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Dutch PM says austerity talks fail

Seven weeks of talks to hammer out an austerity package aimed at bringing the Dutch budget deficit back within European Union (EU) limits has collapsed, the prime minister said, laying the blame squarely with anti-EU lawmaker Geert Wilders.

Prime Minister Mark Rutte said his minority Cabinet will hold a crisis meeting on Monday to discuss what to do now. "Elections are the logical next step," Rutte said but he added that he wants to work with parliament to hammer out austerity measures before a poll can take place.

The talks began in early March after the Dutch economy sank into recession and forecasts showed the 2012 budget deficit will reach 4.6% - well above the 3% limit mandated by European rules. Dutch politicians have strongly demanded that Greece and other countries meet that target.

Rutte leads the free-market Liberal Party in a minority coalition with the centre-right Christian Democrats and outside support from Wilders' Freedom Party. The outspoken Wilders is widely known for his anti-Islam and anti-EU opinions.

Rutte said negotiations had been rounded off on Friday to deliver a "balanced package" of cuts but Wilders torpedoed the talks on Saturday after discussing the package with his party.

Wilders was happy to take the blame, saying he "would not accept that the elderly in the Netherlands have to pay for nonsensical demands from Brussels". He underlined that an accord would have been possible had the coalition been less concerned with following European rules to the letter.

Rutte came to power in 2010 and slashed spending by 18 billion euro (£14.7 billion). But after the latest downturn, he needs to cut at least nine billion euro (£7.3 billion) more, according to estimates by the Central Plan Bureau, the government's economic think-tank.

The collapse came just days before Wilders is scheduled to fly to the US to launch his new book, titled "Marked for Death. Islam's war against the West and Me."

A collapse of talks could endanger the Netherlands' coveted AAA credit rating and drive up its borrowing costs.

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