Dutch queen calls for elections

2012-04-25 16:02

The Hague - The Dutch queen has called for national elections on 12 September, leaving the country with only a caretaker government for more than four months as it struggles to bring its budget deficit within EU-mandated limits.

Prime Minister Mark Rutte and his 18-month old government resigned on Monday after failing to agree on billions of euros in cuts to rein in government spending.

Caretaker Finance Minister Jan Kees de Jager was reportedly meeting with leaders of all political parties on Wednesday in a bid to find common ground on cuts ahead of a debate on Thursday on the government's finances.

The government, along with all other EU nations, has until the end of the month to submit a draft 2013 budget and plan of economic reforms to Brussels as part of the EU's fiscal surveillance of member states.

Rutte had been one of the most vocal critics of countries not sticking to EU budget rules and is now facing a near impossible task of getting the Dutch deficit down to 3% of GDP next year.

Opposition parties say they want to work to get the deficit down to 3%, but not by next year as that would involve deep cuts that will ultimately hurt economic growth.

The Dutch budget deficit is expected to reach 4.6% of gross domestic product this year.

Unpopular austerity

The deficit limits were agreed by the 17 countries in the eurozone to restore investor confidence in the region after a series of debt crises.

But such austerity is increasingly unpopular across Europe amid fears that it is so damaging to business and consumer confidence that it leads to lower economic growth and even greater debt distress.

The collapse on Saturday of Rutte's austerity drive came a day before French Socialist leader Francois Hollande's strong showing in presidential elections.

If he wins a 6 May run-off election against French President Nicolas Sarkozy, Hollande has pledged not to cut, but to increase public spending and to re-negotiate a much vaunted budgetary pact among 25 EU countries meant to enforce national fiscal discipline.

European Council President Herman Van Rompuy, however, underscored the EU's stance that European governments should not attempt to spend their way out of trouble.

"There are no easy answers," Van Rompuy said in a speech on Wednesday to Romania's Parliament. "Since the budgetary situation in many Member States is tight, stimulating growth through 'deficit spending' is not the solution."

- SAPA