Dutch poised to elect rightwing liberals as economic fears dominate

Polls suggest VVD win but raise questions over inclusion of anti-Islamic Geert Wilders in possible coalition government

Dutch voters are expected to elect their first liberal prime minister in almost a century tomorrow in an election dominated by the age of austerity looming over Europe.

As in Britain and Germany, the liberals are tipped to prosper at the expense of the two big parties that traditionally command the centre-right and the centre-left in the Netherlands: the Christian Democrats (CDA) and Labour (PvdA). Opinion polls indicate a triumph for the VVD, rightwing free-market liberals campaigning for swingeing public spending cuts, tighter rules on immigration and pragmatic scepticism towards the EU.

The election was called a year early after the collapse of the Christian Democrat-led coalition in February over the presence of Dutch troops in Afghanistan. But neither the Afghan war nor the explosive issue of Muslim immigration has played a prominent role in the campaign, meaning the anti-Islamic populist Geert Wilders has failed to capitalise. Wilders and his Freedom party are nonetheless predicted to double their share of seats to 18 in the 150-seat second chamber in The Hague, while coming in fourth. Only a few months ago, he was being tipped to win the election.

There was little doubt in The Hague today that Mark Rutte, the VVD leader, would be the new prime minister. In a highly fragmented proportional representation system, however, he will struggle to cobble together a coalition of the right. [Today's] vote will be followed by weeks, perhaps months, of horse-trading over possible coalitions.

One big question is whether the maverick Wilders will be offered a cabinet seat for the first time. Rutte's party is predicted to get 36 seats. His logical coalition partner, the CDA, are polling at 24. They need 76 for a majority. Wilders' seats would enable a majority for a rightwing coalition. Unlike in neighbouring Flanders, in Belgium, there is no cordon sanitaire erected by the mainstream around the extreme right, but the Dutch centre-right remains reluctant to go into government with Wilders.

The Islam-bashing leader wants a total stop to Muslim immigration and mosque-building, and a tax on Islamic headscarves. He has offered tacit support in parliament for a VVD-CDA minority government in return for tough immigration policies. A similar arrangement exists in Denmark, where the far right props up a rightwing government.

While Rutte looks certain to be the big winner, the main loser is expected to be the prime minister, Jan-Peter Balkenende. The CDA leader has headed three governments since 2002, all of which fell. The polls suggest a heavy defeat for his party, from 41 seats to around 23. The PvdA, under the new leadership of Job Cohen, the former mayor of Amsterdam, is also expected to lose a couple of seats.

The election is the first national ballot among the 16 eurozone countries since the eruption of the Greek debt crisis, which then escalated into a full-blown single currency emergency. The campaign has highlighted the degree to which voters' economic worries have hijacked the agenda. Rutte is promising spending cuts of €20bn (£16.5bno) euros to balance the budget over four years from a deficit currently of almost 7%.

In what has become almost routine in Dutch politics, he is also bashing Brussels, demanding, British-style, a slimming down of EU powers and their repatriation to member states, the possibility of British-style "opt-outs" from areas of EU legislation and a British-style big fight over the EU budget when it comes up for review from next year.

Guardian