Top news

Europe predicts slow-track recovery for Dutch economy in 2013

The Netherlands will emerge from recession at the end of the year but its recovery will lag behind Europe, according to the latest EU prognosis.

Brussels expects the Dutch economy to grow by 0.7 per cent in 2013 after shrinking by 0.7 per cent this year.

The figures are more pessimistic the Dutch government’s forecast, partly because they do not take into account the revised coalition deal struck after Mark Rutte’s cabinet fell last month.

The 17 eurozone nations are forecast to grow by 1.3 per cent next year after a 0.3 per cent dip in 2012.

During a press conference in Brussels, Europe’s monetary affairs commissioner Olli Rehn gave a strong hint that Brussels would not allow any flexibility on its new rules on fiscal responsibility.

Nations whose budget deficit exceeds 3 per cent in 2013 face having sanctions imposed by Brussels. That poses problems for the Dutch, who pressed hard for stricter financial discipline under Rutte’s government and are now trying to rein in a projected shortfall of 4.6 per cent next year.

Rehn said he valued the five-party deal to save an extra €16.2 billion brokered by finance minister Jan Kees de Jager, but warned that it needed to be supported by structural reform.

The deal came too late to be reflected in the latest forecasts, but Rehn promised an updated assessment by the end of the month.

The commissioner’s overall message was more upbeat than many analysts expected, with even ‘problem nations’ forecast to improve their prospects in 2013.

‘Recovery is in sight, but the economic situation remains vulnerable with large differences between member states. Without further action growth will remain low,’ said Rehn.

The gloomiest projections were for Greece, Ireland and Spain, whose budget deficits are predicted to be 8.5 per cent, 7.5 per cent and 6.3 per cent of GDP respectively. Poland is expected to be the fastest growing eurozone economy in 2013.

Meanwhile, the Dutch central bank (DNB) warned that Europe risks a lost decade of low economich growth unless policy makers tackle economic reform and weaknesses in the banking sector.

High mortgage debts and the debt crisis are the largest risks to recovery in the Netherlands, DNB said.

It insisted governments needed to reform their economies rather than try to stimulate growth through spending. ‘That requires tenacity. The effects will only be visible as time goes by.’

Source: De Volkskrant: Van minuut tot minuut: de lenteprognose van Eurocommissaris Rehn

Photo by Alberto Novi

Read previous story: Cheap, flimsy and badly put together: Economists' verdict on Dutch government's rescue package