This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/2012/apr/23/eurozone-crisis-austerity-dutch-government

The article has changed 17 times. There is an RSS feed of changes available.

Version 3 Version 4
Eurozone crisis live: Dutch government on brink after austerity talks collapse Eurozone crisis live: Dutch government on brink after austerity talks collapse
(40 minutes later)
10.10am: The political uncertainty in France and the Netherlands, and today's poor eurozone economic data, are conspiriring to forcing stock markets to new lows. 11.05am: Breaking news from the Netherlands -- Dutch broadcaster RTL reports that prime minister Mark Rutte will offer the cabinet's resignation to the country's monarch, Queen Beatrix.
More as we get it....
10.51am: Despite boasting a AAA credit rating, the Netherlands actually posted a larger deficit in 2011 than with Portugal or Italy.
Data released this morning by Eurostat (the EU's statistics office) showed that the Dutch deficit was 4.7% of GDP in 2011. That compares with 4.2% for Portugal and 3.9% for Italy, although rather better than Spain's 8.5%.
The austerity negotiations in the Netherlands had floundered over the government's attempt to cut its defiict to 3% in 2013. After walking out of the talks on Saturday, Geert Wilders condemned the 3% target as a "'strangulation limit" and vowed to fight the next election on the issue of Europe and the euro.
10.23am: Meanwhile, over in Greece there have also been developments this weekend with Antonis Samaras, the man tipped to win general elections on May 6, unveiling his own economic policies to exit the crisis.
Helena Smith, our correspondent in Athens, has all the details:
No country is more desperate for growth than Greece, the country that triggered the debt crisis. Presenting his economic policies to a nation now wearily preparing to go to the polls, Antonis Samaras, the leader of the centre right New Democracy party said he was poised to make a root-and-branch change of the way Greece works.
"Our aim to change everything, both the system of governance and the economic policy," he said.
New Democracy, he said, would take an axe to the public sector by slashing "state wastefulness" and privatizing "whatever can be privatized." What it would not do was add to the tax burden of Greeks already subjected to a barrage of new levies as part of austerity measures prescribed by the country's international creditors at the EU and IMF.
"The middle class, the hardest hit by taxes, needs to breath," said Samaras unveiling the program. "People don't have money to pay new taxes," added the leader referring to the unprecedented cuts ordinary Greeks have sustained to pensions and wages since the outbreak of the crisis in Athens in late 2009.
"The only thing to do is to reduce wasteful public spending, which is huge."
What Greece needed was a flat 15% corporate tax rate, lower sales taxes to boost growth and investment and an amnesty for those bringing deposits back to Greece [around €20 bn is believed to have left the country in an unprecedented cash flight]. Further across-the-board cuts that have plunged the economy into its worst recession since WWII would be avoided because they were "self-defeating."
"The turnaround must begin. Out of a million businesses in Greece in 2009, 250,000 have closed and 300,000 can no longer pay [taxes] and also face closure which will make unemployment soar … especially among the young for whom the jobless rate is more than 50%."
Pundits believe New Democracy will come out on top in the vote described as "critical" by Samaras, Helena explains. But polls show that the party is unlikely to capture enough votes to win an outright majority – which opens the way to political instability if New Democracy is also unable to form a coalition government with Pasok, the centre-left party that backs the tough reforms and austerity measures demanded of Athens in return for aid.
If both parties are unable to garner at least 50% of the vote with anti-austerity groups instead coming to the fore, analysts fear that Greece will be in for a period of intense political and social turmoil as the opponents to the measures step up protests and strikes. "It's a hair-raising prospect that would be the worst possible scenario for Greece," said a senior official in the interim coalition government that under the stewardship of unelected technocrat Lucas Papademos has ruled the country since November last. "It's vital that the two [main] parties cooperate again but, even more significantly, much will depend on them also clinching at least 50 % of the vote. If not, the anti-austerity front will be emboldened to step up protests and strikes which would be very debilitating to implementing reforms."

Although Samaras, crucially reiterated his commitment to the EU-IMF reform program, lenders worry that the leader will under popular pressure to "renegotiate" the measures adding to the fiscal pressure on Greece.
10.10am: The political uncertainty in France and the Netherlands, and today's poor eurozone economic data, are conspiring to forcing stock markets to new lows.
