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Budget deficit to hit 4.5% next year, spending cuts should total €9bn

Thursday 01 March 2012

Ministers will have to cut spending by an extra €9bn if the budget deficit is to be reduced to below 3%, in line with monetary union rules, according to new economic forecasts from the government's CPB think-tank.

The budget deficit is set to hit 4.5% next year, well above the 3% monetary union limit, the macro-economic policy unit said in a statement on Thursday.

This means the government will have to reduce spending or find savings totalling €9bn to meet EU rules and the agreement made when the coalition was formed in 2010.

However, the CPB is less negative on economic growth, predicting an increase of 1.25% in 2013, although unemployment may rise to 6%.

Talks

The two coalition parties (VVD and CDA) together with alliance partner, the anti-Islam PVV, are due to start talks on a new round of cuts on Monday. The CDA has said it will not accept new cuts without economic reform. The PVV wants drastic cuts in development aid.

PVV leader Geert Wilders said after the publication of the CPB forecasts that he did not think it was necessary to cut spending by €9bn. 'We are not figure fetishists,' he said. 'We have to do what is good for the economy and good for the Dutchman.'

VVD parliamentary party leader Stef Blok also said the 3% norm 'is not sacrosanct'. 'But we will have to reduce the deficit. The VVD is the party that wants reforms and cost-cutting.'

Opposition MPs described the new forecasts as 'dramatic'. And Bernard Wientjes, head of the employers organisation VNO-NCW, urged the cabinet to make long-term reforms, not to make savings that will hurt economic growth.

© DutchNews.nl



 

Readers' Comments

Whew man, forming and taking part in this whole completely botched EU plan was brilliant huh? Oh well, there's no way back now. I can't help but remember how quickly everybody voted for this EU thing and how great many people thought it was. I never had much faith in it. The cultural differences reagrding work ethics and lifestyle were entirely ignored. I knew this would come back to haunt us.

By Bill | 1 March 2012 11:00 AM

With which credibility can be asked to Greece and other countries to stick to the rules if then one does not want to stick to the rules himself?
Dangerous road to go.

By FG | 1 March 2012 12:41 PM

Overseas aid and refugee welfare should be first on the list for cuts

By Phil | 1 March 2012 1:45 PM

 
 
 
 
 
 
 
 
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