Countries such as the Netherlands must ensure they meet EU monetary union rules or they will be punished by the financial markets, European president Herman Van Rompuy said at the end of a two-day summit in Brussels on Friday.
Van Rompuy was commenting on questions about the latest ‘dramatic’ economic forecasts for the Netherlands and Spain. Although the two countries are not in a similar position, they must all ‘keep their budgets on track’, the president said.
On Thursday, new figures from the goverment’s macro-economic forecaster said the Dutch budget deficit will reach 4.5% next year, well above the 3% permitted under eurozone rules.
German chancellor Angela Merkel also emphasised the need for budgetary discipline, the Financieele Dagblad said.
Dutch prime minister Mark Rutte said the Netherlands would meet its requirements but pointed out there is a little room to manoeuvre in the rules, according to news agency ANP. It is up to the European Commission to decide if the Netherlands has met its obligations or not, the prime minister said.
However, finance minister Jan Kees de Jager said it is paramount that the Netherlands meets the targets. ‘I am not going to beg Brussels for clemency,’ the minister said.
Next week, ministers begin talks on how to reduce spending by at least €9bn in order to reduce the budget deficit. Some estimates say the savings package will need to total €12bn.
The Telegraaf says the salaries of all civil servants are set to be frozen for a further period in order to help the government meet eurozone monetary union rules.
One source told the paper the pay freeze would be ‘unavoidable’ if the Netherlands is to find savings of at least €9bn. A 2.5 year pay freeze would generate €2.5bn, the paper said.
A freeze in social security benefits and pensions would generate a further €2.7bn.
All but two leaders sign EU fiscal treaty
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