AMSTERDAM – Standard & Poor’s stripped the Netherlands of its triple-A credit rating Friday, saying that the country’s growth prospects have deteriorated and it is not performing as well as peers.
It downgraded the country to AA+, meaning the only remaining eurozone countries with AAA ratings from S&P are Germany, Finland and Luxembourg. The Netherlands’ finance minister, Jeroen Dijsselbloem, said the downgrade was unsurprising “but disappointing.”
The Dutch economy has been hit by falling home prices and rising unemployment, which is expected to hit 8 per cent next year.
“The downgrade reflects our opinion that The Netherlands’ growth prospects are now weaker than we had previously anticipated, and the real GDP per capita trend growth rate is persistently lower than that of peers at similarly high levels of economic development,” S&P said in its announcement.
It said it expects Dutch GDP to fall by 1.2 per cent in 2013 and grow by 0.5 per cent in 2014.
Dijsselbloem, who is also president of the Eurogroup of finance ministers, has prescribed spending cuts and tax hikes to strengthen Dutch and other European government finances and pave the way for long-term growth. Some economists say such austerity measures are counterproductive during a downturn, but the idea is popular in German-led policy-making circles.
Dijsselbloem said in an interview with RTL television that, despite the downgrade, S&P supports the Cabinet’s approach to cutting debt.
But a spokesman for the agency said that’s not accurate. “We as a rating agency do not give any endorsements to policy,” said Josy Soussan. “We look at measures and assess the impact we think they will have.”
The Dutch government has undertaken several rounds of budget cuts but is still expected to run deficits of a little more than 3 per cent this year and next year.