Ministers should press ahead with cuts and economic reforms despite the pain, Klaas Knot, president of the Dutch central bank, said at the presentation of the bank’s annual report on Thursday.

Disappointing economic developments and rising unemployment are no reason to stop reducing spending and reforming the economy, he said.

‘Implementing structural measures and reducing excessive debt positions are lengthy and painful processes,’ Knot said in his statement. ‘But they should not be a reason for watering down the reform measures as these are indispensable if we are to achieve financial stability, economic growth, and consequently sustainable prosperity.’

Knot also said it is acceptable for the Dutch budget deficit to break eurozone targets this year but said extra measures need to be taken to ensure next year’s target is met. Unlike many other countries in the euro area, the Netherlands still has a deficit if the interest payments are disregarded, Knot pointed out.

CPB

On Wednesday, the head of the government’s macro-economic forecasting agency declined to comment on the scale of the government’s planned cuts to meet the 2014 deadline.

However, Coen Teulings did say there is mounting evidence that the negative effect of cuts on economic growth has been underestimated.

The CPB’s new economic plan includes figures which show that every euro the government cuts from its budget, or adds to the tax burden, causes more than a euro’s worth of damage to the economy, the NRC reported.