Financial stringency, political unrest

So some of you may know, although I doubt many of you do because it hasn’t been exactly big news, that the Dutch coalition government has effectively collapsed. For a long time the government has had to run its plans by the PVV (‘Freedom Party’) leader Geert Wilders, who, although not a direct member of government, won enough votes to secure this dubious position. Recently while trying to push through more cuts (or ‘savings’, to employ a commonly used euphemism) to adhere to the not-more-than-3%-deficit rule enforced by Brussels, Wilders withdrew his support and made a grandiose (see: dramatic) exit, citing ‘attacks on the elderly’ and ‘excessive demands from elitist bureaucrats in Brussels’ as his reasons. (Wilders is a typically outspoken, fear-mongering Eurosceptic.)

Essentially, no big deal right? Elections will be held again in September and a new government will be formed. The real issue however is the time lapse and the damage it creates: financial markets lose faith in Dutch political will to enforce necessary budgetary reform, borrowing costs increase, effectively nullifying the point of Wilders’ stance as increased borrowing costs will be felt in the pockets of every consumer anyway (oh, including the elderly). The fine received for breaching the 3% rule is also considerable. The loss of triple-A status isn’t even that big an issue: in a world where AA is the new AAA, there are bigger concerns. What does this mean, however, for the rest of Europe? In a worst case scenario, other EU countries will point to the Netherlands and argue that hey, if they aren’t following the rules, why would we? Who could blame them, especially countries like Spain and Italy where existing cuts are already causing so much resentment?

So it’s no surprise really, that these are no fun times to be a politician – nothing you do is going to be popular. Sarkozy losing the first round elections is evidence of that.

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