Dutch Coalition Talks Hit Financial Wall

Three Dutch parties are starting formal coalition talks, but they are miles apart on how to solve a multi-billion euro budget shortfall.

Why it matters: The deep ideological divides over finances and policy could lead to a prolonged government stalemate or force painful compromises on all sides.

By the numbers: The parties must reconcile a planned €7 billion budget cut with desires for billions more in new spending on defense and the economy, creating a massive fiscal gap.

The big picture: Beyond the budget, the parties are clashing over several core policy issues that represent fundamental ideological differences.

• Taxes and debt: The VVD party opposes tax hikes or increasing state debt, while the D66 and CDA parties see them as viable options.
• Mortgage deductions: D66 and CDA want to phase out the popular mortgage interest deduction, a red line for the VVD during its campaign.
• Road pricing: The VVD is against a "pay-per-use" driving system favored by the other two parties.
• Asylum policy: The parties are split on a key law for distributing asylum seekers across the country.

Yes, but: Even if the trio reaches an agreement, they still lack a majority in the lower house of parliament and will need to bring a fourth party on board, adding another layer of complexity.

What's next: Financial experts from all three parties are meeting separately to map out the fiscal challenges, a crucial first step to see if a deal is even possible.