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Dutch aiming to hold parliamentary elections in mid-September

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  • Dutch aiming to hold parliamentary elections in mid-September

EUROPE - The Netherlands is likely to vote for a new parliament on 12 September following the collapse of its minority government after the Liberals (VVD) and Christian Democrats (CDA) lost the support of the Freedom Party (PVV) over spending cuts.

During a debate on Tuesday, a majority of MPs expressed their preference for elections in September in order to provide sufficient "preparation time". Today, Queen Beaxtrix - as head of state - has formally confirmed the election date of 12 September.

He said the Cabinet would table financial proposals for a debate on Thursday with the view to meeting the European Commission's 30 April deadline to explain how the Netherlands plans to cut its budget deficit to 3%.

He reminded parliament that failure to comply could trigger a yearly fine of as much as €1.2bn, following earlier proposals presented by the Netherlands itself.

Rutte added that, on Thursday, parliament is also expected to establish the rough contours of the 2013 Budget, which the new government will flesh out after the elections.

During the debate on Tuesday, it became clear that not all political parties supported an immediate cut of the budget deficit to 3%.

Diederik Samson, the new leader of labour party PvdA, recommended aiming for a 3.6% deficit next year, followed by structural improvements of 0.5% a year, until a fully balanced budget is reached in the mid-term.

PVV leader Geert Wilders said he would only support cuts leading to a 3% deficit in 2015, "to avoid destroying the Dutch economy".

Emile Roemers, leader of the socialist party SP, also warned that cutting the deficit to 3% straightaway was "irresponsible".

The PvdA, PVV and SP represent 68 MPs, out of a total of 150.

However, elections in September would mean parliament must negotiate a budget with the outgoing Cabinet during an election campaign.

Moreover, because there are 11 political parties in the Dutch parliament, it can take several months to set up a new government.

It has emerged that, during the collapsed negotiations with the PVV - concerning additional spending cuts of at least €14bn - an increase in the retirement age to 66 in 2015 had been on the table.

The Pensions Agreement - concluded last year - provides for a rise to 66 in 2020, followed by a second increase to 67 in 2025 by linking the official retirement age to life expectancy.

Meanwhile, Bernard Wientjes, the employers chairman and one of the architects of the Pensions Agreement, is understood to oppose an earlier increase of the retirement age, as he believes it could jeopardise the entire accord.

The Pensions Federation has called on social affairs minister Henk Kamp to continue working on the Pensions Agreement - particularly the discount rate for liabilities, new rules for calculating contributions and increasing life expectancy.

Asked about the fate of the Pensions Agreement at a conference in London hosted by the UK National Association of Pension Funds, Jasper Kemme - a board member at the Pensions Federation - joked that while it was a question he expected to be asked, he still had no answer to it.

"The government stepping down could mean this deal is also under threat because it has to be supported with legislation as a pact between social partners and the government," he said. "We will have to wait and see how things play out."

On Monday, the spread between the interest on Dutch and German government bonds increased to 77 basis points, with the Dutch 10-year rate rising by 10 basis points to 2.4%.

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