Challenges for Europe's Economic Core: The Netherlands

Editor's Note: This is the third installment of a series on domestic political challenges facing Germany, France and the Netherlands. These countries, which make up the geographic and economic core of the eurozone, have united to press for austerity in the currency bloc, backing financial assistance to struggling economies in exchange for agreements over tighter surveillance and control of national budgets. They have acted more or less together in the past two years, but in the coming months, domestic obstacles for each will weaken their unity.

Recent data indicates that the economic situation is worsening in the Netherlands. The country is expected to remain in recession for the rest of the year, and its gross domestic product (GDP) is expected to contract by 0.75 percent. Housing prices continue to fall, dropping by 3.4 percent in February on a year-on-year basis. The government deficit is expected to be 4.6 percent of GDP in 2012, 1.6 percentage points above the EU target.

In addition to its economic crisis, the Netherlands finds itself embroiled in a political crisis. These combined crises mean it likely will be unable to pass the sort of austerity measures expected of more peripheral eurozone countries — highlighting how austerity as a solution to the eurozone crisis is being questioned at the eurozone's very core.