Economic crisis to have lasting consequences

RNW archive

This article is part of the RNW archive. RNW is the former Radio Netherlands Worldwide or Wereldomroep, which was founded as the Dutch international public broadcaster in 1947. In 2011, the Dutch government decided to cut funding and shift RNW from the ministry of Education, Culture and Science to the ministry of Foreign Affairs. More information about RNW Media’s current activities can be found at https://www.rnw.org/about-rnw-media.

The financial and economic crisis that has brought the Dutch economy to a near-standstill will have lasting consequences. The Netherlands will not be able to negate these consequences through economic growth.

“We have had the first two of the seven lean years, but the other five will surely come.”

Senior finance ministry official Richard van Zwol made the above statement on Friday in a brief explanatory statement regarding a report drafted by a study group of senior officials which argues that the next cabinet will have to introduce an additional 20 billion euros in cuts in order to balance the budget by 2017.

"The essence of our report is that the government’s finances are not yet shockproof. They are instable.” In addition to the economic crisis, this is also the result of the ever-growing costs of public health care.

A change of plan
Van Zwol and his colleagues propose to scrap one of the cabinet’s budgetary rules. The agreement to hold talks on additional budget cuts as soon as the deficit rose above 1 percent of the estimated amount was one of the reasons for the weeks of protracted and inconclusive talks between coalition partners CDA and VVD and their parliamentary backer the Freedom Party. “The agreement on a trigger value simply does not work,” Van Zwol says.

Crashbarriers
The parties noticed they were hitting the budgetary crashbarriers, but had not agreed what to do next. The study group therefore proposes that the new cabinet agrees about four to five billion euros’ worth of budget cuts immediately it takes office. These cuts would then automatically be implemented when the budget deficit exceeded the three-percent limit. “It would avoid at least a few weeks of negotiations,” according to Van Zwol.

(gsh/rk)

© Radio Netherlands Worldwide