Economy needs to grow an extra 1% to head off more spending cuts

16th April 2013, Comments 0 comments

The Dutch economy will have to grow an extra 1% between 2013 and 2014 to head off the threat of extra austerity measures, social affairs minister Lodewijk Asscher said in a briefing to MPs on Monday evening.

Last week, the cabinet sealed an agreement with unions and employers to delay a planned €4.3bn package of spending cuts in the hope the economy will pick up.

‘In order to reach the budget deficit of 3%, the economy will have to grow some 1% more than estimated earlier by the CPB in both 2013 and 2014,' the minister said in a written answer to MPs questions

Ministers plan to reassess the situation in August when the government's macro-economic planning bureau CPB publishes its latest forecasts. The CPB said in March the Dutch economy will contract by 0.5% this year but grow again by 1% in 2014.

The CPB also says the Dutch economy will contract by 0.5% this year but grow again by 1% in 2014.

Eurozone


The cuts are designed to ensure the Netherlands meets eurozone targets with a budget deficit of less than 3% next year and ministers have said repeatedly they indeed to comply with the rules.

Sybrand Buma, leader of the opposition CDA, says in an interview with Tuesday's Telegraaf that prime minister Mark Rutte is putting the onus for recovery on the man in the street.

If they do not buy enough cars, houses and clothes over the next few months, then they will have to pick up the bill in the form of extra cuts, Buma told the paper.

‘That is not what you should do if you want to restore confidence,' Buma told the paper.

Reforms


Meanwhile, Mario Draghi, president of the European central bank, had talks with Rutte on Monday ahead of a speech to Amsterdam University students.

Draghi, who was addressing Amsterdam University students, said he had impressed upon the prime minister that ‘it is crucial for the Netherlands that the reforms ... are put through,' the NRC quoted Draghi as saying.



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