Friday 27 January 2023

Rating agency Fitch doubts Dutch AAA status amid property slump

International credit rating agency Fitch has issued ‘its clearest warning yet’ that the Netherlands faces losing its Triple A credit rating, Britain’s Telegraph newspaper reports on Thursday.

The paper says Fitch may take action ‘if the government fails to deliver austerity cuts or lets political conflict intrude on economic management’. The next rating committee meeting will take place in June.
‘The Dutch are on the edge of a negative rating action,’ Fitch’s expert on the Netherlands Chris Pryce told the paper. The first move is likely to be a switch from stable to negative outlook rather than a full downgrade, the Telegraph said.
The Telegraph says the Netherlands is caught in a ‘negative feedback loop’ in terms of the housing market, with the recession and house price falls feeding off each other.
The number of unsold homes is nearing South European levels and household debt is the highest in the eurozone, the paper points out.
Dutch employers leader Bernard Wientjes told television programme Buitenhof last month it is vital the Netherlands cuts its budget deficit in order to keep its Triple A rating status.
‘This is by far the most important thing for the financial markets,’ Wientjes said. ‘We need to take draconian measures.’
The coalition partners are currently negotiating a €9bn package of cuts to reduce the Netherlands’ budget deficit back to below the monetary union norm of 3%.

Fitch doubts Dutch AAA as property slump reaches ‘coma’

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