Coalition still divided on crisis measures

The two main coalition parties remain divided on how best to tackle the economic crisis facing the country, report various newspapers on Tuesday morning.

The Christian Democrats favour some investment coupled with cutbacks to stabilise the national deficit while Labour wants investments of up to €8bn to kick-start the economy with major cuts coming later.
However the government parties have agreed to postpone major decisions, such as raising the pension age, for the coming two years, according to sources closely involved with the current crisis talks, says the Financieele Dagblad.
According to the paper only limited cutbacks to ensure the longer term health of the country’s finances will be introduced for the time being.
Scenario – deficit 3%
The paper says the coalition partners are currently discussing a scenario in which the government deficit remains at 3% of gross national income (a maximum of 2% was agreed in the coalition manifesto).
Labour wants to wait until the next cabinet period before taking steps to reduce this so that the economy has had time to improve. But the CDA believes structural cutbacks to lower the deficit by 0.5% should already be taken in the coming two years.
The coalition parties are expected to present their rescue package on Friday but according to a CDA source quoted by the Financieele Dagblad, this could be two weeks later.
Meanwhile the third coalition partner, the much smaller ChristenUnie party, is emerging as a mediator between the two main players, says the AD.
Wage moderation
One of the major issues under discussion is wage moderation. Social affairs minister Piet Hein Donner has called for a wage freeze and wants civil servants to be included in this although the cabinet recently agreed to a 1% salary rise plus 1.5% year-end bonus for this group.
Yesterday the chairman of the CNV trade union federation said he supports wage moderation as long as a higher tax rate is introduced for those earning over €176,000. Click here for story.
Donner is due to talks to employers and unions today.

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