Post by N on Apr 23, 2012 18:04:16 GMT -5
6.40pm: Another dramatic day in the eurocrisis is drawing to a close. Here's a summary of the key events:
Dutch prime minister Mark Rutte has resigned after crucial negotiations over the country's budget collapsed over the weekend. Rutte submitted his cabinet's resignation to Queen Beatrix of the Netherlands this afternoon, following an emergency cabinet meeting. Rutte is likely to continue as a caretaker leader while Dutch politicians decide how to proceed.
The crisis was triggered by far-right leader Geert Wilders. He has refused to support up to €16bn of austerity cutbacks, without which the Dutch government would be unable to lower its deficit to 3% of GDP next year. Wilders called the plan an attack on the Dutch elderly.
The political crisis in the Netherlands flared up as the first round of France's presidential election ended. François Hollande is now a clear favourite to beat Nicolas Sarkozy in the run-off in two weeks time, which could reshape the political balance of Europe. Far-right leader Marine Le Pen also polled surprisingly strongly.
Stock markets were spooked by the developments in the Netherlands and France. Surprisingly weak economic data from the eurozone, which suggested that its recession could be deeper than feared, also alarmed investors. The FTSE 100 shed 106 points, while the German DAX fell by 3.3%.
Tomorrow, Dutch politicians will debate the crisis.
We'll be back tomorrow to track the crisis. Until then, thanks for reading and for so many excellent comments (as ever!). Goodnight!
6.12pm: The next stage in the Dutch political crisis will come tomorrow, when lawmakers debate how to proceed over the 2013 budget.
5.58pm: On top of the political crisis in the Netherlands, and Nicolas Sarkozy's poor showing in yesterday's French presidential ballot, there have also been important developments in the Czech Republic in the last few days, with tens of thousands of protesters hitting the streets of Prague over the weekend.
Our Europe editor Ian Traynor argues tonight that these three separate events illustrate a major turning point is the eurozone crisis. He writes:
For more than two years the mainstream political elites of Europe have been battling to save the single currency, seeking its salvation in a German-scripted programme of austerity and legally enshrined fiscal rigour that curbs the budgetary sovereignty of elected governments.
In elections in France on Sunday, in the Royal Palace in The Hague on Monday, and on Wenceslas Square in Prague on Saturday, a democratic backlash appeared to be gathering critical mass as the economic prescriptions of the governing class collided with the street and the ballot box, probably bringing down three European governments.
Paul Nieuwenburg, a political scientist at Leiden University, has predicted that the upcoming Dutch elections will centre on the issue of Europe, with Geert Wilders having already called (last month) for a return of the Dutch gilder.
Ian continues:
For the past 18 months, the finance minister, Jan Kees De Jager, has been the loudest advocate of the most rigorous austerity for the bailed out countries of the eurozone and of the punitive new fiscal rules.
Hoist on its own petard, his government has fallen because it cannot agree on the spending cuts required to meet the new rules by next year.
But the Dutch economy is fundamentally sound and prosperous with low unemployment. The head of the national office of budget forecasters, Coen Teulings, says the government simply needs time to make the structural changes required to comply with the rules.
To insist that all this be done within a year, entailing huge savings and cuts that will make a relatively benign situation worse, represents a triumph of dogma over pragmatism.
5.47pm: The leader of the opposition Dutch Labour party, Diederik Samsom, has criticised prime minister Mark Rutte for mishandling the negotiations over the Netherland's budget.
Samsom accused Rutte of "dropping the ball at the worst possible moment" for the Dutch economy. He also rejected the suggestion that fresh elections might not be held until the autumn, saying:
We have to deliver clarity to the country as soon as possible.
The latest polling data (see 12.28pm) suggested that Samson's party (Pvda) would win 24 seats at a general election, down from 30 last time. That polling took place before the collapse of budget talks, though.....
5.19pm: City analysts are warning this evening that the Dutch government could be caught in limbo for months, following the resignation of Mark Rutte and his cabinet.
