DUTCH spirits have been glum since April, when the minority government of liberals (VVD) and Christian Democrats (CDA) collapsed after the populist Freedom Party leader, Geert Wilders, withdrew his backing for cuts to bring the budget deficit below 3% of GDP. The VVD prime minister, Mark Rutte, got enough measures through with the help of smaller parties, including the liberal D66, but an election is now due on September 12th.

The budget cuts included a VAT rise, a freeze in civil-service pay, higher health-care contributions, cuts in tax benefits for commuter travel and a gradual rise in the pension age to 67, all of which will hit disposable incomes. The Netherlands is already set for a year-long recession in 2012, followed by only sluggish recovery in 2013. Unemployment, which is usually low, has risen to over 6%. In effect, the Dutch have for the first time decoupled from the far stronger German economy.

That is bad news for the mainstream parties, but good for the populists. Mr Wilders lost support after bringing down the government, but has moved on from anti-Muslim to anti-European rhetoric. He wants a Dutch exit from the euro and a referendum on EU membership. This has boosted his ratings again: one poll gives him 23 seats in the 150-strong parliament. He has a populist competitor in the far-left Socialist Party, which promises to scrap the 3% deficit target and reverse market reforms to health care. The Socialists may get 31 seats, just ahead of Mr Rutte's VVD.

In the Netherlands, “those who get the votes offer no real economic solutions,” complains Sweder van Wijnbergen, a liberal economist. Wouter Koolmees, a D66 MP, hopes there are “enough rational people” to back a reformist coalition. But the polls point to a fragmented parliament and months of coalition bargaining. Support for the VVD, which is toying with euroscepticism, is broadly holding up, but the CDA is losing ground. The centre-left PVDA is trying to compete with the Socialists by saying it too will ignore the 3% deficit target. The combined support for the three main parties has fallen from 80% in the late 1990s to a bare majority now.

Dutch economic woes are in part structural. The last big bout of reform in the Netherlands happened as long ago as the early 1980s. More is needed on pensions, housing and the labour market to make the economy competitive again. The Dutch fear they will need to supplement their pensions by saving more. The over-regulated and over-subsidised housing market is in a slump, trapping 500,000 households in negative equity. These two factors have led to a fall in consumption that has not been offset by exports.

The budget measures include a few reforms, like removing subsidies for new interest-only mortgages. But nobody is ready to tackle tax relief on existing mortgages. The labour market needs a shake-up to cut the cost of employing older workers and encourage people to work longer hours. The need for structural reforms in Europe is not confined to the Mediterranean—and it is no easier to get voters to back them in the north than in the south.