Session 1: Managing the Fiscal Crisis in Britain, Germany and The Netherlands - Walter Kickert

Walter Kickert, Erasmus University Rotterdam, March 2011
Preliminary results of an international comparison - Managing the Fiscal Crisis in Britain, Germany and The Netherlands

1. Banking Crisis

1.1. Contents

The measures taken by governments to support and save banks and restore confidence in the banking sector followed a similar pattern all over the Western world:

-       Capital injections. Governments injected capital into banks and became shareholders, thus gaining some control over banks and possible future benefits from the recovery of banks. Nationalisation occurred when governments came to own a significant fraction or all shares of a bank and gave governments more direct control. Nationalisation is criticised in free market economies for fear of political interests overshadowing efficiency and fair competition. In the case of the German regional ‘Landesbanken’ that conflict of interests had occurred in the past. Nationalisation of banks did take place in Britain and The Netherlands, but not in Germany.

-       Guaranteeing bank debt. Guaranteeing bank debt increases the liquidity of banks and promotes interbank lending. The measure was taken by governments to encourage banks to lend to each other and to firms. Notice that after the bank support measures the common complaint of particularly medium and small industry was that they could no longer get loans from banks.

-       Isolating or buying bad assets. Securing or direct buying of assets was meant to isolate the toxic assets of a bank (derived from sub-prime mortgages). This measure was not easily taken by governments because of the difficulty of pricing the toxic assets and the time pressure. Ring fencing assets postponed that decision by first isolating the assets and dealing with the costs later.

-       Increasing deposit insurance. The main argument for having deposit guarantees was to prevent bank runs. In Britain the banking crisis started with the bank run on Northern Rock in 2007. If depositors feel that a bank is failing and they have no insurance, they will rush to withdraw their money before all is gone. In most OECD-member countries the deposit guarantee limit used to be around 20.000. After the banking crisis the guarantees were mostly raised, in Britain to 50.000, in The Netherlands to 100.000 and in Germany to 100% of the deposit.

The following table indicates that the costs of the banking crisis were highest in Britain where the banking and financial sector played a predominant role in the economy, but were also relatively high in The Netherlands (20 billion capital injection fund, and 200 billion liabilities guarantee fund) where the banking sector also has a relatively high part in the economy.

Table. Overview of Banking Aid Measures, 2009 (in percentage of GDP)

	Great Britain	Germany	Netherlands	Average EU
Capital injections	3,5	4,4	6,4	2,6
Guarantees on bank liabilities	21,7	18,6	34,4	24,8
Relief of toxic assets	0,0	1,4	3,9	0,8
Liquidity and funding support	16,4	0,0	7,5	2,9
Total	41,6	24,4	52,0	31,2
Deposit guarantee (euro)	50.000	100 %	100.000

Source: European Commission, 2009

Countries outside of Europe, except for the United States and Japan, have not taken capital injection or nationalisation measures, but have restricted themselves to increasing deposit guarantees and guaranteeing bank debts. These two measures were critical for short-term relief of the banking system and were employed first in the financial crisis.

In March 2010 the European Commission, the ECB and the National Banks decided to carry out a ‘stress test’ in order to determine the capability of European banks to resist new shocks. In July 2010 the results of the ‘stress test’ were published: seven of the investigated ninety-one banks had a capital reserve less then 6% of the balance total, which was the minimum limit. These were Hypo Real estate (Germany), the Agricultural bank of Greece and five Spanish regional savings banks (‘cajas’).

In the summer of 2010 plans were devised for higher capital requirements for banks, known as ‘Basel-3’. Banks reacted furiously on the consequence of attracting extra capital. In September 2010 the Basels Committee (European bank regulatory agencies) reached an agreement to increase the capital reserve requirements in a couple of years.

P.M. Recovery of banks?

The following table gives an indication of the effects of the bank support measures on government finances. It presents the increase in government financial liabilities. Britain has endured the most severe increase in government debt.

