The politics of fiscal consolidation in the Netherlands: mainly compromising but hesitant attempts at targeted priority-setting

Abstract

This article analyses fiscal consolidation in the Netherlands, especially the politics of consolidation and cutbacks. We discuss the contents of the consolidation measures, and the political decision-making processes leading up to the measures. The analysis of the political decision-making focuses on the characteristics and stages of the decision-making. The three stages of fiscal consolidation analysed in this article – the October 2010 coalition agreement, the April 2012 spring agreement, and the October 2012 coalition agreement – show a gradually mounting recognition of the necessity for serious cutbacks. Decision-making was mainly characterized by consensual compromising, that is, incremental, across-the-board, cheese-slicing measures. However, in later stages of the fiscal crisis, hesitant attempts were made at targeted political priority-setting.

Points for practitioners

This article’s main focus is on the political decision-making leading up to cutback measures, whether the decisions were mainly incremental, across-the-board, cheese-slicing, or whether targeted, selective cutbacks based on political priority-setting also occurred. It turns out that hesitant attempts of the latter type were indeed made. After a while some fundamental reconsiderations did seep through in Dutch consensus politics. Another key point is that budget discipline played a dominant role in the government’s fiscal consolidation. The economic experts of the Ministry of Finance, Central Planning Bureau, etc. had a major influence on the financial frames of the cutbacks.