DUTCH PRIME minister Mark Rutte and his centre-right Liberals have reached agreement with the Labour Party to form a new coalition government expected to make cuts of €16 billion in public spending over the next four years.

The deal was agreed on Sunday night and confirmed yesterday by Mr Rutte and Labour leader Diederik Samsom just 47 days after the election that gave the two parties a working majority between them of 79 seats – 41 for the Liberals and 38 for Labour – in the 150-seat parliament.

“This is a balanced package which will ensure that the Netherlands emerges stronger from the financial crisis,” said Mr Rutte last night after briefing his party on the main elements of the agreement. It aims to boost the country’s stagnant economy and increase employment.

Mr Samsom will put the deal to his party members next Saturday, and the new cabinet – the majority of whom have already been chosen by the two leaders – is expected to be sworn in by Queen Beatrix as early as next week. It will have been the quickest formation of a coalition since the 1980s.

As the euro zone crisis continues, the key job of finance minister is widely expected to go to Labour, and 46-year-old Jeroen Dijsselbloem, an agricultural economics graduate and former civil servant. Mr Djisselbloem will replace Jan Kees de Jager of the Christian Democrats, who was widely credited with meeting a controversial Brussels deadline of last April 30th for a draft 2013 budget which would push the Netherlands’ budget deficit below 3 per cent of gross domestic product.

The €16 billion of cuts agreed between the Liberals and Labour over the past six weeks now aims to go even further and eliminate the country’s deficit by 2017.

The biggest savings are expected to be in healthcare and social welfare, which will be cut by €5 billion and €3 billion respectively.

This could cause some political difficulty for Mr Samsom, who campaigned during the election against “unnecessary austerity”.

Perhaps anticipating that antagonism, yesterday he issued an appeal for public understanding and patience as he outlined the joint programme for government, entitled Building Bridges: “This agreement is the result of give and take between the two parties – and we know we are asking everyone to make sacrifices.

“Because it is a balanced package, this programme will not wreck the economy – but will generate jobs in the long term.”

Mr Samsom – who is not expected to take the title of deputy prime minister – maintained that those on higher incomes would be hardest hit by the budget cuts because they would have to pay more for healthcare. At the same time, he says the buying power of those on lower incomes would improve slightly.

Edith Schippers, a former Liberal Party health minister, also warned about the impact of the new austerity package. She implied that the new coalition could become deeply unpopular with the public before long.

“We are in a crisis and we need to take measures to get out of it, but it won’t be easy,” she said. “It is a very tough package and it will be tough for lots of Dutch people.”