Government Debt (percentage of GDP)

	2007	2008	2009	2010	2011	2012
Britain	47,2	57,0	72,4	81,3	88,6	94,5
Germany	65,3	69,4	76,5	79,9	81,3	82,0
Netherlands	52,0	66,0	69,4	74,6	77,6	79,5

Source: OECD Economic Outlook 2010

1.2. Process

In Britain the decisions during the banking and financial crisis were taken by prime-minister Brown, chancellor of the Exchequer Darling, the governor of the Bank of England King, and a very small group of insiders (headed by the first secretary of the Treasury). For fear of information about the sensitive bank actions leaking to the press, the number of people involved was kept to a bare minimum (like in other countries). Due to the institutional characteristics of the British government, with its leading position of the prime-minister, Brown dominated the decision process, at least in public.

In Germany the institutional characteristics of government also give the Chancellor a strong position, but that is restrained by the principle of ministerial responsibility and autonomy. Chancellor Merkel (CDU) had to cooperate with her Finance minister Steinbrück (SPD). In Germany the chairman of the National Bank (..) was also heavily involved in the decision-making on banking support.

In The Netherlands the formal-institutional position of the prime-minister is merely ‘primus inter pares’, that is, chairman of the Friday cabinet meetings. The minister of Finance Bos clearly dominated the decision process, most certainly in public appearances, where he was seconded by the prime-minister Balkenende and the chairman of the National Bank Wellink. The National Bank did play a major role in the process, but the role of the prime-minister was less exposed. The department of General Affairs (the prime-minister’s office) ‘was kept well informed’. Behind the public screens the secretary-general of the ministry of Finance Gerritse played a coordinating role in the many crisis-deliberations. In The Netherlands too only a very small number of people was informed and involved in the crisis-management, even amongst the top-officials of the ministry of Finance, for fear of premature leaking of bank support measures.

Another feature of the decision process in all three countries was the involvement of many external advisors and specialists like lawyers, investment bankers, accountants and the more, to assist in supporting and taking-over banks, in checking the banks’ balances and books, in determining the price of banks’ assets, etc. Ministries of Finance were not prepared for the financial banking crisis and did not have the expertise for buying up banks. External expertise was heavily relied upon.

Decision-making during the banking crisis was typically urgent-crisis-management (Boin et al., 2005; ‘t Hart et al., 2010; Boin and ‘t Hart, 2003). A pressing and important event requires immediate action, but is characterised by high uncertainty. Decision-making becomes centralised in the hands of a few key-players.

2. Economic Crisis: economic recovery plan

2.1 Contents

Almost all Western countries have taken measures to support the economy in face of the crisis. The size and composition of the economic recovery packages varied between countries, depending on the severity of the economic crisis and the fiscal position before the crisis (In 2009 Britain had a high 11,5 per cent of GDP budget deficit, Germany a lower 3,9 deficit and The Netherlands 3,4) . The United States have taken the largest economic measures at about 5,5 per cent of GDP. The following table gives an financial-economic overview of the measures taken in the three countries, where the two main categories of the packages, tax revenue and spending measures, are further specified.

Table. Composition of Economic Recovery Packages

(total over 2008-2010 in percentage of GDP in 2008)

	Great Britain	Germany	The Netherlands
Net effect	-1,4	-3,0	-1,5
Tax revenue
Total	-1,5	-1,6	-1,4
Individual	-0,6	-0,6	-0,2
Businesses	-0,1	-0,3	-0,4
Consumption	-0,7	0,0	0,0
Social contributions	0,0	-0,7	-0,8
Spending measures
Total	0,0	1,4	0,1
Fiscal consumption	0,0	0,0	0,0
Investment	0,1	0,8	0,0
Household transfers	0,1	0,2	0,1
Business transfers	0,0	0,3	0,0
Sub-national government transfers	0,0	0,0	0,0

Source: OECD (2009)

Tax revenues in most OECD-member countries rather concentrated on personal income taxes than on business taxes. Great Britain has lowered consumption taxes by means of a (temporary) reduction of the VAT rate. The following table presents an overview of the economic recovery measures taken per country.

