The collapse of austerity talks in the Netherlands has put the country at risk of losing its top notch AAA rating, analysts said.
"This story is going to cost the Netherlands their triple A," said Arnold Heertje, a former political economics professor at the University of Amsterdam.
"Interest rates on the bond markets will increase," he added.
Right-wing leader Geert Wilders quit make-or-break austerity talks on Saturday, saying his party rejected European Union demands.
The talks, which had been going on for seven weeks, aimed to cut some €16 billion from the budget. They included a slight rise in VAT, a freeze on civil servants' wages and cuts to both the health and development budgets, Dutch media reported.
After the walkout the prime minister said that snap elections were likely, a move that would put on hold the austerity package, which was aimed at steering the country back within European Union deficit targets.
Dutch Prime Minister Mark Rutte this afternoon tendered his government's resignation to Queen Beatrix.
"Prime Minister Mark Rutte has offered his cabinet's resignation to her Majesty Dutch Queen Beatrix," the government information service said in a statement.
"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 Dutch central planning bureau forecast last month that the 2013 public deficit would rise to 4.7% of gross domestic product under current conditions, higher than the EU deficit ceiling of 3% of GDP.
The fall of the government will be "a disaster for the economy of the Netherlands, both from the point of view of the AAA rating and the 'real economy,'" Heertje said.
Sylvester Eijffinger, economics professor at the University of Tilburg, agreed: "The markets will become very nervous. We are following in the footsteps of France and Austria," he said.
Both those countries were downgraded by Standard and Poor's ratings agency in January. The Netherlands, Finland, Germany and Luxembourg are the only euro zone countries left with AAA ratings from all three major agencies.
Others said the loss of the AAA rating would not be catastrophic. "It's not about the rating itself, but about a country's position in relation to others in the euro zone," said Thomas Cool, a former economist with the Dutch central statistics bureau.
"The Netherlands remains one of the most reliable countries, compared with Greece or Spain," he said, referring to countries that have received multi-billion-euro bailouts from the European Union and the IMF.
