Dutch cabinet quits after rift with far-right

Dutch Prime Minister Mark Rutte's liberal government quit on Monday after the collapse of a parliamentary partnership with a far-right party, paving the way for early elections.

The under-pressure premier tendered his cabinet's resignation to Queen Beatrix at her Hague palace and left shortly afterwards at around 4.00 pm (1600 GMT).

A few minutes after Rutte left, the Dutch government's information service said in a statement: "Prime Minister Mark Rutte has offered to her Majesty the Queen the resignation of all ministers and deputy ministers with immediate effect."

After a two-hour meeting, "the Queen is considering the resignation, but has asked all ministers and deputy ministers to continue to do everything that is necessary in the interests of the kingdom," the statement added.

The resignation had been widely expected since the weekend when Rutte acknowledged that a rift with anti-Islam politician Geert Wilders' Freedom Party would likely lead to early elections, otherwise due in May 2015.

Although not part of the ruling coalition, Wilders' party had effectively guaranteed the government's majority for the last 18 months by agreeing to support it in parliament.

That arrangement came to an abrupt halt at the weekend when talks on a new package of austerity measures foundered.

A debate has now been scheduled for 2.00 pm (1200 GMT) on Tuesday before the Lower House in which Rutte is expected to address MPs.

"The ball is now in parliament's court," Finance Minister Jan Kees de Jager told reporters, adding he hoped to have "more clarity" on Tuesday on the austerity package, for which Brussels gave an April 30 deadline.

Rutte's liberal VVD party, its coalition partner the Christian Democrats and Wilders' Freedom Party had been negotiating in private for seven weeks but the divisions came into the open when Wilders walked out on Saturday.

The turmoil has raised fears that the Netherlands' gold plated triple A credit rating could be in danger. It is one of only four eurozone countries to still retain AAA status among the three main credit rating agencies.

Rutte, Verhagen and Wilders held near daily talks at the premier's official Catshuis residence since March 7 to agree on how to cut 16 billion euros (Uê21 billion) off the budget, which stood at 4.7 percent of gross domestic product for 2011. The EU's deficit ceiling is three percent of GDP.

The talks had been in their final stages when Wilders dropped his political bombshell and the Dutch press said on Monday that the ruling class was still in shock.

A visibly upset Rutte told reporters Saturday: "I have to inform you today that the three parties have failed to come to common answers."

Elections now seemed likely, he added.

The austerity package at the centre of the row included a slight raise in Value-Added Tax (VAT), a freeze on civil servants' wages and a cut in spending in both the health and development aid sectors.

"The plan is not in the interest of (Freedom Party) voters," Wilders announced at a press conference, held at the same time on Saturday afternoon.

"We cannot live up to the demands Brussels is putting on us. Money is being taken from the wallets of pensioners."

Rutte's government was sworn in in October 2010 following the fall of the then prime minister Jan Peter Balkenende in February that year in a dispute over continued military support to NATO forces in Afghanistan.