Economic Survey, December 2011


Today the Ministry of Economic Affairs and the Interior publishes the Economic Survey, December 2011, which contains the government's assessment of the economic outlook up to 2013.

  • The outlook for the global economy has deteriorated significantly during the second half of 2011 due to the aggravated debt crisis in a number of European countries. In both the U.S. and in Europe the crisis of confidence has broadened and affects the financial sector as well as consumers and businesses.

  • The weak developments in the global economy are also affecting Denmark. In 2012, GDP is expected to grow by 1 per cent with a modest contribution to growth from exports, due to the weak export market growth.

  • In Denmark, growth in 2012 is supported by the moving forward of investments in the so-called “kick start”-package as well as the reimbursement of the Voluntary Early Retirement Pension (VERP) contributions, which will support private consumption. A significant share of growth next year is thus due to initiatives to support activity and employment in Denmark.

  • Assuming that the debt crisis is contained, growth is expected to become more self-sustained in 2013, and the largest contributions to growth are expected to come from private consumption, business investments and exports. GDP-growth is, however, estimated to be relatively low at 1.4 per cent.

  • Employment is expected to fall throughout 2012. Gross unemployment (including persons in activation schemes) is expected to peak in the second half of 2012 at close to 175,000 persons (6 per cent of the labour force) before decreasing in 2013, due to a rise in employment over the year. By the end of 2013, gross unemployment is expected to be back at the end-2011-level.

  • The public deficit is expected at just over DKK 100 bn in 2012 (5½ per cent of GDP). In 2013 the deficit is expected to be reduced considerably to close to DKK 48 bn (2.6 per cent of GDP). The public finance deficit in Denmark will thus be below the 3 per cent reference value in the EU Stability and Growth Pact (SGP). The structural fiscal deficit (adjusted for cyclical developments) is estimated to decrease from approx. 1½ per cent of GDP in 2010 to balance in 2013, in line with the EU recommendation.

Minister for Economics and the Interior, Margrethe Vestager, states:


"The international crisis of debt and of confidence affects Denmark. Lower international growth means less demand from key export markets. And when confidence is down, consumers and businesses are more reluctant to spend and invest. The “kick-start”-package and the reimbursement of VERP-contributions in 2012 will support employment at the right time and will reduce the worst effects of the debt crisis. But overall, the development points to very modest growth in the coming years.

The government will safeguard confidence in the Danish economy by pursuing a credible and responsible economic policy. The current situation highlights the importance of implementing reforms and consolidating public finances. International confidence is in fact the very best protector of a stable Danish economy.

Confidence is decisive for a continued low interest rate. During the last few months of turbulence, Denmark has been perceived as a “safe haven” for investors. The yield on Danish government bonds have been at the same level or below the German level. Foreign capital has flowed into the country. And Denmark has the highest credit rating (AAA).

Confidence is established when citizens and markets see that economic objectives are reasonable and credible, and that the political will and ability to turn those objectives into reality is present. In European countries efforts are made to find national solutions to restore confidence in fiscal policy. 

The focus is on implementing reforms and pursuing a responsible fiscal policy within the framework of recommendations, which the majority of EU countries have received. This also applies to Denmark.
The plan for a strengthened fiscal cooperation in the euro area will set new standards for the perception of "a responsible fiscal policy”, whether the individual countries participate in the agreement or not. In 2012, we will present a new 2020-plan which will be the government's way of bringing Denmark strengthened through the crisis - by reforms and a responsible economic policy."  Margrethe Vestager