The Netherlands Bureau for Economic Policy Analysis (CPB) said the country's budget deficit could increase to 4.6pc of GDP during this year and next year - a level that far exceeds the 3pc ratio that 25 European Union countries pledged to meet by next year.
In a report that will embarrass the Dutch government but delight Club Med countries, the CPB said: "The Netherlands is confronted with the same problems as Italy and Spain."
The Dutch government will have to introduce a raft of austerity cuts in order to meet the targets, the state think-thank said. Last year the Dutch prime minister, Mark Rutte, and finance minister, Jan Kees de Jager, called for countries that break fiscal rules to be expelled from the eurozone. In a joint article in September the pair said: "An agreement is an agreement. From now on we must prevent countries from violating the rules with impunity." They added: "In the future, the ultimate sanction can be to force countries to leave the euro."
The threat of the Netherlands breaking the "non-negotiable" fiscal pact will alarm European leaders. Angela Merkel, the German Chancellor said it would "last forever." But leaders have already had to agree to soften Spain's budget targets for 2012.
Tim Geithner, the US Treasury Secretary, warned against slavishly enforcing targets. "If every time economic growth disappoints governments are forced to cut spending or raise taxes immediately to make up for the impact of weaker growth on deficits, this would risk a self-reinforcing negative spiral of growth-killing austerity," he told a Washington committee today.