By Catherine Hornby and Bart Meijer
THE HAGUE (Reuters) - The Dutch Liberal Party (VVD) and Labour party, opposites on the political spectrum, have tied in national elections according to an exit poll, making it likely lengthy coalition talks will delay decisions to rein in government spending.
The austerity-minded Liberals had been projected to become the biggest party, but Labour showed a stronger than expected performance as they both tied with 31 seats in the 150-seat parliament.
The exit poll commissioned by Dutch media ANP, NOS and RTL also put the anti-immigrant Freedom party in third place at 23 seats, much more than the expected 18. The Christian Democrats, which led the last four coalitions, came fourth with 21 seats.
In a departure from recent elections in the Netherlands that were dominated by immigration and foreign policy issues, fiscal austerity became the central campaign theme in 2010 as sovereign debt woes plaguing Greece and other euro zone countries threaten the stability of the currency bloc.
In order to attain a governing majority of 76, the winners will have to forge a coalition with at least three other parties. Negotiations could drag on, pushing back the implementation of policies aimed at slashing a deficit expected to reach 6.6 percent of GDP this year.
Marcel Boogers, political science professor at Tilburg University, said a right-left combination -- sometimes described as a 'purple coalition' -- was a likely outcome.
Although the euro zone's fifth largest economy enjoys one of the highest debt ratings in the currency bloc, borrowing costs have edged higher over its ability to pay back loans.
A three-year bond auction on Tuesday showed a spread of 40 basis points over its German benchmark, up from 15 to 20 basis points a week ago and just 7 points in March.
Casting aside decades of stern fiscal policies, the government took over the country's biggest bank ABN AMRO in 2008 after its buyer Fortis collapsed, spending more than 26 billion euros ($35 billion) to prop it up.
It spent more later to boost the economy, offer tax relief and support other financial groups, heightening investor concern over its finances.
A national vote in Belgium on Sunday, split along the French and Dutch speaking regions, is expected to lead to prolonged coalition talks at a time when the neighbouring country needs to bring spiralling debt under control.
The vote will end the eight-year tenure of Prime Minister Jan Peter Balkenende, whose Christian Democrats had ruled with the Labour Party until February, when the government collapsed over a disagreement on extending the deployment of Dutch troops in Afghanistan.
(Additional reporting by Harro Ten Wolde, Gilbert Kreijger, Reed Stevenson; Editing by Ralph Boulton)