Table. Economic Recovery Packages per Country

Great Britain	Germany	The Netherlands
Revenue measuresTaxes on individualsPersonal tax allowanceHousing stamp holiday House insulating subsidy Business taxes Defer corporate tax Relief troubled companies Defer rate empty property Allowance business-cars Consumption taxes Cut in VAT Duties alcohol and tobacco Duties air traffic, vehicle	Revenue measuresTaxes on individualsPersonal tax allowanceTax deductibility trades Child allowances Business taxes Tax relief investment Depreciation for SMEs Consumption taxes Exemption vehicle tax Suspension bio-diesel tax	Revenue measuresTaxes on individualsTax credit for workersBusiness taxes Depreciation rules Lowering tax SMEs Consumption taxes Skipping planned VAT rise Reduction unemployment premium
Spending measuresGovernment spendingPublic investmentEmployment services Capital spending forward Transfer to households Pensions Child benefit Child tax credit Support mortgage payment Mortgage rescue scheme Value for money savings	Spending measuresGovernment spendingPublic investmentTransfer to households Child allowances Vehicle wreck bonus Transfer to businesses Innovation and R&D Training for unemployed	Spending measuresGovernment spendingPublic investmentTransfer to households Help for low-income,     handicapped and chronic sick Transfer to businesses Part-time unemployment
Other financial measuresRecapitalisation of banksNationalisation of banksAsset Purchase Facility Credit guarantee scheme Loans to car industry Financial compensation scheme (Icesave)	Other financial measuresRecapitalisation of banksPurchase of troubles assetsCredit guarantee scheme Debt brake law	Other financial measuresRecapitalisation of banksCredit guarantee schemeExport credit guarantee

Source: OECD (2009)

The overview shows that the measures taken in the three countries are similar to some extent, but vary in the details. For instance, all three countries introduced a premium for the replacement of old cars by new ones. The action was invented in Germany, which has a large car-industry, and had a substantial effect on car-sales there. In Britain the measure only partly supported domestic car-industry as many car-sales are foreign import. The Netherlands hardly has a domestic car-industry.

Although it is too early to already assess the effects of the economic recovery measures on the actual economic development the following table shows that both Britain and Germany in 2009 experienced a severe economic decline, and that the German economy recovered sooner and better than the British one.

Change in real GDP (percentage from previous year)

	2007	2008	2009	2010	2011	2012
Britain	2,7	-0,1	-5,0	1,8	1,7	2,0
Germany	2,8	0,7	-4,7	3,5	2,5	2,2
Netherlands	3,9	1,9	-3,9	1,7	1,7	1,8

Source: OECD Economic Outlook 2010

2.2. Process

The decision-making in this second stage of devising economic recovery plans, was not of the urgent-crisis-management type at the time of the banking crisis. It was not centralised in the hands of the few financial key-actors such as prime-minister, Finance minster and Chairman of National Bank, but involved more actors. Ministries of Economic Affairs, of Social Affairs, Education, Housing, Health and the more were involved in the preparation of the stimulus package. Moreover parliament and politics this time were playing an active role. And employers and employees organisations were involved, as well as many other interest organisations.

