The Netherlands: Dutch Center Right Government Of Mark Rutte Collapses after Geert Wilders Pulls the Plug During Austerity Negotiations

Dutch PM Mark Rutte

The party is over - after weeks of discussions on austerity measures, the Dutch prime minister has said government talks have fallen through and new elections are possibly the "next logical step."

The talks were aimed at cutting up to 16 billion euros ($21 billion) from the annual budget. Dutch Prime Minister Mark Rutte told reporters he would hold a crisis meeting on Monday to assess the situation.

The talks among Rutte's Liberal Party, his coalition partners the Christian Democrats and the anti-Islam Freedom Party headed by Geert Wilders started in March as the Dutch economy sank into recession. Forecasts showed the 2012 budget deficit would reach 4.6 percent of gross domestic product when the EU deficit ceiling is 3 percent.

Rutte blamed Wilders for the collapse. He said that on Friday a "balanced package" of cuts had been agreed only for Wilders to come back on Saturday after talking to his party colleagues and rejecting the plan.

Last week, ratings agency Fitch warned that the Netherlands might loose its AAA credit score if action to cut the deficit and stop debt from rising was not taken. Only Germany, Finland, Luxembourg and the Netherlands still hold AAA rating in the eurozone. The Dutch government has been one of Germany's strongest supporters for a new pact on fiscal responsibility in the eurozone.

If new elections are held they probably will be held in September or October this year.

EU-Digest