Danish economy predicted to have tough 2023 in OECD report

European nations including Denmark are set to feel the pinch of difficult global economic conditions next year, according to a report from the Organisation for Economic Co-operation and Development (OECD).

Danish economy predicted to have tough 2023 in OECD report
The OECD predict fractional growth for the Danish economy in 2023. Photo: Emil Helms/Ritzau Scanpix

The OECD expects Denmark’s economy to get a marginal growth of 0.1 percent in 2023. The forecast is 1.3 percent lower than in the previous report from June this year.

Despite the OECD considerably reducing expectations for Denmark’s economy, analyst Tore Stramer, senior economist with the Danish Chamber of Commerce, in the Nordic country said the forecast was “mildly optimistic” in comments to news wire Ritzau.

The central bank, Nationalbanken, has forecast negative growth of -0.1 percent next year.

“OECD also points out that the slowing down of growth in the Danish economy is happening at a time when the pressure on the labour market is still high,” Stramer said in a written comment.

“The OECD therefore also recommends that fiscal policy should also be restrictive and further restrictions should be considered if pressure from inflation persists,” he said.

The economic co-operation organisation predicted in September growth of 2.2 percent for the global economy next year. That prediction is retained despite the outlook for Europe.

“This shows that the global economy has not been hit by new, serious shocks in recent months,” Stramer said.

Global economy is significantly impacted by the war in Ukraine, which has caused prives to go up.

Central banks have responded to the situation by putting interest rates up.

Tackling inflation should be a political priority next year according to the senior economist with the Confederation of Danish Industry, Allan Sørensen.

“Inflation will subside in 2023 but will still be at a high level. The fight against inflation will need more interest rate increases while fiscal policy must not cause more [inflation],” he told Ritzau.

OECD notes in its report that a significant degree of uncertainty is attached to the forecasts.

But an increased risk of economic downfall in in play due to “insecurity around energy supply, particularly in Europe over the coming two winters,” Stramer said.

“Additionally, there is a risk that restrictions of financial policies will slow the global economy more than expected,” he said.

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Danish shipping giant Maersk ‘lobbied’ to be excluded from global tax deal

The Danish shipping giant Maersk held meetings with Denmark's tax and maritime authorities to advise them on how best to shield the shipping industry from the OECD's global minimum tax deal, according to a Danish media report.

Danish shipping giant Maersk 'lobbied' to be excluded from global tax deal

The revelations, reported by broadcaster DR, come as the company on Wednesday reported record profits of 203 billion kroner, on which it paid just 3 percent in tax. 

They are particularly damaging to the company because of the claim last year from Maersk’s then CEO Søren Skou that his company was open to paying more tax, so long as it was through a global agreement via the OECD, precisely the sort of agreement the company was behind the scenes trying to exclude itself from. 

“It seems as if Maersk is playing a double game,” Lars Koch from the poverty charity Oxfam, told DR after he was presented with the evidence. 

“We can see from the access to documents the number of meetings and close and confidential dialogue”, he added. “Here they agree and inform each other about what Denmark should argue in these international negotiations on a tax agreement and they work actively to safeguard Maersk’s interests by exempting the shipping companies.” 

The broadcaster report was based on internal documents obtained from the Ministry of Taxation and the Danish Maritime Authority. 

The documents show that in June 2020, representatives of the company held a meeting with the Ministry of Taxation in which they they discussed strategies on excluding shipping from the OECD agreement on minimum tax. 

Soon afterwards, the industry lobby group Danish Shipping (Danske Rederier), where Maersk plays a leading role, wrote to the Ministry of Taxation and the Danish Maritime Authority warning that the OECD proposal “creates considerable uncertainty in our hinterland”.

Then in June 2021, a representative from ​the Danish Maritime Authority thanked Danish Shipping for supplying it with arguments it could use to push for shipping to be excluded, saying, “it was extremely well done. A thousand thanks for your efforts.”

Finally, when shipping was exempted from the OECD agreement in July 2021, a representative from Danish Shipping thanked the Danish Maritime Authority for “the orientation and for being aware of the special challenges of shipping”. 

Mette Mellemgaard Jakobsen, Maersk’s head of tax, admitted that her company had tried to influence the process.

“We were specifically concerned about how these rules would be implemented, and we had a concrete concern that it would create an increased distortion of competition,” she told DR. 

“For us, it is absolutely crucial that we are not put at a disadvantage compared to other shipping companies around the world. That is why global agreements are the most important thing for us.”

Rasmus Corlin Christensen, a researcher in international tax at Copenhagen Business School, said that Maersk’s double game was quite “striking”.

“On the one hand, you support and work for global solutions, the shipping industry included. But at the same time you can see that, at least when it comes to the global reforms that have been discussed in recent years, they did not want the shipping industry to be covered.”