Dutch Prime Minister Mark Rutte will convene his cabinet Monday for crisis talks on possible polls after the ruling coalition's right-wing ally quit make-or-break austerity talks.
Rutte's 19-member cabinet is set to meet in The Hague after far-right leader Geert Wilders Saturday quit belt-tightening talks at the 11th hour, saying his party rejected demands by the European Union.
"Tomorrow, he has to discuss the situation with his cabinet. I expect he might make a formal announcement on elections," said Dutch political columnist Rene Tissen.
"As from now, the Rutte government is a true minority government. The deal with (Wilders' party) has expired," added Tissen, who is also a business economics professor at Nijenrode University near Utrecht.
Talks kicked off on March 5 to cut some 16 billion euros (U$21 billion) off the budget.
The Dutch central planning bureau forecast last month that the 2013 public deficit would rise to 4.7 percent of domestic gross product under current conditions.
The EU deficit ceiling is 3.0 percent of GDP.
The figures were a blow for the government, which had insisted that countries in breach of European Union deficit rules had to be rigorous in correcting public finances.
The austerity package at the centre of the row included a slight rise in Value-Added Tax (VAT), a freeze on civil servants' wages and a cut in spending in both health and development, Dutch media reported.
But on Saturday the eurosceptic Wilders, who is also an anti-Islamist campaigner in the Netherlands, said his party could not "live up to the demands Brussels is putting on us."
"Money is being taken from the wallets of pensioners," Wilders said.
Most analysts on Sunday said polls after summer were inevitable, but they differed on whether snap elections would affect the Netherlands top notch credit rating.
Apart from Finland, Germany and Luxembourg, the Netherlands is the only European country left which has AAA ratings from all three major agencies.
New elections "would be a disaster for the Dutch AAA rating as well as the real economy," said Arnold Heertje, a retired economics professor, saying unemployment, lower economic growth and loss in investment would follow.
But Thomas Cool, former economist at the Dutch central statistics office said any change would not damage the Dutch economy on a broader scale.
Cool said he believed the Dutch government would resign and as a parting shot leave a budget cut proposal that would fall within the EU's deficit demands.
"The Netherlands remains one of the more reliable countries in Europe, compared to Greece or Spain," he told AFP.
Rutte's government was sworn in in October 2010 following the fall of the then prime minister Jan Peter Balkenende in February that year in a dispute over continued military support to NATO forces in Afghanistan.