The loss of the Netherlands’ pristine credit rating has reignited a debate in the Northwestern European country and beyond about its austerity program. But “austerity” in the Netherlands, as is the case in most other European nations, has chiefly meant tax increases for its businesses and workers — which has likely had a far more negative impact on growth than government spending cuts.

Standard and Poor’s downgraded Dutch sovereign debt one notch on Friday, leaving Finland, Germany and Luxembourg the only member of the European single currency area with top ratings from all three big American credit rating agencies.

The company said its decision was informed by the Netherlands’ uninspiring growth forecasts. “The real GDP per capita trend growth rate is persistently lower than that of peers at similarly high levels of economic development,” a statement read.

The Dutch economy is still 3.5 percent smaller than it was in 2008. While many other eurozone countries posted growth again this year, the Netherlands lags behind. It is expected to grow just .5 percent next year and Standard and Poor’s doesn’t expect it to regain its previous level until 2017.

The Dutch export economy is doing well, growing more than 2 percent in the last year. The country’s current account surplus is approaching an all time high of 10 percent. Dutch workers remain among the most productive in the developed world, suggesting that unlike high debt countries in the periphery of the eurozone, the country is in less need of labor reforms to boost competitiveness — although generous unemployment insurance, the first six months of which is fully paid for by employers, might account in part for its relatively high jobless figures. It is the domestic consumer economy that has stagnated. Household consumption has dropped in every quarter since early 2011.

The underlying cause is the Netherlands’ high household debt, equivalent to 110 percent of annual economic output. Housing prices have fallen 20 percent since 2008, as a result of which 16 percent of homeowners owe more on their mortgages than their houses are worth.

Public sector wage freezes, although exempting workers in health care, have also depressed consumption. But it is higher taxes that have hit workers in the private and public sector alike.

Prime Minister Mark Rutte’s government raised the sales tax from 19 to 21 percent while taxes on alcohol, fuel, soft drinks and tobacco were raised even further. An insurance tax was raised from 7.5 percent in 2011 to 21 percent in January of this year while a surtax on incomes over €150,000 was levied in both 2012 and 2013. Income tax brackets have also not been adjusted for inflation for several years which has amounted to a de facto tax increase across the board.

There have been cuts, especially in defense and health care, but in order to secure opposition support for its spending plans in the upper chamber of parliament, where the ruling coalition doesn’t a command a majority of its own, education spending is slated to be raised €600 million next year while planned child benefit reductions were canceled. Government spending continues to rise in real terms.

The Netherlands’ central bank has cautioned against further tax increases which it also sees driving up inflation, now the highest in the eurozone. 92 percent of respondents to a survey that was conducted by the ING bank in September said they would rather the government cut spending more than raise taxes to reduce its deficit which is expected to come in at 3.2 percent this year, exceeding the European Union’s 3 percent limit which previous Dutch governments fought to enforce.