To cut or not to cut: confusion as unions, ministers say different things

Ministers and unions are spreading confusion over last week’s agreement on postponing €4.3bn worth of spending cuts, commentators said on Tuesday.

The agreement stated that cuts scheduled to bring the budget deficit to below the eurozone limit of 3% will not go ahead, but both prime minister Mark Rutte and social affairs minister Lodewijk Asscher have said this may not be the case.


Asscher said in a written briefing to MPs on Monday the Dutch economy will have to grow an extra 1% between 2013 and 2014 to head off the threat of extra austerity measures.


Earlier reports indicated ministers plan to reassess the situation in August when the government’s macro-economic planning bureau CPB publishes its latest forecasts. The CPB said in March the Dutch economy will contract by 0.5% this year but grow again by 1% in 2014.


But FNV leader Ton Heerts said on Tuesday the €4.3bn package, which included a pay freeze for health service staff, was no longer on the cards. ‘The pay freeze has gone for 2014 and we will not talk now about a new situation,’ Heerts said.


RTL commentator Frits Wester said the cuts are likely to be back on the table in August. ‘They have been put in a drawer which has not been locked,’ Wester said.





The cuts are designed to ensure the Netherlands meets eurozone targets with a budget deficit of less than 3% next year and ministers have said repeatedly they indeed to comply with the rules.


Sybrand Buma, leader of the opposition CDA, says in an interview with Tuesday’s Telegraaf that prime minister Mark Rutte is putting the onus for recovery on the man in the street.



If they do not buy enough cars, houses and clothes over the next few months, then they will have to pick up the bill in the form of extra cuts, Buma told the paper.

‘That is not what you should do if you want to restore confidence,’ Buma told the paper.



Meanwhile, ING analysts say the cabinet should not assume postponing the cuts will lead to extra growth. They said on Tuesday the economy is likely to shrink 0.7% this year and will grow by 0.7% in 2014.


The agreement with unions and employers is a question of ‘wishful thinking’, analyst Maarten Leeen told the Financieele Dagblad.

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