The governor of Denmark’s National Bank has come out against the government plan, asserting that the checks could accelerate inflation.
“If compensation schemes are adopted that are not matched by public savings or higher taxes, this will put further pressure on the economy, pushing up wages and inflation,” National Bank director Signe Krogstrup told newspaper Berlingske.
Subsidies are being considered for the unemployed and cash benefit recipients as well as the elderly.
Krogstrup’s reaction came as the government and political parties discuss which sectors of the population should receive a helping hand due to climbing everyday costs.
A payment of 6,000 kroner to over 400,000 households who face high energy bills is already scheduled for later in the year.
The central bank director said that further government cash assistance may worsen the current situation by causing inflation to rise.
Some parties are in favour of extending cash help to additional groups, with the elderly the main focus of proposals so far. Students, the unemployed, and cash benefit recipients have also been mentioned.
Business minister Simon Kollerup said he did not think “targeted” cash assistance would worsen inflation.
The government wants to finance the packages by increasing public debt. This would require a deviation from the annual budget justified by extraordinary circumstances.