Without the promise of support from Geert Wilders' Partij voor de Vrijheid (which walked out of the budget talks this weekend), Rutte's minority government doesn't have the votes to get the 2013 budget approved.
Marco Wagner, Commerzbank economist, fears that the Dutch government could simply be "unable to get important reforms approved by parliament" until fresh elections are caused, telling Bloomberg:
This suggests that the 3 percent target* will be missed in 2013 and the country's AAA rating is at risk.
* - Under Brussels' rules, eurozone governments should cut their deficits to 3% of GDP next year.
5.11pm: The gap between Dutch government bonds and German bunds (seen as the safest sovereign debt in Europe) widened to a three-year high today.
Netherlands' debt has typically been seen as a low-risk place to invest. But investors have been getting edgier recently. Today, Dutch 10-year bonds are yielding 2.43%, up 0.11 basis points. That compares with just 1.56% for German 10-year bonds, or 2.12% for UK 10-year gilts.
These rates reflect the value of government debt in the 'secondary bond market', and are only a guide to the actual cost of borrowing. The full impact of the crisis will be clearer tomorrow, when the Dutch Treasury will auction up to €2.5bn of bonds (one set maturing in 2014, the second in 2037).
Live blog - market down
4.43pm: European stock markets are splattered with red ink, as the Netherlands crisis prompted a heavy selloff across the region.
The German DAX tumbled by 3.39%, as unexpectedly poor data from Germany's factories added to fears over the resignation of Dutch PM Mark Rutte. France's CAC 40 ended 2.8% lower.
In Amsterdam the main market, the AEX, closed 2.5% lower at 301.27 as traders reacted to the political crisis that grips the nation.
In London, the FTSE 100 finished 1.85% lower at 5665, having shed 106 points – its biggest fall since 10 April.
4.29pm: Another snap from the Netherlands...
Read the rest of the article here:
www.guardian.co.uk/business/2012/apr/23/eurozone-crisis-austerity-dutch-government?fb=native
Dutch prime minister Mark Rutte has resigned after crucial negotiations over the country's budget collapsed over the weekend. Rutte submitted his cabinet's resignation to Queen Beatrix of the Netherlands this afternoon, following an emergency cabinet meeting. Rutte is likely to continue as a caretaker leader while Dutch politicians decide how to proceed.
The crisis was triggered by far-right leader Geert Wilders. He has refused to support up to €16bn of austerity cutbacks, without which the Dutch government would be unable to lower its deficit to 3% of GDP next year. Wilders called the plan an attack on the Dutch elderly.
The political crisis in the Netherlands flared up as the first round of France's presidential election ended. François Hollande is now a clear favourite to beat Nicolas Sarkozy in the run-off in two weeks time, which could reshape the political balance of Europe. Far-right leader Marine Le Pen also polled surprisingly strongly.
Stock markets were spooked by the developments in the Netherlands and France. Surprisingly weak economic data from the eurozone, which suggested that its recession could be deeper than feared, also alarmed investors. The FTSE 100 shed 106 points, while the German DAX fell by 3.3%.
Tomorrow, Dutch politicians will debate the crisis.
We'll be back tomorrow to track the crisis. Until then, thanks for reading and for so many excellent comments (as ever!). Goodnight!
6.12pm: The next stage in the Dutch political crisis will come tomorrow, when lawmakers debate how to proceed over the 2013 budget.
5.58pm: On top of the political crisis in the Netherlands, and Nicolas Sarkozy's poor showing in yesterday's French presidential ballot, there have also been important developments in the Czech Republic in the last few days, with tens of thousands of protesters hitting the streets of Prague over the weekend.
Our Europe editor Ian Traynor argues tonight that these three separate events illustrate a major turning point is the eurozone crisis. He writes:
For more than two years the mainstream political elites of Europe have been battling to save the single currency, seeking its salvation in a German-scripted programme of austerity and legally enshrined fiscal rigour that curbs the budgetary sovereignty of elected governments.
