Euro has damaged Dutch economy, report claims

 

A REPORT commissioned by Holland’s right-wing Freedom Party has sparked a heated debate in the Netherlands over membership of the euro. It comes just as the coalition government partners, joined by Freedom Party leader Geert Wilders, begin talks aimed at finding €9 billion in austerity budget cuts.

Even before this report, there were fears that tensions over the cuts could exacerbate policy differences between the Liberals and the Christian Democrats – especially since the outspoken Mr Wilders, who backs the government from the opposition benches, is also at the table.

The report by UK consultants Lombard Street Research claims that membership of the euro has hurt the Dutch economically – with growth of just 1.25 per cent a year on average since it joined, compared to an average of 3 per cent a year over the preceding 20 years.

In a similar vein, it also points out that the economies of Switzerland and Sweden, neither of them euro zone members, have grown over the past 10 years by an average of 1.75 per cent and 2.25 per cent respectively, substantially ahead of Dutch growth. They’ve also had lower inflation.

It said the average Dutch person would have had €3,500 more to spend this year alone, boosting consumer confidence, if the Netherlands had grown at the same rate as Sweden.

It calculated that leaving the euro would cost the Dutch exchequer around €51 billion – a net saving of €75 billion compared with the €125 billion it would cost the country to continue to prop up the European currency between now and 2015.

“This report shows that the euro has cost us wealth, economic growth and spending power”, said Mr Wilders, who has been demanding a referendum on whether or not to leave the euro.

“This analysis flies in the face of everything we have been told by the media and by the left-wing elite in The Hague on a daily basis: it is economically sustainable for the Netherlands to leave the euro and return to the guilder.”

The Freedom Party report has received a frosty political reception. Finance minister Jan Kees de Jager rejected the suggestion that it would be cheaper for Holland to abandon the euro than to stick with it – and said the European internal market had been hugely beneficial to Dutch exports.

He also made the point that even if the Netherlands reverted to its own national currency, it would still be obliged to contribute to a euro zone bailout fund – as Britain and Denmark were now doing.

GreenLeft (Groenlinks) leader Jolande Sap dismissed the report as “attention seeking”.

One of the front runners for leadership of the Labour Party, Ronald Plasterk, challenged Mr Wilders to “put his money where his mouth is” during the current budget talks if he wished to force the government into a referendum.

Charles Dumas of Lombard Street Research last night defended the report, although acknowledging his company had “always considered the euro to be a failed project”.