Under the pressure of ever-worsening economic news, with GDP expected to fall a further 0.5 per cent in 2013, the Dutch public and media are beginning to ask whether their government's aggressive austerity policies have been counterproductive.
A government proposal for an additional €4.3 billion in cuts in 2014 to keep the budget deficit within EU limits faces growing resistance both from opposition parties and from the labour movement, a weakened but still powerful player in Dutch politics.
The Dutch government’s inability to acknowledge the damage done by austerity despite mounting evidence is a case of “cognitive dissonance”, Coen Teulings, the head of the Netherlands' official economic forecasting agency, told the Financial Times. “There’s different evidence that all fits [the argument] that the costs of austerity are currently higher, because there’s rising unemployment, there’s a financial crisis and we are close to the zero lower bound [on interest rates]”, Mr Teulings said.
Signs of a public turn against austerity are mounting. A March survey of business entrepreneurs by Dutch pollsters TNS NIPO found extreme pessimism over the economy, with deficit cuts cited as the number one cause.
Meanwhile, opposition parties have balked at the proposal for new taxes and cuts in 2014, leaving the government unable to push its budget through the Senate, where it lacks a majority. Talks between the national business federation and labour groups intended to build consensus for a budget have foundered over the unions’ opposition to further austerity, and the Labour party is said to increasingly lean towards postponing the cuts.
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