Dutch agree coalition as deal struck on further €16bn in austerity cuts

Published on 30/10/2012 00:00

Dutch prime minister Mark Rutte’s Liberal Party and the Labour Party have reached a coalition deal, paving the way for a pro-austerity, pro-European government to be sworn in as early as next week.

Mr Rutte, whose Liberals won the most seats in the 12 September election, will remain as prime minister, while Labour’s Jeroen Dijsselbloem is widely tipped to replace Jan Kees de Jager as finance minister.

Under Mr Rutte and Mr De Jager, a Christian Democrat whose party lost heavily in the election, the Netherlands has been at the forefront of calls for tight fiscal policies across the eurozone to tackle the region’s debt crisis.

Mr Rutte and Labour leader Diederik Samsom reached the deal yesterday, far quicker than expected, underlining the urgency given the European crisis and the fragile state of the Dutch economy. They have already agreed to cut state spending by a further €16 billion (£13bn) over four years, aiming to all but eliminate the budget deficit by 2017.

“This is a balanced package, a package that will make the Netherlands emerge from the crisis stronger,” Mr Rutte said. The biggest spending cuts will be in healthcare, at €5bn, social security, at €3bn, and government overheads, at €2.5bn, it was reported.

The Netherlands, one of a handful of remaining AAA-rated economies in the eurozone, is already implementing a €12bn austerity programme agreed in April. But with the deterioration in the economic environment, further cuts are now needed.