The Dutch stock market has been hit hard, as prime minister Mark Rutte holds an emergency cabinet meeting to discuss whether to seek a general election.The Dutch stock market has been hit hard, as prime minister Mark Rutte holds an emergency cabinet meeting to discuss whether to seek a general election.
Here's a round-up:Here's a round-up:
Dutch AEX: - 2.49%, down 7.69 points at 301
German DAX: -2.38%, down 160 points at 6589
FTSE 100: -1.5%, down 90 points at 5681
French CAC: -1.58%, down 49 points at 3138
Spanish IBEX 35: -2.9%, down 205 points at 6834		Dutch AEX: - 2.49%, down 7.69 points at 301
German DAX: -2.38%, down 160 points at 6589
FTSE 100: -1.5%, down 90 points at 5681
French CAC: -1.58%, down 49 points at 3138
Spanish IBEX 35: -2.9%, down 205 points at 6834
Joshua Raymond of City Index confirmed that the collapse of Dutch austerity talks had spooked investors, saying:
Once again we have Political turmoil threatening to destabilise financial markets over the eurozone debt crisis with the Netherlands coalition government failing to agree on budget cuts and as a result appearing to be on the brink of fresh general elections.
9.59am: The eurozone remains mired in recession, and could suffer a deeper downturn than previously feared.9.59am: The eurozone remains mired in recession, and could suffer a deeper downturn than previously feared.
That's the message from today's economic data from Markit, showing that the eurozone's manufacturing output slumped to its lowest level since June 2009 (46.0 on its PMI survey), while its services sector fell to a five month low (47.9).That's the message from today's economic data from Markit, showing that the eurozone's manufacturing output slumped to its lowest level since June 2009 (46.0 on its PMI survey), while its services sector fell to a five month low (47.9).
Both sectors suffered from falling orders, and rising unemployment. The decline was driven by poor performances in Germany and France (see 8.38am).Both sectors suffered from falling orders, and rising unemployment. The decline was driven by poor performances in Germany and France (see 8.38am).
Martin van Vliet of ING commented:Martin van Vliet of ING commented:
Today's dismal PMI figures clearly indicate that the Eurozone economy remains in dire straits. Our base case scenario is still for a gradual return to modestly positive growth in the second half of this year, but with the lingering debt crisis and the ongoing drag from fiscal policy, the risks are clearly skewed to a more protracted recession.Today's dismal PMI figures clearly indicate that the Eurozone economy remains in dire straits. Our base case scenario is still for a gradual return to modestly positive growth in the second half of this year, but with the lingering debt crisis and the ongoing drag from fiscal policy, the risks are clearly skewed to a more protracted recession.
9.37am: The Spanish central bank has reported this morning that Spain has slumped back into recession.9.37am: The Spanish central bank has reported this morning that Spain has slumped back into recession.
In its latest monthly report, the Bank of Spain said it believes that the country's GDP fell by 0.4% in the first three months of 2012. That follows a 0.3% contraction in Q4 2011, and zero growth in the third quarter of last year.In its latest monthly report, the Bank of Spain said it believes that the country's GDP fell by 0.4% in the first three months of 2012. That follows a 0.3% contraction in Q4 2011, and zero growth in the third quarter of last year.
9.17am: François Hollande has pledged to challenge Europe's obsession with austerity if (as seems likely) the socialist leader succeeds Nicolas Sarkozy as France's president.9.17am: François Hollande has pledged to challenge Europe's obsession with austerity if (as seems likely) the socialist leader succeeds Nicolas Sarkozy as France's president.
The prospect of eurozone's fiscal compact being renegotiated has caused some alarm in the markets today. Jane Foley of Rabobank says the uncertainty could hit the euro (which has already fall today to around $1.314).The prospect of eurozone's fiscal compact being renegotiated has caused some alarm in the markets today. Jane Foley of Rabobank says the uncertainty could hit the euro (which has already fall today to around $1.314).
Foley said:Foley said:
While the lack of growth in the Eurozone region clearly does need to be addressed, the fears of investors is that fiscal reform could be watered down which could open the path for a longer and potentially deeper bout of contagion in the debt markets.While the lack of growth in the Eurozone region clearly does need to be addressed, the fears of investors is that fiscal reform could be watered down which could open the path for a longer and potentially deeper bout of contagion in the debt markets.