P.M. Britain

In Germany the Christian-Socialist coalition government has involved more parties in the preparation of the economic stimulus package. In German governmental decision-making the so-called ‘coalition committee’ (Fleisher and Parrado, 2010) traditionally plays a prominent role in the intermediation between government and parliament. It consists of the Chancellor, the Vice-chancellor (from the coalition party), the chairmen of the parliamentary parties, and the party chairmen. The coalition committee met in October 2008 (first Konjunkturpaket) and January 2009 (second Konjunkturpaket) to coordinate the government response to the economic crisis. Due to the upcoming September 2009 elections the process was clearly influenced by party competition. The Social-democrat (SPD) Finance minister Steinbrück and Foreign minister Steimeier dominated the policy debate and e.g. proposed the car scrappage scheme (Abwrackprämie), which became very popular. The Christian-democrat (CDU-CSU) ministers were less active in setting the policy agenda so Chancellor Merkel (CDU) adopted many of the SPD-proposals without amendments. The Foreign minister Steinmeier (SPD) even organised a meeting with trade-unions to discuss the economic stimulus measures, thus forcing Chancellor Merkel to convene an ‘economic summit’ with representatives from government, science, industry, trade unions and interest groups to discuss the economic recovery actions. The institutional characteristics of German government allowing for power-concentration in the hands of the Chancellor, did lead to a centralisation of decision-making during the banking crisis, but not during the economic recovery preparation. Even ministers who bear no responsibility for financial and economic Affairs, like the Foreign minister, became highly involved in the process. In cases that attracted much public attention, like the saving of the warehouse-chain Karlstadt, or the post-order company Quelle, and above all the support plans for the car-company Opel, many political players interfered publicly in the debate.

In The Netherlands the Christian-Socialist coalition government in March 2009 announced the economic recovery plan ‘working on the future’ as an addition to its original 2007 coalition program. Besides consultations with the coalition partners the Christian-democrats, the Social-democrats and the Christian Union, and with opposition parties in parliament, the government in the recovery program explicitly mentioned intensive consultation with employee and employer organisations in the Labour Foundation. Behind the screens top-official played an important role in the coordination of the policy-making, especially the secretary-general of the ministry of Finance Gerritse. The decision-making at this stage of the crisis was not urgent-crisis-management but the normal Dutch system of consultation, deliberation, compromise and consensus. In the policy-making on economic recovery many more actors played a role than just the minister of Finance Bos and prime-minister Balkenende. Measures to support the labour market and assist unemployed were prepared and published by the ministry of Social Affairs. Economic relief measures for businesses were the competence of the ministry of Economic Affairs. Measures on education and science fell under the responsibility of that ministry. A whole range of constitutionally independent and autonomous ministries was involved in preparing the recovery plan. Moreover the recovery plan was not a one-off event but a sequence of announcements of various measures. In March 2009 the plan was announced, in April the part-time unemployment measure was enacted, extra investments for rail-maintenance and extra investment in sustainable stables were announced, in May the car scrappage premium and actions against youth-unemployment, in June another elaboration of the crisis approach for housing construction, in July a measure for school building maintenance, and so on. The process involved many actors and consisted of many subsequent steps, such as announcement, working-out, enactment, realisation etc. Quite different from the immediate actions required during the banking crisis.

3. Fiscal Crisis: retrenchment package

3.1. Contents

The retrenchment packages that Britain announced in the October 2010 ‘spending review’ (£81 billion), Germany in the July 2010 ‘Sparpaket’ (82 billion) and The Netherlands in the October 2010 ‘coalition agreement’ (18 billion) were different but also had some common characteristics, the most prominent one being that administration itself was the prime target of the spending cut-backs. The British Cameron-Clegg-government announced a 34 % cut in the costs of the Whitehall administration and its agencies and cut-backs for local government. Official estimates were that 490.000 jobs in the public sector will be lost, and others later estimated an additional 0,5 million loss in associated private sector jobs. The spending review announced that this would be compensated by a creation of 2 million extra jobs in the private sector. The German Merkel-government announced cut-backs in administrative expenditures leading to a loss of 10.000 jobs, and an army-reform by cutting 40.000 soldiers. The Dutch Rutte-government announced savings of up to 1,5 billion in national administration and another 1,1 billion cuts in the provincial and municipal incomes, plus a range of other measures totalling up to 6,1 billion cuts in administrative expenditures in 2015.

