AMSTERDAM – The Dutch government has temporarily abandoned austerity measures it previously said were needed to bring the country's budget deficit within European rules.
On Thursday, the Cabinet brokered a deal with unions that scraps planned salary freezes for government and healthcare workers. Prime Minister Mark Rutte said Friday he "hopes and expects" the deal will restore confidence and boost growth.
But he vowed to meet European rules and bring the budget deficit below 3 percent of annual gross domestic product. He said cuts are possible after all if the new approach hasn't paid off by August.
In March, the budget forecasting office said the country will run a 3.3 percent budget deficit in 2013, widening to 3.4 percent next year. It said further austerity measures would do more harm than good.