Knot: government must cut right now – Financieele Dagblad

Klaas Knot

Dutch Height

Juist now the weather improved somewhat with the economy, the government should try to further reduce the budget deficit. That call did Klaas Knot, president of De Nederlandsche Bank, Sunday in the studio of TV program Buitenhof.

“When it comes to restoring order to public finances is the timing of the cuts might be as important as the magnitude, “said Knot. “And there we have not in the Netherlands such a great track record. We are actually doing enough in the good times through which we are forced to do too much in the less favorable times.

Budget Rules

Knot refers to the European budgetary rules. It states, inter alia, stipulate that the deficit of the EU Member States must not exceed 3% of gross domestic product (GDP). Less known is that the rules also require that countries with a deficit of less than 3% have to try to pick up a half percent of their budget each year in good times. In the case of the Netherlands would involve € 3 billion.

Knot left in the middle where the cabinet which € 3 billion from should make. He called it a “political choice” but hinted that his preference for spending cuts rather than tax increases.

Emerging markets

Knot also addressed the troubled stock market last week. He acknowledged that there is a lot of turmoil on the Chinese economy. “But actually the transition that goes China – a lot of export and investment-driven growth model to a more domestic demand and consumption-based economy – something which we are already more than ten years to ask. ‘Knot cited the economic problems in emerging countries as Brazil and Russia “much more disturbing” than the cooling of China’s economy.

Oil

The low price of oil, according to Knot a coin with two sides. “That’s for us as central bankers annoying because it puts extra pressure on inflation which is already too low. But it is also for the eurozone economy as fantastic news, “the central banker. “The citizens are the eurozone as it were additional purchasing power in the lap, because energy prices are lower. That will help the economic recovery. “