Dutch downgrade: Northern discomfort

THE decision by Standard & Poor’s to strip the Netherlands of its coveted AAA rating is a vivid illustration of the damage that the euro crisis has wreaked not just on the troubled economies of southern Europe but also within the northern core. The rating agency downgraded the Netherlands today one notch to AA+. That leaves only Germany, Finland and Luxembourg within the 17-strong euro area with a top rating from the three main agencies. The Netherlands may be a small place but in fact it is the fifth biggest economy within the euro zone. And it has political clout within the currency club. Along with Finland, the Netherlands has been a crucial ally of Germany in formulating the response of northern creditor nations to the calls for help from the periphery. For example the Dutch finance minister met with his counterparts from Finland and Germany in September 2012 and the three issued a statement in which they insisted on limiting the use of the European Stability Mechanism, the euro zone’s rescue fund, for banking rescues.Shortly after that meeting in Helsinki Jeroen Dijsselbloem became Dutch finance minister and at the start of 2013 he became head of the Eurogroup of euro-zone finance ministers, which plays a crucial role in formulating policy towards rescues, as in the case of Cyprus earlier this year (which by any reckoning was mishandled). A week ago he was busy …

Link to article: www.economist.com/blogs/freeexchange/2013/11/dutch-downgrade?fsrc=rss

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