Budget Outlook, december 2010


The Danish economy is recovering after the international economic recession. Economic growth is returning, and compared to other countries the unemployment rate is still low in Denmark – and lower than previously expected.

Fiscal policy has been eased substantially both in 2009 and 2010 to support growth and employment. The expansive fiscal policy and the economic recession contributes to deficits on the general government budget balance exceeding the reference value of 3 per cent of GDP in the Stability and Growth Pact of the EU.

Hence, Denmark has received a recommendation adopted by the EU Council of Finance Ministers (ECOFIN) to tighten fiscal policy by at least ½ per cent of GDP per year in the period 2011-2013. The government and Danish People’s Party have in May 2010 agreed to bring Danish economy back on track with the Fiscal Consolidation Agreement, which meets the recommendation from ECOFIN to consolidate public finances by 1½ per cent of GDP from 2011-2013.