ButElisabeth Afseth of Investec argues that a Hollande presidency could bring clear benefits to the eurozone.ButElisabeth Afseth of Investec argues that a Hollande presidency could bring clear benefits to the eurozone.
It may not be such a bad thing for Europe to get a fresh face with a different opinion as the current austerity-only drive is not working, though it is probably too optimistic too hope Hollande will be able to bring about the environment for change that is required to get Europe out of its current problems.... I can't see drastic labour reforms coming from that front.It may not be such a bad thing for Europe to get a fresh face with a different opinion as the current austerity-only drive is not working, though it is probably too optimistic too hope Hollande will be able to bring about the environment for change that is required to get Europe out of its current problems.... I can't see drastic labour reforms coming from that front.
Still - a little less focus on austerity may make the Germans think about how else they can bring about fiscal discipline to their troubled neighbours…Still - a little less focus on austerity may make the Germans think about how else they can bring about fiscal discipline to their troubled neighbours…
Hollande won the first round of the Presidential election with 28% of the vote, followed by Nicolas Sarkozy with 27% and Marine Le Pen with 20%.Hollande won the first round of the Presidential election with 28% of the vote, followed by Nicolas Sarkozy with 27% and Marine Le Pen with 20%.
Nicolas Doisy of Cheuvreux, part of Crédit Agricole, says the results show the French people do not support economic reforms. Doisy writes:Nicolas Doisy of Cheuvreux, part of Crédit Agricole, says the results show the French people do not support economic reforms. Doisy writes:
The main message from the first round is indeed that a large section of the population already rejects the policies called by the economic situation, who-ever the next President is.The main message from the first round is indeed that a large section of the population already rejects the policies called by the economic situation, who-ever the next President is.
They fear that the so-called French social model will broken with deep fiscal austerity and the liberalisation of the labour market and non-financial services.They fear that the so-called French social model will broken with deep fiscal austerity and the liberalisation of the labour market and non-financial services.
My colleague Alexandra Topping is covering all the reaction to yesterday's vote in this live blog.My colleague Alexandra Topping is covering all the reaction to yesterday's vote in this live blog.
9.10am: Last month, our European editor Ian Traynor explained in detail how the Dutch government was in crisis over its budget cuts, having previously taken such a hard line against other Eurozone countries.9.10am: Last month, our European editor Ian Traynor explained in detail how the Dutch government was in crisis over its budget cuts, having previously taken such a hard line against other Eurozone countries.
As one of the most vocal cheerleaders for the rigid new rules the Rutte government has put its own credibility on the line. The Dutch are the authors of a radical proposal for establishing a new eurozone budget tsar to enforce fiscal rectitude across the 17 countries.As one of the most vocal cheerleaders for the rigid new rules the Rutte government has put its own credibility on the line. The Dutch are the authors of a radical proposal for establishing a new eurozone budget tsar to enforce fiscal rectitude across the 17 countries.
"The government's in a fix," says Paul Nieuwenburg, a political scientist at Leiden University. "It's a problem of image. Having such a big mouth on Greece and seizing the moral high ground, they are now morally obliged to stick by the rules. Things have become very complicated. That's why Rutte has withdrawn into splendid isolation and they won't talk to the media.""The government's in a fix," says Paul Nieuwenburg, a political scientist at Leiden University. "It's a problem of image. Having such a big mouth on Greece and seizing the moral high ground, they are now morally obliged to stick by the rules. Things have become very complicated. That's why Rutte has withdrawn into splendid isolation and they won't talk to the media."
The full piece is well worth a read, to understand how Mark Rutte's alliance with Geert Wilders has come unstuck.The full piece is well worth a read, to understand how Mark Rutte's alliance with Geert Wilders has come unstuck.
9.05am: The emergency Dutch cabinet meeting was due to start in The Hague around half an hour ago.9.05am: The emergency Dutch cabinet meeting was due to start in The Hague around half an hour ago.
