Wednesday, 14 September 2011
The sluggish Danish economy will be the main driver in determining the choice of the Danes when they go to the polls on Thursday. The right wing bloc wants to reduce pension benefits, while the leftwing are advocating longer retirement age.
It is no longer immigration policies that are the Danes are seeing as a focus for debate today but their economy. Evidence of this is that before the election on Thursday debate has been dominated by the economy.
“It's clear that the economy is the dominant issues throughout the election campaign,” says Anders Olshov, head of the �resund Institute.
Here it is about the means to emerge as responsible and able to maintain economic order. Greece is a horror example. While there is a need to put some force on a slow development to date which has been driven by exports, the danger, however, is that increasingly as the rest of the world, including the important trade partner Sweden, are revising down forecasts of their economies, something needs to be done in Denmark which has not seen the type of buoyant growth enjoyed by Sweden for example.
Thus to look deep into the Danish scene, one will find that private consumption had stalled for a while now, hampered by a declining housing market. Like Ireland and Spain Denmark has built for several years, a housing bubble funded by cheap credit and willing banks.
AdvertisementThe bubble actually got burst, and since then property prices have fallen by up to 35 percent. Many owners of villas and apartments have seen the value to their properties less valued today than the purchase price, which makes the grip tightening on their wallets.
In addition, it has become harder to borrow money and unemployment is going up. Several banks have had problems and a national banking emergency has been created.
Politicians do not, however, have ideas some how to deal with some of the situation. The government has already proposed the possibility of being quite favourable terms to retire at age 60. The same agreement raised the retirement to the age 67 years.
The reform is criticized by the Social Democrats, many tipped to take over the government, after the next election. But it will be difficult to overturn that. The Social Liberal Party, Radical Liberals, who are part of the left block, were part of the deal.
The left block's main proposal to increase state revenues and economic activity is that the Danes must work an average of twelve minutes longer per day. The question is whether politicians have the mandate to implement such a change. In Denmark, like Sweden, it is labour movement that determines the rules of the collective agreement.
A consequence of the weaker trend is that Swedes commuting to Denmark has been reduced.
“In the past, Swedes cross the bridge and strait to work the same day in Denmark but now it's not so anymore. Several companies have fire people. Moreover, it is less profitable since the Danish krone has lost in value against the Swedish,” says Anders Olshov.
Positive is that the Danish economy was stronger than expected in the second quarter this year - with growth of 1 percent.
Troels Theill Eriksen, economist at Nordea in Copenhagen, sees some potential for stimulating the Danish economy, although the budget deficit is on the way up. But public debt is still low.
“But it is important that we have a long term policy. We see in Greece what can happen otherwise. As a small country, we will not burden ourselves, but must have a long-term sustainability,” he said.
By Scancomark.se Team