Denmark reduces national debt by 25 percent since 2021

The Danish national debt has fallen by as much as 25 percent since last year, according to figures from the country’s central bank.

Denmark reduces national debt by 25 percent since 2021
Denmark has significantly reduced its national debt since last year, according to central bank figures. File photo: Liselotte Sabroe/Ritzau Scanpix

Denmark’s debt now corresponds to 11 percent of the country’s GDP, meaning around a quarter of the debt recorded in 2021 has been removed, new figures from Danmarks Nationalbank show.

The number is extraordinary and one of the lowest recorded for the metric, according to Kristian Skiver, senior economist with the Danish Chamber of Commerce (Dansk Erhverv).

“The explanation for this is that the economy has come flying out of the coronavirus crisis with record-high employment and low unemployment,” Skriver said.

“Additionally, 2021 saw a positive trend on the stock market. That has benefited pension yields,” he said.

Low national debt means Denmark is better equipped to cope with an economic crisis than comparable countries, he said.

“A downturn will place a dampener on incomes and also make expenses increase for things like unemployment benefits,” Skiver said.

“This lower debt means we are better equipped,” he said.

READ ALSO: Danish economy predicted to have tough 2023 in OECD report

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’Record number’ of foreigners move to Denmark for work

A record number of people moved to Denmark from abroad for work reasons in 2022, according to national agency Statistics Denmark.

’Record number’ of foreigners move to Denmark for work

A total of 31,600 people moved to Denmark to work last yer, according to a Statistics Denmark review released on Tuesday.

The figure corresponds to a 24 percent increase compared to 2021 and is the highest in the history of the statistic, which goes back to 1997.

The average number of work immigrants in the decade prior to 2022 was 21,000 people.

Specifically, the number describes the amount of people who were given work permits in Denmark in a given year.

The fact that the statistic has reached a historical high is remarkable, according to an economist.

“In a time with a major labour shortage, Danish businesses have succeeded in recruiting labour from abroad. That is a big success story, which certainly ensures growth and stability in the Danish economy in the period after the coronavirus pandemic,” senior economist Tore Stramer of the Danish Chamber of Commerce told news wire Ritzau.

“The large inflow of foreign labour has held of a threatening overheating of the labour market and ensured stable high growth in the economy,” he said.

READ ALSO: Danish parliament set to vote through relaxed work permit rules

Broken down by nationality, the largest proportion of people moving to Denmark to work came from EU countries in Eastern Europe.

Some 6,000 Romanian nationals were granted Danish work permits in 2022, with 3,700 coming from Poland.

Employment levels in Denmark continue to set records, confounding an uncertain economic outlook and high inflation.

READ ALSO: Danish economy defies headwinds to grow by 3.6 percent

Foreign labour is a driving factor for high employment levels, Stramer said.

“The large inflow of foreign labour has been the absolute primary factor behind the strong rise in employment in recent years,” he said.

“Specifically, foreign labour has driven around 40 percent of the overall increase in employment over the last three years,” he said.