In elections in France on Sunday, in the Royal Palace in The Hague on Monday, and on Wenceslas Square in Prague on Saturday, a democratic backlash appeared to be gathering critical mass as the economic prescriptions of the governing class collided with the street and the ballot box, probably bringing down three European governments.
Paul Nieuwenburg, a political scientist at Leiden University, has predicted that the upcoming Dutch elections will centre on the issue of Europe, with Geert Wilders having already called (last month) for a return of the Dutch gilder.
Ian continues:
For the past 18 months, the finance minister, Jan Kees De Jager, has been the loudest advocate of the most rigorous austerity for the bailed out countries of the eurozone and of the punitive new fiscal rules.
Hoist on its own petard, his government has fallen because it cannot agree on the spending cuts required to meet the new rules by next year.
But the Dutch economy is fundamentally sound and prosperous with low unemployment. The head of the national office of budget forecasters, Coen Teulings, says the government simply needs time to make the structural changes required to comply with the rules.
To insist that all this be done within a year, entailing huge savings and cuts that will make a relatively benign situation worse, represents a triumph of dogma over pragmatism.
5.47pm: The leader of the opposition Dutch Labour party, Diederik Samsom, has criticised prime minister Mark Rutte for mishandling the negotiations over the Netherland's budget.
Samsom accused Rutte of "dropping the ball at the worst possible moment" for the Dutch economy. He also rejected the suggestion that fresh elections might not be held until the autumn, saying:
We have to deliver clarity to the country as soon as possible.
The latest polling data (see 12.28pm) suggested that Samson's party (Pvda) would win 24 seats at a general election, down from 30 last time. That polling took place before the collapse of budget talks, though.....
5.19pm: City analysts are warning this evening that the Dutch government could be caught in limbo for months, following the resignation of Mark Rutte and his cabinet.
Without the promise of support from Geert Wilders' Partij voor de Vrijheid (which walked out of the budget talks this weekend), Rutte's minority government doesn't have the votes to get the 2013 budget approved.
Marco Wagner, Commerzbank economist, fears that the Dutch government could simply be "unable to get important reforms approved by parliament" until fresh elections are caused, telling Bloomberg:
This suggests that the 3 percent target* will be missed in 2013 and the country's AAA rating is at risk.
* - Under Brussels' rules, eurozone governments should cut their deficits to 3% of GDP next year.
5.11pm: The gap between Dutch government bonds and German bunds (seen as the safest sovereign debt in Europe) widened to a three-year high today.
Netherlands' debt has typically been seen as a low-risk place to invest. But investors have been getting edgier recently. Today, Dutch 10-year bonds are yielding 2.43%, up 0.11 basis points. That compares with just 1.56% for German 10-year bonds, or 2.12% for UK 10-year gilts.
These rates reflect the value of government debt in the 'secondary bond market', and are only a guide to the actual cost of borrowing. The full impact of the crisis will be clearer tomorrow, when the Dutch Treasury will auction up to €2.5bn of bonds (one set maturing in 2014, the second in 2037).
Live blog - market down
4.43pm: European stock markets are splattered with red ink, as the Netherlands crisis prompted a heavy selloff across the region.
The German DAX tumbled by 3.39%, as unexpectedly poor data from Germany's factories added to fears over the resignation of Dutch PM Mark Rutte. France's CAC 40 ended 2.8% lower.
In Amsterdam the main market, the AEX, closed 2.5% lower at 301.27 as traders reacted to the political crisis that grips the nation.
In London, the FTSE 100 finished 1.85% lower at 5665, having shed 106 points – its biggest fall since 10 April.
4.29pm: Another snap from the Netherlands...
Read the rest of the article here:
www.guardian.co.uk/business/2012/apr/23/eurozone-crisis-austerity-dutch-government?fb=native