Five Dutch political parties have agreed tough budget cuts days after the government collapsed over the measures. PM Mark Rutte called elections for 12 September after Geert Wilders’ Freedom Party (PVV) refused to back billions of euros in cuts to the 2013 budget. After crisis talks on Thursday, three opposition parties backed a budget agreement with the two former coalition partners now running a caretaker administration – the liberal VVD and the Christian Democrats (CDA). The 11th-hour deal comes ahead of a European Commission deadline for EU capitals to submit economic “convergence plans” to Brussels by Monday. It also comes after ratings agency Fitch said The Hague could lose its top-notch grade. The centre-right Romanian government – after just two months in office – fell on Friday following a no-confidence vote as opposition parties capitalised on wide-spread popular anger over austerity measures.
Budget cuts may be deepening the recession, but governments should not give up now, European Central Bank chief Mario Draghi said at a hearing in the European Parliament. “We are just in the middle of the river we are crossing, the only way out is to persevere,” the Italian economist in charge of the eurozone’s central bank said. He admitted that “fiscal adjustment” – a euphemism for budget cuts – is contributing to recession, which in some countries may last longer than a year or even two. He said the only way out is to stick to labour market reforms that “free some energies in the economy,” given that countries like Spain were prosperous and competitive in the past.
Standard & Poor’s (S&P) downgraded Spain by two notches on Thursday in a sign of persistent investor concern over the stability of the eurozone. “The downgrade reflects our view of mounting risks to Spain’s net general government debt as a share of GDP in light of the contracting economy, in particular due to the deterioration in the budget deficit trajectory for 2011-2015,” S&P said in a statement announcing the downgrade to BBB+ from A. It also said further downgrades may come down the line, as Spain’s economy is expected to shrink by 1.5 percent this year, as opposed to 0.3 percent growth predictions a few months earlier.
EU Council chief Herman Van Rompuy has spoken out against the “winds of populism” threatening freedom of movement in the Union – a swipe at anti-immigrant discourse in French elections and on the Dutch political scene. “It is the duty of each government to make sure that no-one – no member of any group or any minority – is treated as a second-class citizen. Regrettably, the winds of populism are affecting a key achievement of European integration: the free movement of persons within our borders,” he said in a speech in the Romanian parliament on Wednesday.
The German chancellor, Angela Merkel, has set the course for a confrontational relationship with François Hollande if the Socialist politician becomes French president on 6 May. French President Nicolas Sarkozy faces an uphill struggle in the second round of the presidential election, after coming second in Sunday’s first vote. He won 27.1% of the vote, while his Socialist rival Francois Hollande took 28.6%, the first time a sitting president has lost in the first round. Third-place Marine Le Pen took the largest share of the vote her far-right National Front has ever won, with 18%. Merkel said on Friday that she was not prepared to bow to Hollande’s desire to renegotiate the framework for EU budgetary discipline. Merkel fiercely defended the fiscal pact that has been agreed by 25 European governments, and said it would not be open to alteration.
A judge in the Netherlands has upheld a new law to ban foreign tourists from entering cannabis cafes. While soft drugs are tolerated, there is growing concern at tourists visiting just for drugs, and foreign dealers selling illegally at home. The ban is due to start in three southern provinces next month, and go nationwide by the end of the year. A group of cafe owners argued at The Hague district court that the ban was discriminatory against foreigners. Under the new law, Dutch residents will still be allowed into the cafes, as long as they have valid identification, or possibly hold a new “weed pass”, which is also being debated.
Some 40,000 people have gathered on an Oslo square to sing a popular peace song which mass killer Anders Behring Breivik condemned at his trial. The right-wing extremist had accused the singer of Children Of The Rainbow, Lillebjoern Nilsen, of being a Marxist who sought to brainwash children. Nilsen led the crowd on Thursday in singing the song on Youngstorget Square, close to the courthouse.