It looks as if the Netherlands has moved out of recession but the current political situation could threaten any recovery, Dutch central bank president Klaas Knot said on Monday

Knot was speaking during the presentation of a six-monthly report into the health of the Dutch banks.

The report says Dutch banks are well on their way to strengthening their capital buffers. According to Knot, this stronger position should lead to more flexibility in the supply of loans over the next few years which, in turn, will help economic recovery.

Signals

‘My feeling is that we are out of recession. Many signals are now at green,’ Knot says. ‘But it will be a month and a half before we have the figures to prove it.’

The central statistics office CBS will publish third quarter figures on the economy in mid-November.

‘I cannot imagine those figures will be anything but positive,’ says Knot. He points out that the export market is picking up with traditional Dutch export countries showing slight signs of growth, and that the housing market is beginning to show signs of improvement.

Threat

The biggest threat to the economic recovery is the current political situation, according to Knot. ‘It cannot be the case that the recovery we have been longing for for eight quarters is to be put at risk by a political inability to do what is necessary to get the government finances under control,’ he says.

The coalition government is currently negotiating with opposition parties on the €6bn extra spending cuts contained in the 2014 budget.

According to Knot those cuts will not lead to an improvement in government finances, but will simply stop the budget deficit from increasing further.