Prime minister Mark Rutte's centre right VVD party running neck-and-neck with Diederik Samsom's Labour party in polls
Two Dutch centrist parties are preparing to stitch up a new left-right coalition following an early general election being closely watched across Europe because of its potential impact on responses to the euro crisis and the Franco-German split over austerity versus growth policies.
At the end of a volatile campaign that has seen hard-left anti-European socialists top the polls, traditionally powerful Christian democrats wiped out, and the social democrats of the Dutch Labour party slumping, it was the latter who were making the political weather, staging a remarkable comeback to rival the main governing party as election victors.
The campaign has revolved around Europe and austerity after the minority centre-right coalition of Prime Minister Mark Rutte collapsed in April after less than two years because of disputes over spending cuts needed to meet EU budget deficit targets next year.
Rutte's centre-right VVD party was running neck-and-neck with the Labour party whose new leader, Diederik Samsom, has emerged as the star of the election. Pundits predicted a new coalition of Labour and the VVD with around 70 of the 150 seats at stake, requiring a third junior coalition partner.
The hard-left socialists were tipped to come third, with the far-right anti-immigration maverick, Geert Wilders (pictured), expected to lead his Freedom party to fourth place. Both Wilders and the socialists have waged an anti-austerity, anti-EU campaign, with Wilders's anti-Muslim and anti-immigrant activism playing a much lesser role because of the domination of economic issues and budget cuts.
Samsom has quickly emerged as a prime-ministerial contender due to his strong television performance in the campaign debates. Most polls still predict Rutte's VVD will emerge as the marginal winner, meaning he would be first choice for prime minister. Power politics in the Netherlands get under way in the wake of rather than before an election because of the coalition system and the highly fragmented party spectrum. The horsetrading will start today and the formation of a government could take months.
If, as expected, a Lib-Lab partnership is the basis of the new government, the key sticking points will be over the pace, scale and location of spending cuts and tax rises. There could be disputes over the ongoing attempts to stabilise the euro and Holland's participation in bailing out weaker eurozone countries. Rutte received much criticism during the campaign for declaring on television that Greece would not get another euro of Dutch money.
The outgoing Rutte government was closely allied with Germany in taking a hawkish line on austerity and dictating tough terms to bailout beneficiaries. But his minority coalition collapsed when it emerged that the Netherlands also needed to fill a huge funding gap to meet EU-set budget deficit targets by next year.
Wilders, propping up the minority government in parliament, vetoed the welfare cuts needed to meet Brussels' targets.
In the expected new coalition, Labour will argue for slower spending cuts than Rutte, will take a softer line on eurozone bailouts, and also seek to temper the austerity, tilting the balance of power in the eurozone towards President François Hollande's socialists in France and away from Chancellor Angela Merkel in Berlin.
The two biggest parties, if joined in a coalition, will need to agree on raising the retirement age, on how to reform the most generous system of mortgage tax relief in Europe, on health, social security and other welfare cuts, all to meet EU budget targets in one of the wealthiest countries in Europe with some of the lowest unemployment.
The likeliest outcome of the election will be to demonstrate that the Dutch have turned much more wary of the EU, albeit keen to keep the union and the euro.
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