The retrenchment packages also excluded specific sectors from cut-backs. The British ‘spending review’ announced to protect school spends for the poor, the national health service, and international development aid. The German retrenchment package announced to exclude education and research from cuts (an extra 12 billion was announced). The Dutch announced extra investments in care (to be financed from larger cuts in cure and care), safety, infrastructure and quality of education (to be financed by equivalent cuts in education).

The retrenchment packages also consisted of measures to reduce social unrest. In Britain the principle of ‘fairness whilst protecting the most vulnerable’ was worked out in school spending for the poorest. In Germany education was protected. In The Netherlands the elderly were protected (an election campaign issue of the right-populist Wilders-party) by increasing the pension-age by only one year, and extra funds for elderly care.

The retrenchment packages also contained measures that were rather symbolic and rhetoric than specific and realistic. Such as the British rhetoric about ‘big society’ and ‘small state’ where citizens and social organisation should take more responsibilities for themselves and each other. A retreat of the welfare state did not succeed in the 1980s either. The rhetoric of ‘localising’ public tasks means a decentralisation of central government tasks to municipalities, however local government was to be severely cut its expenditures. The Dutch announced a budget-cut in the performing arts sector, which is financially peanuts but symbolically representative of the right-populist aversion against ‘high-brow leftists’. It caused a major uproar in the arts field that naturally has a high public profile.

P.M. elaborate

Although it is too soon to assess the effects of the fiscal cut-back measures on the actual levels of deficits and debt the following table indicates that the budget deficit problem was most severe in Britain before the crisis and will remain so. In Germany and The Netherlands the balance before the crisis had a surplus. Germany seems most successful in reducing its budget deficit.

Government Financial Balance (percentage of GDP)

	2007	2008	2009	2010	2011	2012
Britain	-2,8	-4,8	-11,0	-9,6	-8,1	-6,5
Germany	0,3	0,1	-3,0	-4,0	-2,9	-2,1
Netherlands	0,2	0,5	-5,4	-5,8	-4,0	-3,1

Source: OECD Economic Outlook 2010

The following table gives an indication of the severity of the government debt problem. The first two rows indicate how large the government debt was in 2007 and how much it increased between 2007 and 2012. The second row indicates what effort should be made to stabilise government debt in 2025. Clearly Britain is in the most severe position.

Government Debt (percentage of GDP)

	Great Britain	Germany	The Netherlands
Debt in 2007	47,2	65,3	52,0
Debt in 2012	94,5	82,0	79,5
Required change to stabilise debt in 2025	6,2	1,7	2,2

Source: OECD Economic Outlook 2010

3.2. Process

The decision-making in this third stage of decision-making on major cut-backs in public expenditures was politically more sensitive than in the previous stages, because this time the role of government was not heroic about saving banks or recovering of the economy, but quite unpopular about budget cut-backs, loss of public sector jobs, cutting public services, reducing social security and welfare arrangements, hurting social interests. In all three countries the governments postponed the decision-making about retrenchments till after the elections, that is, to the next cabinet. The decision-making was therefore typically political in the sense of weighing many different and conflicting interests. Government, ministries, parliament, political parties, employer and employee organisations and many other interest groups were involved. Normally that would imply that the decision-process is slow, incremental and gradual. In Britain however the actions were far from incremental. So let us have a look at the speed and the extent of the decision-making in the three countries.

At first sight the British process leading to the ‘spending review’ seems an example of the quick and swift decision-making, which the institutional characteristics of the British centralised government and majoritarian political system enables. The new Cameron-Clegg cabinet was formed within one weekend after the May 2010 elections and severe retrenchments were announced. These were, however, just first global announcements, which still had to be worked out, first in the June ‘emergency budget’ which still was only the framework for the spending review, and finally in the October ‘spending review’ with the details of the cut-backs. In sum the process took more than five month to arrive at a specified stage. Compare that to the time lapse between the June 2010 elections in the Netherlands and the detailed retrenchment plans in the October coalition agreement. Although the Dutch government system of weak prime minister and the consensual political system are usually considered the reason for slow and incremental decision-making, in effect the process did not take longer.

