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ECONOMY

Are the Nordic countries heading for an economic downturn?

The Nordic countries' economic boom is expected to come to a screeching halt because of the financial crisis caused by the coronavirus outbreak.

Are the Nordic countries heading for an economic downturn?
Norwegian kroner. Photo: Terje Pedersen/NTB scanpix /TT

“The boom in the Danish economy has come to an abrupt end in early 2020. The outbreak of the coronavirus and the measures implemented to contain its spread have led to a sharp contraction in economic activity,” the Danish central bank said in a statement.

The central bank said it expected Danish gross domestic product (GDP) could contract between 3.0 and 10 percent in 2020.

In neighbouring Sweden, the country's National Institute of Economic Research (NIER) said that “a particularly deep economic downturn looms”.

NIER expected Swedish GDP to contract by 6.0 percent in the second quarter alone, and by 3.2 percent for the full year of 2002.

Both countries have already announced a number of economic measures to mitigate the coronavirus impact, including support for businesses and subsidising temporary lay-off schemes.

NIER said it thought the measures adopted by Sweden were appropriate, but warned that more would be necessary “to stem the rise in unemployment”.

The Swedish government earlier this week forecast the jobless rate would rise from 7.0 percent currently to around 9.0 percent this year, which would be the highest level in 23 years.

The Danish central bank also noted that more measures could become necessary but this would also be dependent on developments abroad.

“We should not forget that we are also highly dependent on developments abroad. And once the economic restrictions are phased out, more conventional fiscal stimulus will probably be required to underpin demand,” Lars Rohde, the bank's governor, said in a statement.

On Friday, Norway's government announced that GDP could contract between 1.5 and 7.0 percent this year.

The economy of the Nordic country, the largest oil producer in Western Europe, is doubly affected by the effects of the pandemic and the rapid fall in oil prices.

Member comments

  1. Sweden was already having lower GDP than expected during pre-coronavirus. And economically they were supposed to be doing well better all things considered.

    They will most likely do the worst out of the Nordic countries in the future, especially considering how poorly they are responding to the Coronavirus (doing nothing, pretending it doesn’t exist)

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MONEY

Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

The value of the British pound has fallen steeply against the dollar in recent days but also against the Euro – and the krone. So what should you do if you live in Denmark but have income – such as a pension, rental income or a salary – in pound sterling?

Exchange rate: What are your options if you live in Denmark but have income in pound sterling?

Exchange rates might sound like a spectacularly dull topic, but if you live in Denmark (where, naturally, your day-to-day living expenses are paid in kroner) but have income from the UK in pounds, then the movement of the international currency markets will have a major impact on the money that ends up in your pocket.

This is not an uncommon situation – Denmark-based Brits may work remotely as freelancers from British companies and be paid for invoices in pounds, while retired Brits might be receiving a British pension.

Others might have income from rental properties or investments.

So a big loss in the value of the pound against the euro – and by extension, the krone – can have a major impact on Brits in Denmark.

The most recent fall in the value of the pound was sparked by the UK government’s new mini budget and has already seen a relative recovery. 

The pound-krone exchange rate over the last month. Chart: xe.com
 
 
But while this one-time fall is spectacular, it’s also part of a longer term trend in the fall of the value of the pound, especially since Brexit, that has seen people such as foreign-based pensioners lose a big chunk of their income.
The pound-krone exchange rate over the last 10 years. Graph: xe.com

So if you have income in pounds, what are your options?

Income in kroner – obviously this isn’t an option for everyone, especially pensioners, but the best way to protect against currency exchange shocks is to make sure that you’re paid in the same currency that you spend in.

Alternatively, income in euros: the advantage of the euro in Denmark is that its value is pegged to the krone and not sensitive to exchange rate fluctuations.

For those being paid from abroad, billing in euros means you could work in any EU country – including the anglophone ones like Ireland – and get your salary in euros.

Depending on your employer, it might also be possible for you to ask to bill in euros. 

Work in Denmark – if you’re currently not working or want to switch to local currency income, then an obvious option is to take up some work in Denmark.

Depending on your work and residency status, as well as the field you work, the practicality of this option ranges wildly from one person to the next.

READ ALSO: How can you get a work permit in Denmark if you are not an EU national?

Exchange rate – if your income can only be paid in pounds, it’s crucial to ensure that you get the best exchange rate possible and that you don’t waste money on international transfer fees.

The best options here are online banks or money transfer services, which compete on the rates that they offer, so usually have the most advantageous rate.

Some online banks also have the option to set up accounts in both pounds and kroner, so that you can receive money in pounds and spend it in kroner without having to make bank transfers, which can attract fees.

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