage industry. The budget deficit must be reduced to ensure the Netherlands is not forced to borrow at increasingly high interest rates and wages must be frozen, the organisations said.
Agnes Jongerius, leader of the country’s biggest trade union federation FNV, said a wage freeze and more cuts would further damage the economy. The Netherlands is sinking into recession while Germany and France show growth, she said.
The government’s macro-economic agency CPB is due to publish new economic forecasts on March 1.
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