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Danish economy continues to dig deeper and deeper as the state incurs a deficit of Dkr85 billion


 




Wednesday, 24 August 2011
The deficit of Danish public finances will be accounted next year at about Dkr85 billion, equivalent to 4.6 percent of gross domestic product, GDP. If this will be the reality then Denmark is breaking EU rules on tighter budget deficits of not more 3 percent of GDP.

This emerged from the country’s Finance ministry as reported by radio Denmark on Wednesday. The deficit will grow by Dkr5 billion compared to what the government's Finance ministry estimated in May.

The deficit next year means that Denmark is breaking the euro rules which require that deficits may only represent three percent of GDP. As such Denmark is also breaking away from the Scandinavian countries as the country which has not been able to recover from the financial crisis and that which is persistently struggling with deficit, except of Iceland whose economy is on track to recovery.

Therefore, Denmark must by 2013 ensure that the euro rules on deficits are observed. This the government has guaranteed - despite the new stimulus package - partly through the recovery package.

This year, the deficit was less than predicted in May. It landed at Dkr68 billion against an expected deficit just a few months ago of Dkr74.3 billion. The deficit this year will reach 3.8 percent of GDP.

Advertisement Denmark’s public finance balance

2006 : 82.3 billion.
2007: 81.4 billion.
2008: 56.9 billion.
2009: -46.5 billion.
2010: -48.3 billion.
2011: -68.2 billion.
2012: -84.5 billion.
Source: Politiken
For making Denmark working again, gross unemployment is pitted to rise by 9,000 more next year than predicted in May. Next year there will be 161,000 people - equivalent to 5.6 percent of the workforce who will be in the dole.

This year, the government expects that a few thousand more will lose their jobs than it was viewed in May. The expected gross unemployment rose to 162,000 from 160,000 in May.

The economic growth is expected if anything, to be less than just a few months ago: It will be 1.3 percent this year - a downward revision of 0.6 percentage points, while it will rise to 1.8 percent next year.
Looking solely at the state operating, capital and expense account - the so-called CIL-account - will next year have deficit of Dkr79.7 billion - that's an increase of Dkr 36.2 billion compared to this year.

One reason is that the state expects to pay Dkr17 billion back to the Danes in retirement contributions. While it expects to collect lower revenues from taxes on Danish pensions because of developments in the stock market.

On the whole, the budget comes from a hard-pressed Danish coalition government, with Lars Rasmussen from the Liberal Conservative Party, Liberal Party, as Prime Minister.
Generally, the Danish economic indicators are not very good at the moment. The country is in recession, deficits are increasing and the domestic banking problems are on the rise as well as real estate crisis is not yet over.

L�kke Rasmussen's coalition is also under enormous pressured in terms of public opinion. A recent measurement showed the opposition, the Social Democrats in the lead with 53.5 percent and Denmark must hold elections by 12 November.
By Scancomark.se Team


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