P.M. Germany September 2009 elections, October 2009 coalition cabinet, July 2010 Sparpaket.

As to the extent of the measures, the difference between the British drastic fundamental actions, and the Dutch incremental compromise measures does indeed reflect the institutional characteristics of both political systems. The British cabinet created a special form of cabinet decision-making to ensure that all Whitehall spends could be fundamentally scrutinised, the so-called ‘star chamber’. An explicit attempt to prevent cut-back measures to be only the outcome of a dealing and wheeling between the respective ministries and the Treasury, to prevent that the many vested interest in the status quo would allow for mere incremental actions. The Dutch cabinet in 2009 only installed ‘working-groups’ consisting of officials to perform fundamental reconsiderations, thus shifting the prime political responsibility for fundamental priority-setting to the bureaucrats. Moreover the proposals of the reconsideration working-groups were more or less neglected in the election campaign and can hardly be found back in the October 2010 coalition agreement.

The marking difference between both the British and German decision-process and the Dutch, was that the first two processes took place after the coalition-cabinet was formed, so that the process resulting in the retrenchment package was orchestrated, coordinated and lead by an already installed and functioning government, while the Dutch decision-making on the retrenchments coincided with the coalition formation. The Dutch coalition formation was a sequence of political party alternations. First in June a coalition of centre-right was investigated, then in July a coalition of left-plus-right, subsequently in August a centre-right-populist cooperation, which shipwrecked but was later restored, resulting in September in plans for a Liberal-Christian coalition supported by the populist party, which in October led to the final coalition agreement. During the coalition formation the ‘cabinet-informers’ negotiate with the party-leaders and their adjutants, while every deal is extensively discussed in the party fractions, and when leaked to the press also publicly debated. Besides the ‘cabinet-informers’ also ask questions about policy issues that are answered by officials in the respective ministerial departments. Departments have long before prepared answers to every possibly conceivable question, to make sure that the cabinet-informers are immediately served when a request arrives. Besides hundreds of widely different interest organisations write letters to the cabinet-informers, which usually is just a waste of time. Intelligent and major interest groups know better ways to influence the political decision-making. No wonder that in such a hectic circus fundamental priority-setting can hardly take place. Moreover retrenchments are certainly not the only political hot issue at stake. The coalition agreement contained a financial attachment, which specified the cut-back measures and which was composed by the financial party-specialists with support of expert officials.

4. Conclusions

The institutional characteristics of government and parliament in the three countries are:

-       Britain has a two-party majoritarian political system with a single-party cabinet. Power in cabinet is centralised in the hands of the prime-minister. Cabinet dominates over parliament. Remark that in 2010 for the first time since ages a coalition-cabinet was formed.

-       Germany has a multi-party consensus democracy with coalition cabinets. In cabinet the Chancellor has much power but that is more restrained than in Britain because of the autonomy of ministers. Relation between cabinet and parliament is more dualistic.

-       The Netherlands has a multi-party consensus democracy with coalition cabinets. The prime-minister has no formal-legal dominance over the constitutionally independent ministers. Relation between cabinet and parliament is dualistic.

The similarities between the decision processes in Britain, Germany and the Netherlands during the banking crisis were:

-       The decision-process was of an urgent-crisis-management type. The urgent and major crisis asked for immediate, swift and drastic responses.

-       Decision-making was centralised in the hands of a small number few key-actors, the prime-minister, the minister of Finance, the Chairman of the National Bank and the secretary-general of the ministry of Finance.

-       Many external advisors and specialists like lawyers, investment bankers, accountants etc. were involved.

