The Dutch economy faces a prolonged period of economic stagnation and the government is wrestling to satisfy the EU’s budget rules, the Wall Street Journal says in an article.

The paper says the country’s economic woes are largely home-grown, with households cutting spending to pay down mortgages while facing austerity-driven tax increases, rising unemployment and pension cuts.

Economists see no quick way out, says the paper. The Netherlands suffers from a so-called balance-sheet recession – one characterised by high debt levels that prompt households to save rather than spend – and they are usually longer and more severe than the average cyclical downturn.

Drift

The country is drifting away from the euro zone core and may even be stripped of its cherished triple-A rating, says the paper.

The writers say the issue has stirred a heated debate between critics such as union who want the government to relax its budget-cutting efforts and prime minister Mark Rutte who is eager to satisfy EU budget rules in 2014.