Dutch government becomes latest casualty of euro debt crisis
Prime Minister Mark Rutte and his Cabinet resigned en masse Monday after they failed to clinch a deal with other parties over austerity cuts to reduce the Netherlands' budget deficit. It was an embarrassing development for the Dutch, who have repeatedly lectured Southern European nations on the need to rein in public spending but now can't agree on such a plan themselves.
It also helped fuel a day of heavy losses in stock markets across Europe, with investors unsettled by weak manufacturing data in Germany, confirmation of a return to recession in Spain and an uncertain presidential election result in France.
The euro debt crisis seems now on the verge of erupting again after a few months of relative calm. The soothing effect of cheap long-term loans from the European Central Bank to the region's financial institutions is wearing off, and analysts are asking whether the harsh public austerity prescribed by Germany is worsening the crisis instead of solving it.
So far, the Dutch have enthusiastically sided with Berlin in the demand that financially troubled European nations curb their spending. But the Dutch government found itself in the hot seat when official figures showed that its own deficit this year was on track to hit 4.6% of gross domestic product, well above the 3% limit for Eurozone countries.
Negotiations over what to cut and how much have consumed Dutch political leaders for weeks. The talks finally fell apart over the weekend, prompting Rutte's resignation.
-- Henry Chu
Photo: Dutch Prime Minister Mark Rutte leaves the palace of Queen Beatrix after formally submitting his resignation Monday. Credit: Robin Utrecht / EPA