Saturday 26 September 2020

MPs agree higher deficit better than cuts

A majority of MPs agree that the budgetary rules agreed by the coalition government should be dropped so that the Netherlands does not need to make deep cuts in spending which would further worsen the country’s economy.


This was the conclusion of Thursday’s parliamentary debate following the publication a day earlier of figures which confirm the economy will shrink by 3.5% this year – considerably more than expected.
According to the government’s budget rules, cuts have to be made in spending if the budget deficit goes over 2% of gross national product. The government’s social policy unit CPB expects that this will happen this year.
Pieter van Geel, parliamentary leader of the biggest ruling party, the Christian Democrats (CDA), told MPs that cuts of €40bn over the coming 18 months would be needed to ensure the budget deficit is limited to 2%. ‘That will ruin the economy,’ he is quoted as saying by the Financieele Dagblad.
Consensus
Finance minister Wouter Bos welcomed MPs’ standpoint. ‘It is good to see such a broad consensus agreeing that it would not be sensible to make big cuts to bring down the budget deficit,’ he is quoted as saying by the paper.
The opposition right-wing Liberal party (VVD) was the only party which called for the government to hold on to its strict budgetary policy. VVD leader Mark Rutte said there are a number of ways in which government expenditure could be reduced without damaging the economy.
But Van Geel dismissed this: ‘You don’t know what you’re talking about. This is not the way to contribute to a proper debate about how we can solve our problems,’ he is quoted as saying by the NRC.
Closed doors
Ministers and the coalition parties (CDA, Labour and the orthodox Christian ChristenUnie) are to meet behind closed doors to prepare a plan to tackle what many papers are calling the worst economic crisis in 30 years.
The framework for the measures needed is expected to be ready by mid- March, Bos said in a tv interview earlier this week.
A number of measures will be discussed including raising the state pension age, reducing mortgage tax relief and cutting tax breaks for non-working parents.
More on this
PM: Economic situation extremely serious
Regions draw up recession busting plans
No change of course despite recession

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