Broad support needed for new reforms, creating jobs, says Rutte

The cabinet must continue its current economic strategy while looking for broad political support for reforms, prime minister Mark Rutte said on Thursday, following the publication of new economic forecasts.

Rutte said he wanted to reach agreement on policy with other parties in both houses of parliament as well as the unions and employers’ organisations.

The Netherlands is going through a difficult phase, the prime minister said. ‘We have to work to recover employment levels, with broad support,’ Rutte said.

‘We have to ensure the jobs motor starts working again by encouraging exports and helping consumer confidence to recover,’ Rutte said.

Finance minister Jeroen Dijsselbloem described the CPB figures as gloomy but not as bad as those published by the European Commission earlier in the week.

Deficit

On Thursday morning, the government’s macro-economic forecasting agency said unemployment will continue to rise and the Dutch budget deficit will hit 3.4% next year, above the crucial eurozone 3% limit.

This means the government will be forced to find several billion euros to cut the deficit to agreed limits, commentators said after the figures were published.

The CPB’s deficit figure, which is a preliminary forecast, is slightly more optimistic than the 3.6% figure published a few days ago by the European Commission.

2013

This year the deficit will hit 3.3%, the CPB said. The VVD and Labour coalition had agreed they would not make any further cuts in 2013 but by 2014 the budget deficit must be back below the eurozone limit.

This means a new package of measures will be necessary. Options on the table include tax increases and further public sector wage freezes.

Dijsselbloem has already been approaching other party leaders in an effort to win broad support for new measures. The government needs other parties in addition to the ruling VVD and PvdA in order to get legislation through the upper house of parliament.

Negotiations

VVD parliamentary party leader Halbe Zijlstra told RTL news the cabinet will go public with its proposals for new cuts on Friday. These will then form the basis for negotiations with other parties as well as unions and employers.

‘We have to combat a crisis together and that includes the opposition parties taking responsibility,’ Zijlstra said.

The government must be able to present its proposals to cut the budget deficit to Brussels by May 1.

Good news

The CPB also says the Dutch economy will contract by 0.5% this year but grow again by 1% in 2014, driven by exports. Spending power, which has gone down by an average 1.5% this year, will also go up in 2014, the agency said.

Labour leader Diederik Samsom said the figures show ‘there is light at the end of the tunnel’ if all the parties, unions and employers succeed in working together to solve the unemployment problem.

However, RTL commentator Mathijs Bouwman warned that spending power and economic growth are notoriously tricky to predict. He also pointed out that the unstable Dutch political situation leads to quick fixes and short-term measures.

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