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ECONOMY

Denmark’s national debt at lowest level for 13 years despite pandemic

The Danish state debt is at its lowest level as a proportion of GDP since 2009, according to new data from the central bank.

Denmark's economy emerged strongly from the Covid-19 crisis in 2021, keeping the national debt from increasing as had been predicted.
Denmark's economy emerged strongly from the Covid-19 crisis in 2021, keeping the national debt from increasing as had been predicted. Photo: Kristian Djurhuus/Ritzau Scanpix

Nationalbanken figures show that the Denmark’s state debt of 438 billion kroner in November 2021 is 17.8 of the national GDP, which is the lowest level since 2009.

GDP, a metric for the strength of the economy, is a measure of the value of the country’s economic output in a given year.

The Danish Chamber of Commerce said it was “amazing” that national debt was at its lowest share of GDP for 13 years in the face of the Covid-19 crisis and compensation packages for businesses which were introduced in response to it.

“If we rewind to December 2020, the Ministry of Finance said it expected the national debt to end up as high as 27 percent of GDP in 2021,” the organisation’s senior economist Tore Stramer said.

“That means that the national debt in 2021 increased by around 200 billion kroner less than feared,” Stramer said.

The surprising result is connected to the strong response of the Danish economy to the coronavirus crisis last year, according to the economist.

That response has seen record levels of employment with several sectors experiencing labour shortages.

“In addition to that, there is a particularly strong growth in spending that has lifted activity in the Danish economy,” Stramer said.

“That has really lifted state revenues from personal taxes, business taxes and VAT,” Stramer said.

READ ALSO: More foreign nationals have full time jobs in Denmark than ever before

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WORKING IN DENMARK

Demand for labour remains high in Denmark with employment up for 14th straight month

Denmark’s labour market remains on a trend which has seen the number of people in paid employment in the country grow month-on-month since early 2021.

Demand for labour remains high in Denmark with employment up for 14th straight month

New data from national agency Statistics Denmark shows that the number of people in paid employment increased by 16,000 between February and March this year and now stands at 2,947,000. The data is corrected for variations caused by work that is season-dependent.

The new figures represent the 14th consecutive month in which the number of people working in Denmark has increased.

Additionally, more people are in work now compared to just before the Covid-19 pandemic hit, with a knock-on effect on the economy and jobs.

145,000 more people are hired now than just before the Covid-19 crisis, senior economist with Sydbank, Mathias Dollerup Sproegel, told news wire Ritzau.

“The labour market continues to be a ray of sunshine in the Danish economy,” Sproegel said.

“Aside from record-high employment, unemployment is also close to the record-low from before 2008. That tells us that the labour force has been strengthen somewhat in recent years,” he said.

“That is due to earlier political reforms and an active effort to bring all available hands in the Danish economy into play,” he said.

READ ALSO: How Danish work permit rules are keeping out skilled foreigners living in Sweden

Another analyst, senior economist Lars Olsen with Danske Bank, said the figures evidenced that it is still possible to find staff to fill the many available positions on the labour market.

“This suggests that there are still reserves to draw on, probably among students and people who have not previously had a strong connection to the labour market,” he said in a written comment.

“It would also seem to help that the age of the state pension has been put up again this year, so nobody will reach pension age during the first half of this year,” he said.

READ ALSO: Could Denmark delay plan to increase retirement age?

Hotels and restaurants are among sectors which saw the strongest growth in employment in March, with over 5,500 new hires giving an increase of 4.6 percent.

Culture and leisure also saw notable growth at 3.3 percent or 1,900 people.

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