Dutch herald end of welfare state as austerity hits

The Dutch government heralded the end of the welfare state on Tuesday as the fifth-largest eurozone economy presented an austerity-driven budget for 2014. "The classic welfare state is slowly but surely turning into a society of participation," King Willem-Alexander told parliament, laying out the Liberal-led government's plans for the year. "It is asked of all those who can to take responsibility for their own life and that of those around them," the king said in the speech written by Prime Minister Mark Rutte. The king, who travelled through the streets of The Hague to address MPs and senators in an ornate horse-drawn golden carriage, said the transformation would be particularly noticeable in social security and long-term healthcare policies. "The classic welfare state of the second half of the 20th century has ended up with practices in these domains that have become untenable in their current form," said the king, whose country for decades symbolised the western European ideal of the welfare state. Dutch Finance Minister Jeroen Dijsselbloem later unveiled his budget in parliament, with the Netherlands economy still struggling to return to growth. "Balance has not yet returned to our economy, and that can be seen from the figures," Dijsselbloem, who also heads the Eurogroup of eurozone finance ministers, told parliament. The trade-dependent Dutch economy is in the fourth quarter of a recession and is struggling even as other European countries return to growth. A growth prediction of 0.5 percent for 2014 is less than previous forecasts and unemployment, on the rise since June 2011, is expected to climb beyond 9 percent. "A quick and painless solution does not exist," Dijsselbloem said, referring to six billion euros in additional budget cuts for 2014. Those savings come on top of austerity measures agreed by previous governments since the financial crisis started in 2008. The government hopes that all of the cuts agreed since then will result in overall savings of 30 billion euros in 2014, rising to 50 billion euros in 2017. Most of the additional measures announced Tuesday had already been leaked in the Dutch press, including lowering healthcare refunds and reducing ministries' budgets. A reported public sector wage freeze was however not announced. The austerity measures will reduce Dutch households' purchasing power by 0.25 percent in 2014, but at the same time bring the public deficit down to 3.3 percent of gross domestic product (GDP). The Netherlands' Central Planning Bureau (CPB), whose predictions the government uses to draw up its budget, said in June that without the additional measures the deficit would rise to 3.9 percent of GDP next year. European Union rules mean that the Dutch deficit cannot be over 3 percent of GDP. It was 4.1 percent in 2012. The budget announcement came with the government in free-fall in opinion polls. A poll published Sunday said that the ruling Liberal-Labour coalition, in power for a year, would lose around half its seats in parliament were elections held now. Eurozone growth in the second quarter of 2013 was 0.3 percent overall, while the Dutch economy shrank by 0.2 percent during the same period.