Austerity measures unwise during recession, says Labour leader

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It would not be a good idea to make very deep cuts in government spending at a time of economic contraction, Labour leader Diederik Samsom told a radio current affairs show on Sunday evening.

The current coalition government is made up of Samsom's party and the right-wing Liberal VVD and is faced with a budget deficit which breaks eurozone rules.

During the interview, Samsom hinted several times the 3% budget deficit limit is not set in stone, Dutch media reported. 'We are striving to reach 3% but at the point the economy contracts, we have to make an exception,' Samsom said. 'That is what we are experiencing this year, so we are making an exception.'

Recession


The Dutch economy is currently in recession and the government agreed earlier not to make any further cuts in 2013, despite the need to meet eurozone rules. The government's position is surprising given the Netherlands has been one of the most vociferous proponents of budgetary discipline.

Nevertheless, the Labour leader, who remains an MP rather than a minister, said the new measures proposed by the government would ensure the Dutch economy does not shrink again in 2014.

The cabinet on Friday published a list of measures aimed at saving an extra €4.3bn. These include tax increases, a pay freeze for public sector workers and extra charges on industry.

Unions


The coalition has invited opposition parties, unions and employers' organisations to have their say on the proposals in an effort to build up broad support.

Last Thursday, new macro-economic figures from the government's forecasting agency CPB showed the budget deficit will reach 3.4% next year, but that the economy will grow some 1%.

The Labour party's deputy prime minister, Lodewijk Asscher, told a television chat show on Sunday he would urge unions to take part in the discussions, despite their earlier cynical reaction.

The unions must seize the opportunities offered by new measures to stimulate the economy, said Asscher, who is also social affairs minister. 'I am not afraid to grab my wallet and take steps to boost the economy.'



© DutchNews.nl

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