Central bank says spending cuts need to be up to €8bn next year
The Netherlands will have to make savings generating between €6bn and €8bn next year to reduce the budget deficit in line with eurozone regulations, according to new calculations from the Dutch central bank.
The continuing economic downturn means the budget deficit will go up to 3.9% next year without any further cutbacks, well above the 3% limit, the central bank said on Monday.
The European Commission said last month the Netherlands needs to make cuts of €6bn to cut the deficit to 2.8%.
Earlier this year the cabinet agreed to shelve a €4.3bn austerity package in a pact with unions and employers which ministers hoped would boost economic growth.
However, ministers said later they would look again at the situation in August to see if cuts would be necessary after all. These new figures indicate the austerity package will have to be increased in size to meet Brussels' rules.
Central bank director Job Swank told reporters it is not sensible to try to make up the deficit with higher taxes. 'You cannot keep on doing that because you really drive down consumer spending,' he said.
Instead the government should indentify other areas where spending can be cut. Healthcare would be one option, Swank said.
The government said earlier it would wait for new forecasts from its macro-economic policy unit CPB before deciding if extra measures are necessary. Those figures are due later this week.