(The following statement was released by the rating agency)
Sept 13 - Standard & Poor's Ratings Services said today that the outcome of the Dutch general election on Sept. 12, 2012, has no immediate impact on the unsolicited sovereign credit ratings or outlook on the State of The Netherlands (AAA/Negative/A-1+).
The centre-right VVD party of Prime Minister Mark Rutte has emerged as the strongest party, closely followed by the Labor Party (PvdA). We expect that VVD will form a pro-European coalition government with the Labor Party, and may also include the progressive and pro-European D66 party. The eurosceptic parties on the left and right of the political spectrum have lost popular support and we expect that The Netherlands will remain a constructive player working to resolve the eurozone financial crisis. However, if building a coalition takes time, as has happened several times in the aftermath of past elections, the current government will remain in place in the interim.
We anticipate that policymaking in The Netherlands will continue to benefit from a consensus favoring conservative fiscal policies. We expect most of the EUR14 billion (2.3% of GDP) in fiscal cuts agreed by five political parties in April 2012 will be included into the 2013 budget, which is likely to be approved by year-end. If the cuts remain in the budget, we expect the budget deficit to shrink to just below 3% of GDP in 2013 from the expected 4.6% deficit for 2012. Should next year's economic growth fall appreciably below our current assumption of 0.8%, the risks of fiscal slippage could rise substantially, in our opinion.
All prospective coalition members have stated that their goal is to reduce the general government deficit. Although each political party favors different measures to reduce the budget deficit, we expect fiscal consolidation to continue in the medium term under our base-case scenario. That said, given the more-centrist nature of the potential coalition, we expect that the stronger austerity policy that VVD advocates will be tempered with more growth-oriented fiscal policies.
In our view, the final fiscal outcome will be contingent on overall growth in the highly open Dutch economy, which is highly exposed to its eurozone partners via trade and financial channels and thus is vulnerable to potentially sizable exogenous shocks.
This unsolicited rating(s) was initiated by Standard & Poor's. It may be based solely on publicly available information and may or may not involve the participation of the issuer. Standard & Poor's has used information from sources believed to be reliable based on standards established in our Credit Ratings Information and Data Policy but does not guarantee the accuracy, adequacy, or completeness of any information used.