* Consumer confidence at -44 points, lowest since 1986
* Unemployment at 7.5 pct at 16-year high
* House prices drop 10 pct in January y-on-y
* Dutch deputy PM: there is no simple short term solution
By Gilbert Kreijger
AMSTERDAM, Feb 21 The shrinking Dutch economy
showed signs of sharp deterioration on Thursday with a ream of
data that could make it harder to meet its deficit target and
keep its top notch triple-A credit rating.
Consumer confidence fell to its lowest since records began,
unemployment reached the highest level in around 16 years, and
house prices showed the strongest annual drop since 1995, the
country's statistics office said.
The export-oriented Netherlands, the euro zone's
fifth-largest economy, is in its third recession since 2009, and
wants to bring the deficit below the European Union target of 3
percent of economic output this year.
Rating agency Fitch cut its outlook on the Netherlands' AAA
credit rating to negative earlier this month, citing worries
about falling house prices, the banking system and the high
state debt burden.
Consumer confidence fell to minus 44 points in February from
minus 35 in January, reaching the lowest point since records
started in 1986, Statistics Netherlands said in a statement.
Seasonally adjusted unemployment rose to 7.5 percent in
January, or almost 600,000 of the labour population, from 7.2
percent in December, the statistics office said.
Prices of existing homes, meanwhile, fell almost 10 percent
in January compared with a year earlier, the biggest
year-on-year drop since records started in 1995.
"The short-term prospects are not rosy. It is a bitter pill
for people who lose their jobs or have finished their education,
and can't find work," Deputy Prime Minister Lodewijk Asscher
said in a statement.
"There is, however, no simple solution to solve this problem
in the short term. Therefore we have to continue investing in
education, innovation, and contain the crisis in Europe."
Considered part of the euro zone's core, the Netherlands is
suffering from a building slump, falling consumer spending and
investments, and is under a government austerity programme.
DEFICIT TARGET DOUBTS
Prime Minister Mark Rutte has pledged to bring the budget
deficit below 3 percent but official forecasts in December
suggest this will be difficult without further austerity.
The central bank expects a deficit of 3.5 percent of gross
domestic product this year, while cabinet forecaster CPB expects
3.3 percent in 2013, down from 3.8 percent in 2012.
"The thing about the Dutch is that as regards the budget
deficit, past experience suggests they will do whatever it takes
to meet the rules," Rabobank economist Lyn Graham-Taylor said.
"The Dutch consumer has been hit by pension cuts, by the
housing market. But it doesn't immediately increase the chance
of a ratings downgrade. This is poor economic data but it would
take a while to feed into any ratings actions," he said.
Both Rutte and Finance Minister Jeroen Dijsselbloem have
said previously that they would wait for new forecasts from
cabinet forecaster CPB before considering further austerity
measures. CPB will publish preliminary numbers on Feb. 28.
Dijsselbloem, who became head of the Eurogroup of euro zone
finance ministers last month, has repeatedly said in the past
few months that European rules allow for leniency in reaching
deficit targets in difficult economic conditions.
The Dutch economy contracted 0.2 percent quarter-on-quarter
in last quarter of 2012, after a 1 percent shrinkage in the
Dutch consumer spending in the fourth quarter fell 2.3
percent from a year ago, reflecting a slumping property market,
job losses, pension cuts and tax hikes.
House prices are down 19 percent since peaking in 2008, and
Fitch expects the decline to reach 25 percent. Some pension
funds have already reduced pay-outs due to funding shortages,
and another 68 will cut from April 1 by as much as 7 percent,
the central bank said on Tuesday.
Bankruptcies also hit a record 11,235 last year, the
statistics office said last month, up 18 percent from 2011 with
construction and trade companies accounting for the highest
number if personal and individual businesses are excluded.