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What is in Denmark’s draft 2023 budget?

Finance Minister Nicolai Wammen is scheduled to present a draft budget for Denmark in 2023 on Wednesday. Several elements of the draft budget have been reported ahead of its publication.

What is in Denmark’s draft 2023 budget?
Printed versions of the government’s draft budget for 2023 were distributed to ministers on August 30th. Photo: Philip Davali/Ritzau Scanpix

People in Denmark who are worst-affected by increasing prices and inflation can expect a helping hand from the government provided by the 2023 budget, according to reports by Danish media including broadcaster DR in advance of its official presentation on Wednesday.

Printed versions of the government’s draft budget for next year were distributed to ministers late on Tuesday. 

Notable points of the draft budget include two billion kroner set aside for inflation aid, a 1.3 billion kroner Covid-19 reserve and 100 million kroner to boost internet access in rural Denmark. 

The government has already paid out relief this year to around 400,000 homes hit by high energy bills, while rent increases have been capped at 4 percent.

Additional assistance is now planned according to reports on the draft budget.

Up to two billion kroner is earmarked for inflation assistance in the budget, DR writes. Wammen confirmed to the broadcaster that money would be spent tackling the issue.

“We are putting aside a framework to give additional inflation help. We will sit down with parliamentary parties and say, ‘here is an amount which we should look at together and see how it can best be used for Danes badly affected by inflation at the moment,” the minister said.

“This will be a tight budget because we don’t want to fan the inflation that has hit Denmark and the rest of Europe,” he also said.

The inflation help will reportedly be paid for by cuts to public infrastructure spending. This means additional money will not be spent, thereby limiting further inflation, the government reasons.

Specifics as to who would receive the inflation help are not clear in advance of the draft budget presentation, scheduled for 1pm on Wednesday.

Inflation in Denmark in June was 9.7 person, according to Statistics Denmark. This encompasses food and energy prices as well as other essentials.

The draft budget sets aside 600 million kroner for a so-called “negotiation fund” (forhandlingspulje) for which the target of spending can be thrashed out between parties in parliament. The pool would rise to 1 billion kroner annually in 2024-26.

The amount, which can for example be spent on the health system if a need was deemed to arise, is lower than it was in the last two budgets (1.2 billion and 1.5 billion kroner in 2020 and 2021 respectively). The government is reported to favour mental health services and the elderly as areas which could benefit from the fund in 2023.

Additional spending on the health service (outside of the negotiable fund) is set at 447 million kroner in 2023 and 2.5 billion kroner during the years 2024-27.

Also included in the budget is 615 million kroner for ongoing management of Covid-19, 1.3 billion kroner for civil law measures related to company taxation in 2023-26, 760 million kroner on elementary education in 2023-26 and a Covid-19 reserve fund of 1.3 billion kroner.

Up to 100 million kroner could also be spent on improving broadband internet in rural regions, a break with the government’s previous stance that the market should ensure improvements in this area without state spending.

The overall amount of spending and number of new measures in the budget are relatively limited, reflecting what the government is calling a “tight and responsible” approach given the unstable broader economic climate.

Inflation is not expected to decrease as much as the Ministry of Finance projected in an earlier prognosis from May this year, news wire Ritzau reports.

However, while consumer prices are expected to grow by 3.3 percent in 2023, private sector wages are forecast by the ministry to go up by 3.6 percent.

READ ALSO: Denmark’s economy grows with clouds visible on horizon

The draft budget must be discussed and negotiated with other parties – normally the government’s allies on the left of centre – until a finalised version is agreed on with backing from enough parties to see it voted through parliament.

Left wing parties the Red Green Alliance (Enhedslisten) and the Socialist People’s Party (SF) have already called for more spending on some elements of the budget, while the opposition Conservatives said increased inflation assistance was not the correct way to bolster the economy.

Negotiation of the budget usually takes place during the autumn with the final version concluded no later than December, but this could be disrupted by a potential general election this autumn.

READ ALSO: How likely is Denmark to have a general election ahead of schedule?

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At what time of the day is electricity cheapest in Denmark?

The electricity rate for customers in Denmark may vary hour-to-hour due to several factors and can fall way below the average price. So when is it cheapest?

At what time of the day is electricity cheapest in Denmark?

The price of electricity could defy the current era of soaring energy costs and fall to around 0 kroner (before transport and taxes are applied) for a short period around 2pm on Wednesday.

The electricity price per kilowatt hour could fall to zero on October 5th because of windy weather across Europe, which will result in huge electricity production from both on- and offshore wind turbines, broadcaster DR reports.

Combined with solar energy, which doesn’t factor in when electricity prices fall at night but does in the afternoon, this will force the market price of electricity close to zero, according to the report.

Additionally, heavy rain in Norway and Sweden, both of which have large hydropower production, can also help reduce the price of electricity in Denmark.

Before you connect everything to the grid at 2pm, keep in mind that electricity won’t be completely free to consumers. Transport costs and taxes of around 1.40 kroner still apply, DR notes.

The cost of electricity will nevertheless be low throughout Wednesday afternoon.

That sounds unexpected at a time when electricity costs this winter are expected to be far higher than they were in 2021 and the government has announced measures to help households pay bills. Cities are introducing their own saving measures to reduce electricity use.

“We actually expect [low daytime rates on Wednesday] to persist for a while. At the moment it looks like there will be wind until the weekend and we anticipate a lot of rain will fall,” Jack Kristensen, functions manager with Denmark’s largest energy company Andel Energi, told news wire Ritzau.

“It is predictably the hours where there’s not much consumption that it will be cheapest,” he said.

“Preceding days have been much higher in price,” he said.

Kristensen said he predicted hourly prices on Wednesday of 3 øre (0.03 kroner) per kilowatt hour from 1pm-2pm, followed by 0.2 øre (0.002 kroner) per kilowatt hour from 2pm-3pm.

The most expensive times of day – when people are waking up and around dinner time – have recently seen prices at around 1.10-1.20 kroner per kilowatt hour, Kristensen told Ritzau.

Taxes and transport costs should be added to these figures to get the overall price. In August, the total price of electricity per kilowatt hour hit a peak of 9.47 kroner on August 30th, according to data reported by DR.

People searching for electricity savings should also keep in mind that the rate falls at night.

Because drops in the hourly electricity price caused by increased wind production are highly dependent on weather conditions, they are not easy to predict.

However, apps can be used to monitor electricity prices. These include the ‘Min strøm’ app, which has been downloaded by tens of thousands of people in Denmark. Popular alternatives are the ‘Elpriser’ and ‘Andel Energi’ apps.

Lower nighttime prices can be taken advantage of by setting timers on thirsty appliances like dishwashers and tumble dryers and running them at night.

The autumn could bring about a general fall in Danish electricity prices compared to August and September because of windier weather, according to an industry analyst who spoke to DR.

“With robustly windy weather over Denmark, Sweden and Germany, we and our neighbours will be able to produce lots of cheap electricity and we will have hours with very low electricity prices during the course of the autumn,” said Kristian Rune Poulsen, senior consultant with industry interest organisation Green Power Denmark, in comments to the broadcaster.

High levels of sustainable energy production make electricity prices less dependent on gas prices because less gas is needed to produce the electricity Denmark needs.

The war in Ukraine is a major factor causing gas prices to go up, also affecting the electricity price.

READ ALSO: How people in Denmark are changing their energy use to keep bills down

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