Netherlands postpones austerity measures to favour growth

(THE HAGUE) - The Dutch government said Friday it will postpone some austerity measures in the hope of stimulating growth while respecting its European Union obligations.

"This is a deal that will contribute to reestablishing trust in our economy," Liberal Prime Minister Mark Rutte told journalists after a cabinet meeting.

He said that the priority nevertheless remained "putting government accounts in order."

The Netherlands is traditionally pro-fiscal discipline and austerity measures, like Germany, announcing on March 1 that it would slash its 2014 budget by a further 4.3 billion euros ($5.6 billion) to respect a 3-percent of GDP European Union deficit limit.

Centre-right premier Rutte said the situation will would be reevaluated in September to decide if the austerity measures should in fact be implemented, in part or in whole.

He justified the decision by saying that the economy had shown a slight improvement, notably in terms of exports.

"When we finalise the 2014 budget (in September), the government will evaluate whether the economic growth... will be sufficient not to apply these extra (austerity) measures," the government said in a statement.

Rutte's announcement follows an agreement with social partners, including unions, concluded late on Thursday night.

That deal, which must still be approved by parliament, includes postponing a planned reduction in the amount and duration of unemployment benefits until 2016.

According to official figures used by the government for its budget and published before March 1, the deficit will be 3.3 percent of GDP in 2013, and 3.4 percent in 2014.

The deficit stood at 4.1 percent in 2012.

The Netherlands is one of just four eurozone countries still to have a triple-A rating from the three major agencies.

Its economy is dependent on the health of other economies because it is largely export based.