Finally! A Dutch government is formed with an 'orange touch’ - ING

"Agreement comes after record-breaking negotiations," notes ING Senior Economist Marcel Klok.

Key quotes:

"The government's main themes: Lower taxes and combating climate change are the main themes of the coalition agreement of the new Dutch government. The treaty, 'Confidence in the Future', promises to deliver that primarily by curbing an increase in health care spending and worsening the sustainability of public finances. The mildly expansionary fiscal stance is adding somewhat to already firm economic growth."

"Today (Tuesday), 209 days after the general election in the Netherlands, the four negotiating political parties have finally come to a coalition agreement, beating the previous record of 208 days by the Van Agt government in 1977 by one day. As broadly expected, the VVD (Conservative Liberals), CDA (Christian Democrats), D66 (Social Liberals) and ChristenUnie (Social Christians) have agreed to govern with incumbent Mark Rutte (pictured) continuing as Prime Minister. The coalition parties hold the smallest possible majority in parliament. Although a one-seat majority is a small base, we still expect the governing parties to stick closely together. In order to ensure this, three out of four party leaders will remain members of their parliamentary faction."

"The economic assessment: The policies in the new coalition agreement will boost GDP in the short term by 0.2 percentage points, on average, per year up to 2021, according to the Netherlands Bureau of Economic Policy Analysis (a.k.a. CPB), despite the fact that the output gap was already expected to be closed in 2018. Hence the plans currently appear to be adding somewhat to overheating pressures going forward. Public finances worsen considerably. The sustainability balance is now projected at -0.4% GDP, while it was slightly positive before the new policy plans. This despite the fact that the government budget balance is still increasing to 0.5% GDP in 2021 and the debt ratio is dropping to 45.8% in 2021."

"In conclusion, at the expense of sustainability of public finances, the strongly competitive Dutch economy will be growing even more strongly in the years ahead and many citizens are set to benefit much more than expected earlier."