Budget Outlook 3: Expected budget balance surplus in 2014
Today the Ministry of Finance publishes Budget Outlook 3, December 2014 which contains a status of fiscal policy and general government finances and central government finances. In 2014 a budget balance surplus is expected, and estimated public deficits in 2015 and 2016 are below the limit in the Stability and Growth Pact.
The Danish recommendation under the excessive deficit procedure was abrogated in June 2014, as Denmark fulfilled the requirement to bring the public deficit sustainably below 3 per cent of GDP.
The general government surplus is estimated to 1¾ per cent of GDP in 2014 (DKK 34.2bn). The estimated surplus in 2014 reflects among other things extraordinary high temporary revenues from the pension yield tax and the reallocation of capital pension schemes. Excluding temporary revenue from reallocation of capital pension schemes etc. the budget balance is estimated to show a deficit of approximately 1½ per cent of GDP.
The general government deficit is projected to 2.5 per cent of GDP in 2015 (DKK 49.7bn) and 2.6 per cent of GDP in 2016 (DKK 52.7bn). The estimated deficits in 2015 and 2016 are thus within the limit of 3 per cent of GDP in the Stability and Growth Pact. The deficit in 2015 reflects among other things the expected temporary revenue from the Pension Package (October 2014), which was intended to reduce the risk of a new EU-recommendation.
The deficit on the structural budget balance is estimated to 0.6 per cent of GDP in 2015, which is 0.1 per cent of GDP higher than estimated in August. This primarily reflects new estimates of expenditures and revenues, and is thus not a consequence of changed rules or changed policy.
In 2016, the deficit on the structural budget balance is estimated to 0.5 per cent of GDP. The economic policy in 2016 will reflect the agreements on the economy in municipalities and regions in 2016, the budget proposal for 2016 and the following negotiations on the budget bill for 2016.
The Minister of Finance Bjarne Corydon says:
With the budget for 2015 the government continues to balance its economic policy. We focus on improving public services and taking Denmark out of the crisis, while at the same time maintaining a responsible economic policy.
At the same time, the Pension Package has reduced the risk of a new EU- recommendation. The fact that the economic policy is responsible and in accordance with the fiscal framework in the Danish Budget Law and the EU Stability and Growth Pact strengthens confidence to the Danish economy.
The budget for 2015 improves health and daycare and it introduces a new cash benefit for jobseekers who have exhausted the right to unemployment benefit and labor market benefit. From day one it has been a main priority for the government to underpin employment and to improve public services in a responsible way.
The deficit of the central government account (the CIL-account) is estimated to DKK 13½bn in 2015 or 0.7 per cent of GDP. Central government expenditures in the budget for 2015 are in accordance with the expenditure ceilings.
The estimates for the general government and central government finances are based on the short term projection for the Danish economy cf. Economic Survey, December 2014.
Read more about Budget Outlook here.