After weeks of discussions on austerity measures, the Dutch prime minister has said government talks have fallen through and new elections are the “next logical step.”
The Dutch government appeared close to collapse on Saturday after budget talks between the minority government parties and its opposition support collapsed.
The talks were aimed at cutting up to 16 billion euros ($21 billion) from the annual budget. Dutch Prime Minister Mark Rutte told reporters he would hold a crisis meeting on Monday to assess the situation.
“Elections are the logical next step,” Rutte said. He added that he wants to work with parliament to finalize austerity measures before the poll takes place.
The talks among Rutte’s Liberal Party, his coalition partners the Christian Democrats and the anti-Islam Freedom Party headed by Geert Wilders started in March as the Dutch economy sank into recession. Forecasts showed the 2012 budget deficit would reach 4.6 percent of gross domestic product when the EU deficit ceiling is 3 percent.
Rutte blamed Wilders for the collapse. He said that on Friday a “balanced package” of cuts had been agreed only for Wilders to come back on Saturday after talking to his party colleagues and rejecting the plan.
Wilders said he “would not accept that the elderly in the Netherlands have to pay for nonsensical demands from Brussels.”
AAA-rating in jeopardy
Last week, ratings agency Fitch warned that the Netherlands might loose its AAA credit score if action to cut the deficit and stop debt from rising was not taken.
The Dutch also have huge levels of personal debt, mostly mortgage-related. One of the highest in the EU, the debt has become a major concern as house prices started to fall in 2008.
Only Germany, Finland, Luxembourg and the Netherlands still hold AAA rating in the eurozone. The Dutch government has been one of Germany’s strongest supporters for a new pact on fiscal responsibility in the eurozone.