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5/8/13

The Netherlands: Heavily indebted stodgy Netherlands is nation that’ll blow up euro ? - by Matthew Lynn


The Netherlands - economic decline?
The Netherlands has turned into one of the most heavily indebted countries in the world. It has slumped into recession, and shows very little sign of coming out of it. The euro crisis has been dragging on for three years now, but so far has only infected the peripheral nations within the single currency. But the Netherlands is a core member of both the euro and the European Union.

If it can’t survive in the euro zone, then the game really will be up. 

Holland has always been one of the most prosperous and stable nations with Europe — and one of the most pro-EU. It was a founding member of the union, and one of the most enthusiastic supporters of the launch of the single currency. With a rich, export-oriented economy, and plenty of successful multinational companies, you might suppose it had much to gain from the creation of the single economy that was meant to come into being once the euro was successfully launched. 

But instead it has started to play out a depressingly familiar script. It is blowing up in exactly the same way that Ireland, Greece and Portugal did — except on a slightly longer fuse. 

Low interest rates, set mainly to benefit the German economy, and lots of cheap capital, lead to a property boom, and an explosion of debt. From the launch of the single currency to the peak of the market, Dutch house prices doubled, making it one of the most over-heated markets in the world.

Note EU-Digest: Is this reality or more disgruntled Anglo-Saxon Eurosceptism ?

Read more: Stodgy Netherlands is nation that’ll blow up euro - Matthew Lynn's London Eye - MarketWatch

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