Before it began, minister for international cooperation Ben Knapen admitted that a general election now seems 'inevitable'. Knapen told news programme RTL Z that:Before it began, minister for international cooperation Ben Knapen admitted that a general election now seems 'inevitable'. Knapen told news programme RTL Z that:
It is important that everyone who bears responsibility stays calms and makes sure we get an orderly budget. We do have big problems.It is important that everyone who bears responsibility stays calms and makes sure we get an orderly budget. We do have big problems.
8.49am: Geert Wilders' decision to torpedo the Dutch austerity talks (see 7.50am) comes seven weeks after he demanded that the Netherlands quit the euro.8.49am: Geert Wilders' decision to torpedo the Dutch austerity talks (see 7.50am) comes seven weeks after he demanded that the Netherlands quit the euro.
Back on March 5, Wilders claimed that the euro was not in the interests of Dutch people, saying:Back on March 5, Wilders claimed that the euro was not in the interests of Dutch people, saying:
We want to be the master of our own house and our own country, so we say yes to the guilder. Bring it on.We want to be the master of our own house and our own country, so we say yes to the guilder. Bring it on.


Wilders' Partij voor de Vrijheid don't simply want freedom from the single currency either. PVV campaigns on an anti-immigration platform, while Wilders himself was acquitted of hate speech charges last June over a series of attacks on Islam.

Wilders' Partij voor de Vrijheid don't simply want freedom from the single currency either. PVV campaigns on an anti-immigration platform, while Wilders himself was acquitted of hate speech charges last June over a series of attacks on Islam.
8.38am: The latest economic data from France and Germany paints an unexpectedly bleak picture, and added to the gloom in the financial markets.8.38am: The latest economic data from France and Germany paints an unexpectedly bleak picture, and added to the gloom in the financial markets.
Germany industrial sector suffered its sharpest contraction in three years this month. The monthly manufacturing PMI fell sharply to 46.3, from 48.4 in April (on this index, the 50-point mark separates expansion from contraction).Germany industrial sector suffered its sharpest contraction in three years this month. The monthly manufacturing PMI fell sharply to 46.3, from 48.4 in April (on this index, the 50-point mark separates expansion from contraction).
While France's manufacturing output picked up (to 47.3), its service sector PMI fell to a six month low of 46.4. And in another blow, French manufacturing sector confidence also dropped in April -- with factory owners saying they were worried by falling overseas orders.While France's manufacturing output picked up (to 47.3), its service sector PMI fell to a six month low of 46.4. And in another blow, French manufacturing sector confidence also dropped in April -- with factory owners saying they were worried by falling overseas orders.
With the eurozone already thought to be in recession, this is not a great start to the second quarter of the financial year.With the eurozone already thought to be in recession, this is not a great start to the second quarter of the financial year.
8.22am: The Netherlands is one of just four eurozone members who still holds an AAA credit rating with all three major credit rating agencies.8.22am: The Netherlands is one of just four eurozone members who still holds an AAA credit rating with all three major credit rating agencies.
Analysts believe that the political crisis that now grips the country could prompt a downgrade. Without the support of Geert Wilders' Freedom Party, Mark Rutte is clinging onto power as the leader of a minority party. He admitted over the weekend that elections are the "logical next step".Analysts believe that the political crisis that now grips the country could prompt a downgrade. Without the support of Geert Wilders' Freedom Party, Mark Rutte is clinging onto power as the leader of a minority party. He admitted over the weekend that elections are the "logical next step".
Arnold Heertje, a former political economics professor at the University of Amsterdam, predicted:Arnold Heertje, a former political economics professor at the University of Amsterdam, predicted:

This story is going to cost the Netherlands their triple A....Interest rates on the bond markets will increase.
This story is going to cost the Netherlands their triple A....Interest rates on the bond markets will increase.
In the bond markets this morning, the spread betweeen German and Dutch bond yields has hit a three-year high. That follows a rush into German debt, driving down the yield (effectively the interest rate) on 10-year bunds to a record low.In the bond markets this morning, the spread betweeen German and Dutch bond yields has hit a three-year high. That follows a rush into German debt, driving down the yield (effectively the interest rate) on 10-year bunds to a record low.
