Dutch crisis: Parties agree deal on budget cuts

Finance Minister Jan Kees de Jager held two days of talks before an agreement was reached

Five Dutch political parties have agreed tough budget cuts days after the government collapsed over the measures.

PM Mark Rutte called elections for 12 September after Geert Wilders' Freedom Party (PVV) refused to back billions of euros in cuts to the 2013 budget.

Prospects of meeting an EU deadline on 30 April for measures to reduce the budget deficit to 3% of GDP seemed slim until Thursday's surprise breakthrough.

A European Commission spokesman said it was a promising development.

After crisis talks on Thursday, three opposition parties backed a budget agreement with the two former coalition partners now running a caretaker administration - the liberal VVD and the Christian Democrats (CDA).

"We have reached an agreement," Stef Blok, leader of the VVD, later told parliament.

Earlier, Finance Minister Jan Kees de Jager said the parties had agreed "a broad package that I hope will win broad support".

"In any case we have a majority in Parliament," he said. "The Cabinet will meet tomorrow and then it (the budget) goes to Brussels."

The Dutch economy is in recession and the government is facing a budget deficit of 4.6% next year if further spending cuts are not made.

Without a deal before the European Commission's 30 April deadline, there are fears that the Netherlands' prized AAA credit rating status could be in jeopardy.

For seven weeks, the two coalition parties had tried unsuccessfully to reach agreement on billions of euros in cuts, together with the far-right PVV on whose support the minority government relied.

The three opposition parties - D66, Green Left and Christian Union - as well as the two former coalition partners put the proposed cuts to their MPs before a parliamentary debate on Thursday evening. All five parties agreed the terms of the deal by late Thursday afternoon, Dutch media said.

"I think what we've agreed is good enough to put to the parliamentary party," Green Left leader Jolande Sap told reporters earlier.

Together, the five parties form a slender majority in the 150-seat Dutch parliament.

Mr Blok told Dutch TV that the cuts would involve "tough and painful measures that are necessary to bring the budget in order before next year". Without going into detail, he said the cuts involved changes to the housing market and the right to dismiss workers.