The Pro European Liberal VVD party has won a closely contested election battle, suggesting that Dutch Voters still have faith in the Single currency.
Prime Minister Mark Rutte now faces the difficult task of having to form a government with his arch rivals from the Labour Party. The election saw voters shun the anti- Europe and radical fringe parties dispelling concerns that the Euro sceptics could take control of a core member of the Eurozone.
Rutte’s party won 41 seats in the lower house giving them a 2 two seat lead over their centre-left rivals in the Labour Party, who won 39 seats.
“We fought this election house by house, street by street, city by city, and I’m proud. Tomorrow I will take the first steps leading to the formation of a cabinet,” Rutte said overnight after Labour leader Diederik Samsom conceded defeat.
The two parties could form a new coalition government but Rutte and Labour leader Diederik Samsom dismissed this. If Rutte is to form a stable dominant government then an alliance with his rivals could be necessary. The prospect may be undesirable from the two leaders but such a coalition could provide the Netherlands with much-needed political stability at a time of slow growth and much needed unpopular policy changes.
Negotiations between the two groups could be difficult as they are almost equally matched in numbers. Their key similarity is that both groups are pro-European albeit they have very different ideas when it comes to fiscal and social policies.
“(These two) parties have become so big that neither can form a majority cabinet with other parties,” said sociologist Paul Schnabel in a column for business daily Het Financieele Dagblad.
“That also makes it difficult because they are condemned to each other. A forced marriage, which usually has little blessing.”
In a sign that confidence remains in the Eurozone the two major anti parties suffered heavy defeats. The hard-Left Socialists who opposed austerity measures and Eurozone bailouts ended up in third place tying with the radical party of right-wing firebrand Geert Wilders populist Freedom Party. He lost half his seats.
Samsom struck a tough tone for possible coalition negotiations, saying: “Nobody knows exactly what will happen today, but one thing is certain. The course can be changed. The course must be changed because the right-wing policies of the past two years cannot continue.”
The Euro has been buoyed by the election result and is currently trading at a new four-month high against the US Dollar and a two-month high against the British Pound. It has been a good week for the Euro so far following yesterday’s decision by the German constitutional court that ruled that the German government can ratify the European Stability mechanism. It adds to the growing sense of optimism that things could be making a turn in the right direction.
The Pound to Euro exchange rate is currently trading at 1.248
The Pound to US Dollar exchange rate is currently trading at 1.611
The Pound to Australian Dollar exchange rate is currently trading at 1.544
The Euro to US Dollar exchange rate is currently trading at 1.291
The Euro to Pound exchange rate is currently trading at 0.801
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