8.07am: Shares are falling across Europe at the start of trading. Here's a summary:8.07am: Shares are falling across Europe at the start of trading. Here's a summary:
UK FTSE 100: - 0.7% at 5727, down 44 points
French CAC: - 1.1%
German DAX: -1.3%
Italian FTSE MIB: -1.7%
Netherlands AEX: - 1.1%		UK FTSE 100: - 0.7% at 5727, down 44 points
French CAC: - 1.1%
German DAX: -1.3%
Italian FTSE MIB: -1.7%
Netherlands AEX: - 1.1%
The political crisis in the Netherlands, and the French presidential election results, are both causing some concern. On top of that, the latest economic data from China shows that its factory output fell again last month.The political crisis in the Netherlands, and the French presidential election results, are both causing some concern. On top of that, the latest economic data from China shows that its factory output fell again last month.
Cameron Peacock, market analyst at IG, commented:Cameron Peacock, market analyst at IG, commented:

Stage one of the French election results, (while mildly encouraging for Sarkozy) continue to suggest a change in government for France, which has the potential to rock the dynamic of the region's 'power rankings', while the collapse of austerity talks in the Netherlands could jeopardise Holland's prized AAA rating and threatens to destabilise one of Europe's more functional governments.
Stage one of the French election results, (while mildly encouraging for Sarkozy) continue to suggest a change in government for France, which has the potential to rock the dynamic of the region's 'power rankings', while the collapse of austerity talks in the Netherlands could jeopardise Holland's prized AAA rating and threatens to destabilise one of Europe's more functional governments.
7.50am: The political crisis in the Netherlands was triggered by right-wing leader Geert Wilders, who heads the Partij voor de Vrijheid (PVV) or Party for Freedom.7.50am: The political crisis in the Netherlands was triggered by right-wing leader Geert Wilders, who heads the Partij voor de Vrijheid (PVV) or Party for Freedom.
For weeks, prime minister Mark Rutte has been holding talks over around €16bn of budget cuts. Wilders has now thrown that 2013 budget into uncertainty by walking out of negotiations over the Dutch austerity plans on SaturdayFor weeks, prime minister Mark Rutte has been holding talks over around €16bn of budget cuts. Wilders has now thrown that 2013 budget into uncertainty by walking out of negotiations over the Dutch austerity plans on Saturday
Wilders says his party could not support the tough cutbacks demanded by the European Union. He criticised the EU for making "attacks on our elderly", claiming:Wilders says his party could not support the tough cutbacks demanded by the European Union. He criticised the EU for making "attacks on our elderly", claiming:
Money is being taken from the wallets of pensioners.Money is being taken from the wallets of pensioners.

Rutte is now due to hold emergency cabinet talks today. Without the support of Wilders' Freedom Party, he may be forced to quit and call snap elections. Louise Armitstead of the Daily Telegraph reckons Rutte's resignation could come today.
Rutte is now due to hold emergency cabinet talks today. Without the support of Wilders' Freedom Party, he may be forced to quit and call snap elections. Louise Armitstead of the Daily Telegraph reckons Rutte's resignation could come today.
7.45am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.7.45am: Good morning, and welcome to our rolling coverage of the eurozone debt crisis.
Today is going to be dominated by Holland, and Hollande. The Netherlands is gripped by a political crisis after talks over its austerity budget collapsed over the weekend. Mark Rutte, the Dutch prime minister, has called crisis cabinet talks today, after his coalition partner – the Freedom Party – walked out of negotiations over deep spending cuts.Today is going to be dominated by Holland, and Hollande. The Netherlands is gripped by a political crisis after talks over its austerity budget collapsed over the weekend. Mark Rutte, the Dutch prime minister, has called crisis cabinet talks today, after his coalition partner – the Freedom Party – walked out of negotiations over deep spending cuts.
The Dutch crisis comes as the financial markets digest the results of the French presidential elections. Socialist François Hollande secured a clear lead over Nicolas Sarkozy in the first round of voting – victory in two weeks time would have significant ramifications for the eurozone.The Dutch crisis comes as the financial markets digest the results of the French presidential elections. Socialist François Hollande secured a clear lead over Nicolas Sarkozy in the first round of voting – victory in two weeks time would have significant ramifications for the eurozone.
With City traders predicting that European stock markets will fall this morning, it could be a lively day ...With City traders predicting that European stock markets will fall this morning, it could be a lively day ...