More bad news for Europe: the Netherlands will be joining the ranks of countries not abiding by the EU’s target of keeping budget deficits under 3 percent of GDP. Its deficit will come in at around 3.3 percent for 2013.European leaders, however, aren’t too worried, says the Financial Times:
In principle, the European budget commissioner, Olli Rehn, can impose penalties on countries that violate the norm. But Mr Rehn gave the Netherlands some breathing room when releasing EU forecasts last week, saying the projected Dutch deficit overshoot was mainly due to the country’s nationalisation this month of failing bancassurer SNS Reaal.On its longer-term structural budget deficit, Mr Rehn said: “The Netherlands has taken effective action.”
Nevertheless, it just doesn’t look good. EU budget rules are starting to look more and more like Swiss cheese, with France, probably Italy, and now the Netherlands (three of the original founding six members) headed for non-compliance. And the Dutch were one of the toughest hawks—until the shoe started to pinch.The Dutch themselves are not the big problem, as the FT makes clear. They will likely manage to get their affairs in order sooner or later. But it’s still a major setback for efforts to give Europe a serious economic rule book. And it’s not at all clear how Germany is going to get a set of rules that will assure its thrifty taxpayers that they’re not in for an infinite series of bailouts of countries that keep running up deficits.