Dutch government quits over budget deficit

THE HAGUE, Netherlands -- The Dutch government, one of the most vocal critics of European countries failing to rein in their budgets, quit yesterday after failing to agree on a plan to bring its own deficit in line with EU rules.

Prime Minister Mark Rutte tendered the resignation of his entire cabinet to Queen Beatrix, effective immediately, after Rutte informed her talks on a new austerity package collapsed over the weekend.

Rutte is to debate with parliament today on whether and how his caretaker government can still improve the budget, and when to schedule new elections. No date was announced, but opposition lawmakers called for a vote in late June.

Opposition Labor Party leader Diederik Samsom accused Rutte of "dropping the ball at the worst possible moment" for the economy and demanded elections as soon as possible.

The Dutch government collapse came a day after the first round election victory of France's socialist candidate Francois Hollande, who has said he wants to focus less on austerity and more on economic growth.

The two developments call into question whether budget-cutting policies that are causing trauma in countries such as Greece, Spain and Portugal can be enforced even in "core" European countries such as France -- or in the Netherlands, one of the few along with Germany to maintain an AAA credit rating.

Rutte's hopes to clinch a deal to lower the deficit to within the EU's 3 percent target evaporated Saturday when his most important political ally, populist euroskeptic Geert Wilders, cut off talks, saying a slavish adherence to European rules was foolish and would harm the Dutch economy.