Kredietbeoordelaar Moody’s heeft maandagavond de vooruitzichten van Nederland, Duitsland en Luxemburg verlaagd naar ‘negatief’, de eerste stap richting een downgrade. Directe aanleiding voor de stap is de toenemende onzekerheid over de verdere ontwikkeling van de eurocrisis. Specifiek voor Nederland wijst Moody’s op de zwakke groeivooruitzichten, de hoge gemiddelde schuld per huishouden en dalende huizenprijzen. Finland, dat ondanks een onderpand bedong voor financiële hulp aan Spanje, is het enige AAA-land zonder 'outlook negative'. Begin Juli verlaagde Egan-Jones de rating voor Nederland naar 'A', vanwege de exposure op Zuid-Europa.
MOODY'S CHANGES THE OUTLOOK ON THE NETHERLANDS' Aaa RATING TO NEGATIVE
Moody's Investors Service has today changed the outlook on the Netherlands' Aaa government bond rating to negative from stable. The Aaa rating itself remains unchanged.
The key drivers of today's action on the Netherlands are:
1.) The rising uncertainty regarding the outcome of the euro area debt crisis given the current policy framework, and the increased susceptibility to event risk stemming from the increased likelihood of Greece's exit from the euro area, including the broader impact that such an event would have on euro area members.
2.) The rising contingent liabilities that the Dutch government will assume as a result of European policymakers' reactive and gradualist policy response, which comes on top of a marked deterioration in the country's own debt levels relative to pre-crisis levels.
3.) The Netherlands' own domestic vulnerabilities, specifically the weak growth outlook, high household indebtedness, and falling house prices, whose impact is amplified by this heightened event risk.
--RATIONALE FOR NEGATIVE OUTLOOK
As indicated in the introduction of this press release, the first driver underlying Moody's decision to change the outlook on the Netherlands' Aaa bond rating to negative is the level of uncertainty about the outlook for the euro area and the impact that this has on the country's susceptibility to event risk. Specifically, the material risk of a Greek exit from the euro area exposes core countries such as the Netherlands to a risk of shock that is not commensurate with a stable outlook on their Aaa ratings. The elevated event risk in turn increases the probability that further contingent liabilities will eventually crystallise, with the Netherlands bearing a significant share of the overall liabilities.
The second and interrelated driver of the change in outlook to negative is the increase in contingent liabilities that is associated with even the most benign scenario of a continuation of European leaders' reactive and gradualist approach to policymaking. The likelihood is rising that the strong euro area states will need to commit significant resources in order to deepen banking integration in the euro area and to protect a wider range of euro area sovereigns, including large member states, from market funding stress. As a large, wealthy euro area country, the Netherlands bears a significant share of these contingent liabilities. The contingent liabilities stem from bilateral loans, the EFSF, the European Central Bank (ECB) via the holdings in the Securities Market Programme (SMP) and the Target 2 balances, and -- once established -- the European Stability Mechanism (ESM).
The third factor underpinning this outlook change is that domestic vulnerabilities are being amplified by the stress that is emanating from the euro area. The Dutch growth outlook is relatively weak, both in relation to Aaa-rated peers and to its own track record. In fact, according to the Dutch central bank, the country's growth performance between 2008-14 will be its lowest for any seven-year period since the Second World War. Some of the reasons for this are unrelated to developments in the euro area such as declining real disposable incomes (which are expected to fall by nearly 4% in total in 2012-13), the Netherlands' high degree of household leverage (over 200% of disposable income, though household assets are also substantial) and falling house prices. However, negative developments at the euro area level are amplifying these negative trends, which are in turn contributing to weak confidence and an overall contraction in domestic demand. This dynamic creates additional fiscal headwinds and means that the Dutch government's debt burden will begin to fall later and from a higher level.
--RATIONALE FOR NETHERLANDS' UNCHANGED Aaa RATING
The Netherlands' Aaa sovereign rating is underpinned by very high levels of economic, institutional and government financial strength.
The Netherlands is a large, wealthy and open economy that is highly developed and diversified. Although the growth outlook over the forecast period is quite weak relative to the country's historical experience, the Dutch economy remains highly competitive, a fact that is reflected in the sizeable current account surplus. Moreover, unlike some of its fellow euro area countries, the Netherlands has already pursued substantial labour market reform, which has translated into a highly productive labour force whose participation rate is above the EU average.
In view of the country's strong tradition of building consensus on key economic policy changes, Dutch institutions have built a robust and highly transparent institutional framework to facilitate this process. The country also has a strong tradition of relying on independent institutions at key points in the fiscal policymaking process.
The Netherlands also enjoys a broad, long-standing consensus on fiscal discipline. In 1994, the Dutch introduced trend-based budgeting with expenditure ceilings (expressed in real terms) for a government's entire term. Under Dutch fiscal rules, revenue windfalls cannot be used to finance expenditures and, in general, departments need to compensate for any overspending themselves. Within a few days of the collapse in April 2012 of the governing minority coalition over budget negotiations, the outgoing coalition was able to reach agreement with three opposition parties on additional fiscal consolidation measures. The speed with which agreement could be reached illustrates that the consensus in favour of fiscal discipline remains in place.
--WHAT COULD MOVE THE RATING DOWN
The Netherlands' Aaa rating could potentially be downgraded if Moody's were to conclude that debt metrics are unlikely to stabilise within the next 3-4 years, with the deficit, the overall debt burden, and/or debt-financing costs on a rising trend. This could happen in one of three scenarios, all of which imply lower economic and/or government financial strength: (1) a combination of significantly slower growth over a multi-year time horizon and reduced political commitment to fiscal consolidation, including discretionary fiscal loosening or a failure to respond to a deteriorating fiscal outlook; (2) the exit of any country from the European monetary union, as such an event is expected to set off a chain of financial-sector shocks and associated liquidity pressures for banks and sovereigns that would entail very high cost for countries such as the Netherlands, and cause contingent liabilities from the euro area to increase; or (3) a sharp rise in debt-refinancing costs following a loss of safe-haven status.
--WHAT COULD MOVE THE OUTLOOK BACK TO STABLE
Conversely, the rating outlook could return to stable if a combination of less adverse macroeconomic conditions, a more benign outlook for the euro area and deficit reduction measures were to ease medium-term uncertainties with regard to the country's debt trajectory.