Na Moody’s was het woensdag de beurt aan Fitch. De kredietbeoordelaar verwacht dat het Nederlandse begrotingstekort in 2013 onder de 3 procent blijft. Maar mocht dat echter niet lukken, dan komt de rating onder druk te staan. Aan het einde van het tweede kwartaal staat een beoordeling gepland. Fitch wijst op de nog steeds sterke positie van Nederland op de kapitaalsmarkt, maar waarschuwt tevens voor de hoge particuliere hypotheekschulden, goed voor 100 procent van het bruto binnenlands product.
Netherlands Will Miss 3% Deficit This Year
Fitch Ratings forecasts that the Netherlands’ budget deficit will be 4.5% of GDP this year, with larger risks around next year’s 3% target following the breakdown in negotiations over austerity measures and possibility of early elections.
The Dutch Prime Minister tendered his resignation on Monday following the failure of three-party negotiations over fiscal consolidation measures. These measures were intended to ensure the government meets its commitment to the European Commission to rein in its deficit to under 3% of GDP in 2013.
In the context of the eurozone crisis, the increase in policy risk this year is a negative development. Our 2012 deficit forecast is based on the assumption that no supplementary consolidation measures are agreed in the near term. While this year’s deficit will be in excess of the 3% Maastricht reference value, it is not inconsistent with the Netherlands’ current ‘AAA’ rating.
There is a possibility that the government’s consolidation measures are passed with opposition support in the coming days, but this window of opportunity is narrow. The deadline for submission of the measures to Brussels is April 30.
Early elections in September are probable. In the meantime, a caretaker administration would be responsible for the day-to-day running of the country. Its caretaker status would not necessarily preclude further austerity measures being introduced during its term. However, the electoral cycle would make this outcome less likely. It is therefore possible that no such measures will be agreed until the autumn, by which point their effectiveness in reducing the current year’s fiscal deficit will be limited.
Our base-case expectation is that the deficit will be brought down to 3% in 2013, with the public debt ratio stabilising thereafter. However, domestic policy uncertainty has increased, while financial and economic risks from the eurozone crisis remain significant. If it becomes clear that our base-case is unlikely to materialise, pressure on the rating will increase. We expect to conclude a review of the Netherlands’ rating by the end of the second quarter, in line with our existing schedule.
The level of public debt, 65.2% of GDP in 2011, is significantly below that of its larger ‘AAA’ peers, Germany, France, UK and US (all above 80%). The country’s strong external finances also support the rating. On top of this, the country has a track record of fiscal discipline: in the 10 years to 2007, public debt was reduced by 23% of GDP. However, this debt reduction has been almost entirely reversed, with a 20% of GDP increase from 2007 to 2011.
One of the main drivers of the deficit is cyclical: we expect real GDP to contract by 0.8% this year. This return to recession will have an adverse effect on government spending and receipts. Owing to high household leverage, private consumption is particularly sensitive to developments in house prices in the Netherlands, which are falling (down 3.4% yoy in February). In a similar fashion to the 2002-03 recession, this sector is therefore acting as a persistent drag on the economic recovery.