The differences between the three countries were:

-       In Britain and Germany the prime-minister played a central role, whereas in the Netherlands the prime-minister played a secondary role.

-       Differences were not so much in process as in contents. The banking sector in Britain was economically much more predominant, Germany had specific problems with the regional ‘Landesbanken’, and in the Netherlands the nationalisation of ABN-Amro was specific.

The similarities between the decision processes during the economic crisis were:

-       The decision-process was no longer urgent-crisis-management by a few key-actors, but involved many more actors, such as other ministries, parliament, party politics, employee and employer organisations, and many interest groups.

The differences between the three countries were:

-       The British prime-minister played a more central role than the German Chancellor, who was even challenged by the Socialist-democrat  Foreign minister. The Dutch prime-minister played an even less prominent role. In the Netherlands the economic recovery package was not a one-off action, but a sequence of many subsequent steps.

-       Differences were not so much in process as in the contents of the economic recovery package, although the sub-categories of tax revenue and spending measures were similar in all countries.

The similarities between the three decision process during the fiscal crisis were:

-       The decision process became politically more sensitive as this time it was about highly unpopular cut-back and retrenchment actions. In all three countries the retrenchments were lifted over the elections.

-       The contents of the retrenchments packages were similar in the sense that in all three packages administration was most to be cut in expenditures, that some sectors were excluded from cuts-backs, that measures were included to appease social unrest, and that many actions had a rather rhetoric and politically symbolic character.

The differences between the three countries were:

-       Although the British government system allows for quicker and swifter decision-making and at first sight that seemed the case, in effect the process in Britain was not shorter that in the Netherlands with its eternal deliberation and compromise culture.

-       Nevertheless Britain created special forms of decision-making to enable fundamental political  priority-setting (star chamber). In the Netherlands government shifted the political responsibility for fundamental priority-setting to working-groups of officials.

-       The extent of the decisions was definitely more drastic in Britain.

-       A marked difference was that the decision-making about the retrenchments in Britain and Germany was coordinated and lead by the new cabinet after the elections, whereas in the Netherlands that decision process coincided with the cabinet formation itself, which is a hectic period of intensive deliberation, compromise and consensus searching.

Institutional Characteristics of Countries

Great Britain	Germany	The Netherlands
Two-party majoritarianSingle-party cabinetPrime-minister in powerCabinet dominates parliament	Multi-party consensusMulti-party cabinetChancellor in power butrestrained by ministers Relation cabinet-parliament dualistic	Multi-party consensusMulti-party cabinetPrime-minister no formal power. Ministers independentRelation cabinet-parliament dualistic

 

Managing the Banking Crisis

Similarities

Decision-making urgent-crisis-management. Immediate, swift and drastic actions.Decision-making centralised in hands of few key-actors.Many external advisors and specialists like lawyers, bankers, accountants.

Differences

Great Britain	Germany	The Netherlands
Prime-minister centralBanking sector vital	Chancellor centralRegional Landesbanken	Prime-minister secondaryNationalisation ABN-Amro

Managing the Economic Crisis

Similarities

Decision-making involved many more actors, other ministries, parliament, politics, employer and employee organisations, interests groups

Differences

Great Britain	Germany	The Netherlands
Prime-minister central	Chancellor challenged byother ministers	Prime-minister secondary

Managing the Fiscal Crisis

Similarities

Decision-making politically sensitive because unpopular cut-backs.Although Britain seemingly quicker, in effect not shorter than Netherlands.Contents of packages similar. Administration cut most. Some sectors excluded from cuts. Measures included to appease social unrest. Many actions rhetoric and symbolic.

Differences

Great Britain	Germany	The Netherlands
Fundamental priority-settingin star chamberDecisions more drasticDecision-making by new cabinet	No fundamental priority-settingDecisions incrementalDecision-making by new cabinet	Fundamental priority-settingby officials. No effect.Decisions compromisepatchwork Decision-making coincided with coalition formation

About these ads