Employers: Ignore 3 Percent Budget Deficit Ceiling
THE HAGUE, 12/06/13 - European Commissioner Olli Rehn is willing to give the Netherlands more time to get its deficit down to the eurozone norm of 3 percent of GDP, he suggested in The Hague on Tuesday. Employer organisations are urging the cabinet not to raise taxes anymore.
The commissioner repeated that the Netherlands needs to make additional savings to get its deficit down to 2.8 percent in 2014. Brussels last week set that percentage rather than just 3.0 percent as the target. However, a breathing space would be possible if economic growth continued to be elusive, Rehn stated on Tuesday.
Rehn was speaking after a meeting with Finance Minister Jeroen Dijsselbloem. Dijsselbloem said he had told the commissioner the Netherlands cannot follow the 2.8 percent percent target advice. "It is already difficult enough to reach 3 percent".
Employer organisations VNO-NCW and MKB want the cabinet to ignore the EU’s 3 percent of Gross Domestic Product (GDP) budget deficit ceiling in 2014. “The cabinet must explain in Brussels that things have to proceed at a quieter pace.”
The employers do find that the Dutch government finances must be put in order and there must be big reforms. “But the economy must also be able to get underway again. Via new tax hikes, the opposite is threatened.”
The employer organisations were responding on Tuesday morning to figures from the Dutch central bank (DNB), which said Monday that the deficit will turn out at 3.9 percent of GDP in 2014 without supplementary policy measures. In order to get below the 3 percent level, the cabinet has to make extra savings of 6 to 8 billion euros, according to DNB.
The employer groups VNO-NCW and MKB fear tax hikes if Brussels does not provide the extra time. “Even higher taxes mean that the working Dutch will once again be given the bill and consumer confidence will again suffer heavy blows,” they write in a press release. The employers consider that the government should instead cut its own spending and the employers’ taxes and social premiums as well as purchasing power should be left untouched.
The Netherlands has already recently been given an extra year to comply with the budget rules: the deficit must now come down to below 3 percent in 2014. Other countries such as France and Spain were however given two years extra.
A number of opposition parties are urging postponement of extra cutbacks. "The austerity fetishism has a counter-productive effect,” according to MP Arnold Merkies of the Socialist Party (SP). "Cutbacks must not continue to hang over our heads like a Sword of Damocles. We must be able to get out of the mess with an investment agenda.”
“It is clear that there will be no end to the crisis with the present cabinet policy,” said leftwing Green (GroenLinks) MP Jesse Klaver. "We do not need any extra tax increases and cutbacks at this time, but rather focused investments to get the economy underway again.”
Geert Wilders expressed his dissatisfaction on Twitter. "Rutte is demolishing the Netherlands. What the Netherlands needs is tax reduction, tax reduction and tax reduction!” declared the Party for Freedom (PVV) leader.
Other parties such as the Christian democrats (CDA), centre-left D66 and small Christian party ChristenUnie do not want to say yet whether they consider the 3 percent target should be abandoned. But they consider that the cabinet must make it clear as quickly as possible what it plans to do.
The conservatives (VVD) and Labour (PvdA) are keeping quiet but are sticking to the 3 percent for now. The finance ministry said it had “taken note of the figures.” “The cabinet will make decisions in August based on the figures that the Central Planning Bureau (CPB) presents,” the ministry added.
New forecasts from the CPB are due on Friday. CDA, D66 and ChristenUnie want the cabinet to propose and debate measures from next week rather than wait until August.