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Netherlands to invest 6 bln euros to stimulate economy

Updated:2009-03-27 09:27:37

The Dutch government plans to spend 6 billion euros (8.1 billion U.S. dollars) in two years on measures to boost the economy, including subsidizing environmentally-friendly houses, encouraging the use of cleaner cars and reducing youth unemployment, Dutch Prime Minister Jan Peter Balkenende said on Wednesday.

According to the stimulus plan which Balkenende presented to the parliament on Wednesday, the government will make the investments in this year and next, and then start to cut spending in 2011 when the economy hopefully picks up again, Dutch media reported.

The government will allocate funds for the insulation of homes and schools, construction of windmill parks, and to build new hospitals and schools, Balkenende said. Planning procedures for construction will be accelerated in a bid to revive the building sector that has been hit hard by the crisis.

The government also plans to give rebates to people who turn in their old vehicles and buy a cleaner new one.

In order to keep people in jobs, the government will introduce part-time unemployment benefit and will put a focus on youth employment.

The environmental tax on airplane tickets introduced last July will be abolished, much to the delight of Dutch airports, which have their passengers changing to airports in neighboring countries.

The government intends to raise retirement age from 65 to 67 to cut pension spending, but it will give an independent advisory body -- made up of the unions, the employers and experts -- five months' time to present an alternative. If the proposed alternative can save the same amount of money, the government will scrap the plan.

Home owners whose property is valued at more than 1 billion euros will also have to pay higher taxes and there will be tougher controls on health spending, Balkenende said.

The government intends to cut spending by 5 billion euros starting from 2011 if the economy is forecast to grow by a reasonable degree at that time. The national budget deficit is expected to have risen to 5.7 percent in 2011, and the government plans to lower the deficit by half a percentage point every year.

The Dutch economy, which depends heavily on exports, has slipped into its worst recession in 80 years. The country's GDP is forecast to shrink by 3.5 percent this year and the unemployment expected to rise to 8.75 percent in 2010.

Balkenende said on Wednesday that the stimulus measures are both necessary and "well-balanced." He said everyone would have to contribute to the fight against recession, and "only together will we have the strength to climb up again."



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