The Netherlands’ ruling center-right coalition unveiled an expansionary budget on Tuesday, when King Willem-Alexander read out his annual speech from the throne to set out the government’s priorities for the next fiscal year.
Whereas the Dutch government, then also led by Mark Rutte, raised taxes and cut public spending during the last economic crisis to keep its budget deficit under the EU’s 3-percent ceiling, it now argues against austerity and is borrowing the equivalent of 7.2 percent of GDP (down from an earlier estimate of 8.7 percent).
Rutte argues the savings made in previous years allow the government to avoid cuts this time.
Dutch prime minister Mark Rutte has taken a hard line in Brussels on the conditions of coronavirus aid to Southern Europe, but at home his government has abandoned austerity without controversy.
During the last economic crisis, Rutte, who has led the liberal People’s Party for Freedom and Democracy since 2006, raised taxes and cut public spending to keep the Netherlands’ budget deficit under the EU’s 3-percent ceiling.
Now, when the economic contraction caused by COVID-19 is even more severe, he is borrowing €56 billion, or 7.2 percent of GDP. Debt as a share of economic output is projected to rise from 49 to 61 percent.
Statism is back in a country that is (or used to be) considered a champion of liberalization and free trade.
Time is running out for the autonomous Dutch islands in the Caribbean to do a deal with their former colonizer.
Coronavirus has brought tourism, the mainstay of the island economies, close to a standstill. Tax revenue has dried up while unemployment has soared. Without support from the European Netherlands, the governments of Aruba, Curaçao and Sint Maarten will run out of money in weeks.
Weeks of political deadlock on Curaçao have been broken with the swearing-in of Shaheen Elhage as lawmaker. He succeeds William Millerson, who died in June.
Millerson’s death had reduced the government to ten out of 21 seats in the island’s legislature. Opposition parties refused to attend Elhage’s inauguration, denying the ruling parties a quorum. They are unhappy with cuts and reforms the government is enacting to qualify for financial support from the Netherlands.
One opposition lawmaker, Marilyn Moses, did attend parliament on Monday.
The government of the Aruba, a Dutch island in the Caribbean, has presented a five-point plan to restructure its tourism-dependent economy, which has been decimated by COVID-19.
Meanwhile on neighboring Curaçao, pro-independence parties are boycotting the inauguration of a pro-government lawmaker, bringing politics on the island to a standstill.
The two islands, and Sint Maarten, are autonomous countries within the Kingdom of the Netherlands and have yet to approve Dutch terms for financial support to cope with the effects of coronavirus. Read more “Contrast in the Dutch Caribbean”
Health Minister Hugo de Jonge has won an unexpectedly close election for the leadership of the Netherlands’ ruling Christian Democratic party.
De Jonge, a centrist who was backed by the party establishment, won 50.7 percent support against 49.3 for backbencher Pieter Omtzigt, a difference of 258 votes.
The Christian Democrats are the second-largest party in Mark Rutte’s government with nineteen out of 150 seats in parliament. Recent surveys give them 9 to 11 percent support, not enough to become the largest party but enough to play a role in the formation of the next government.
The Dutch government is criticized in the international media for resisting EU grants (it prefers loans conditions on reforms) to help pay for the economic recovery in coronavirus-struck Southern Europe. But the critics are oddly incurious about the Netherlands’ motives.
An editorial in Monday’s Financial Times is typical. It accuses Prime Minister Mark Rutte of singlehandedly putting the EU economy at risk, but it resorts to stereotype and innuendo to explain why he’s unwilling to sign off on a €750 billion recovery fund: the Dutch are stingy and Rutte is worried about losing voters to the Euroskeptic right. (He’s never been more popular.)
Mr Rutte pays lip service to the idea of a stronger, geopolitical Europe but is unwilling to accept the price tag that comes with it, especially with national elections looming next year.
I single out the Financial Times because it should know better. There have been worse opinion columns in the Italian and Spanish press.
At least the Financial Times hints at the need for “productivity-enhancing reforms” in Italy and Spain, which have borne the brunt of the coronavirus pandemic. But it doesn’t say which reforms or why.