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Dutch PM resigns as EU demands for swingeing cuts end coalition

THE Dutch prime minister resigned yesterday after European Union demands for budget cuts to bring Holland into line with euro spending rules caused the collapse of his government.

Elections as early as June 27 are likely to become a popular vote on EU-imposed austerity measures after the fall of a government that over the past year strongly backed the eurozone's fiscal union treaty and urged that Greece be stripped of sovereignty for falling behind with its own programme of spending cuts.

Mark Rutte, the prime minister, quit after his fragile liberal-conservative coalition government, which has no parliamentary majority, fell apart at the weekend when the far-Right Freedom Party walked out of talks to implement €14.7bn in cuts.

"The government now knows that it is no longer sufficiently assured of the necessary parliamentary support to do what is necessary for our national economy," he admitted in his resignation letter to Queen Beatrix.

Diederik Samsom, the leader of the pro-European opposition Labour Party, accused Mr Rutte of "dropping the ball at the worst possible moment" and demanded snap elections.

The impasse in one of the eurozone's last remaining countries to have a AAA credit rating comes as financial markets have been jolted by the prospect of an anti-austerity Socialist French president, and high Spanish banking debt threatens to reignite the single currency's debt crisis.

The vote will call into question whether eurozone austerity policies that have triggered the fall of governments and the rise of technocratic administrations in "peripheral" southern Europe can even be enforced in "core" northern European countries such as Holland and France.

The Dutch crisis came after Geert Wilders, the leader of the Freedom Party, withdrew support for Mr Rutte's minority Liberal and Christian Democrat government after accusing it of bowing to Brussels' demands to "bleed" the people.

The decision by Mr Wilders, whose anti-Islam party has switched its focus to campaign against the EU, came as Dutch opinion polls on Sunday suggested that 57pc of voters opposed the cuts.

The European Commission yesterday repeated its demand for the Dutch government to submit measures to balance the budget in line with euro spending rules to Brussels within nine days.

"The commission trusts that the Dutch government will continue to seek a budget solution," said a spokesman.

"Governments change but commitments on behalf of states cannot be changed without discussion with European partners."

"I'm sure that behind closed doors work is being done to prevent the Netherlands from losing its credit rating, because that would only aggravate problems for the next government," Andre Krouwel, an associate professor of political science at VU University in Amsterdam, said by phone. Even so, there's "no way" an accord can be reached before the election, he said.

The Dutch government's predicament complicates policy making in the 17-member euro region at a time when Spain's borrowing costs and the French election are causing renewed concerns about Europe's crisis-fighting stance.

The Dutch economy entered its second recession in three years during the second half of 2011 and unemployment increased from 5pc to almost 6pc in 12 months. (© Daily Telegraph, London)

Irish Independent