Budget Outlook 2, August 2012

Today the Danish government presents its central government budget proposal for 2013 and the Ministry of Finance publishes Budget Outlook 2, August 2012.

The central government budget proposal for 2013 reflects a continuation of the responsible economic policy, where the budget deficit is reduced, while growth and employment are supported. 

In 2013 the central government CIL-account deficit is estimated at DKK 5¼bn corresponding to 0.3 per cent of GDP. In 2012 the deficit is estimated at DKK 71½bn. The substantial lower deficit in 2013 partly reflects the responsible economic policy and compliance with the EU-recommendation. But it should also be seen in light of the repayment of early retirement contributions in 2012. 

The general government budget deficit is estimated at DKK 73½bn in 2012 (4.0 per cent of GDP) and 36½bn in 2013 (1.9 per cent of GDP). 

The structural budget balance is estimated to be strengthened by 1½ per cent of GDP from 2010 to 2013. The structural budget balance is adjusted for the cyclical position of the economy and other temporary factors. 

At the same time as the general government budget is improved, several economic-political measures in 2012 and 2013 support growth and employment in the short run. The Danish government has in the early summer made political agreements, which increase investments in social housing, climate adaptation and corporations as well as a tax reform, which boosts private consumption. These initiatives come in addition to the fiscal stimulus package Kick-start from November 2011.

The Minister for Finance Bjarne Corydon says: 

I am pleased that Denmark is likely to meet the recommendation by the EU to reduce the actual general government budget deficit below the limit of 3 per cent of GDP in 2013 and strengthen the structural budget by 1½ per cent of GDP from 2010 to 2013. The credibility of the fiscal policy ensures low interest rates.

At the same time as we reduce the budget deficits the government strengthen the effort to help young people without a job, and unemployed in need of upgrading or education to get a job. The budget proposal also includes a massive investment in education and research.

The estimates for the general and central government finances are based on short term projections for the Danish Economy, cf. Economic Survey, August 2012.

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