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POLITICS

Danish economists say abolition of Great Prayer Day is ‘not necessary’

Leading economists in Denmark say that scrapping the Great Prayer Day holiday is not a necessary measure and that the potential economic benefits for the state are dubious.

Danish economists say abolition of Great Prayer Day is ‘not necessary’
A photograph of the government bill to scrap Great Prayer Day. Leading economists have questioned the potential benefits of abolishing the holiday. Photo: Ida Marie Odgaard/Ritzau Scanpix

Three economists writing in a column in political media Altinget said there was “nothing necessary” about the plan to scrap Great prayer Day.

“Is it better, then, to cancel the government’s planned tax cuts, to cut public spending or to use the opposition’s alternative proposal?”, write the three economists: Ulrik Beck, senior economist with thinktank Kraka; and Michael Svarer and Hans Jørgen Whitta-Jacobsen, professors in economics at Aarhus and Aalborg universities respectively and both former members of the Danish Economic Councils.

The three economists go on to write that the answer to the question comes down to preferences and priorities.

They state that an opposition plan to raise an annual three billion kroner, the amount the government says the Finance Ministry will raise by scrapping Great Prayer Day, is “a fraction better”.

The three governing parties – the Social Democrats, Liberals (Venstre) and Moderates – want to abolish springtime public holiday Great Prayer Day in a move they say will enable increased defence spending to meet Nato targets by 2030, three years ahead of the current schedule. A bill was tabled by the government earlier in January.

The policy has met with criticism from trade unionsthe church and opposition parties, while the military itself has also distanced itself from the plan.

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In an alternative proposal, the nine opposition parties say they can raise the money by diverting 1.25 billion kroner from the public investment budget, 1 billion kroner from a winter assistance programme which the parties say was over-financed, and savings on business support spending of 0.75 billion kroner.

The three economists write that the opposition proposal could hold back the welfare system in future, however. Additionally, a reduction in business support could harm companies.

Regarding the economic effect of scrapping Great Prayer Day, they state that although this has a potential monetary benefit, it is uncertain.

That is because people working in Denmark could choose to adjust their working hours by taking less overtime or “hours of interest” (interessetimer), they state.

In addition, collective bargaining agreements between trade unions and employers could eventually provide for an extra day off in response to emerging demand for this.

That would negate the effect of scrapping the holiday, the experts said.

READ ALSO: What is a Danish collective bargaining agreement?

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ECONOMY

KEY POINTS: What is in Denmark’s 2023 budget proposal?

Denmark’s coalition government presented on Thursday a new budget proposal in which it said it was “stepping on the brakes” on state spending.

KEY POINTS: What is in Denmark’s 2023 budget proposal?

Danish budgets are usually tabled and eventually adopted during the autumn, but last year’s election disrupted the normal timetable.

The proposed budget, given the title “A Responsible Way Forward” (En ansvarlig vej frem) was presented by ministers from the three coalition parties on Thursday: Finance Minister Nicolai Wammen, acting Defence Minister Troels Lund Poulsen and Culture Minister Jakob Engel-Schmidt.

A cautious economic approach to spending is needed given global circumstances including the war in Ukraine, inflation and last year’s energy crisis, Wammen said.

“Even though a lot of things look good when we look at the Danish economy, that doesn’t change where we are. Uncertain times,” he said.

Engel-Schmidt added that some might describe the proposed budget as “boring”, given that it “doesn’t bring a shower of presents”.

Key points from the proposed budget are outlined below. The proposal will go into negotiations with other parties in parliament before being voted through in its final form.

Inflation assistance to lower income groups 

Last year saw the highest inflation rate for 40 years in Denmark, and the effects will still be felt in 2023 even if the inflation percentages themselves are less severe.

Although the government wants to “step on the brakes”, it has still set aside 2.4 billion kroner for financial assistance to people vulnerable to rising prices.

Some 1.1 billion kroner will be spent on 5,000 kroner “cheques” for elderly persons who receive social welfare. People who have high medicine costs and students who receive subsidies because they must provide for others, such as single parents (SU-forsørgertillæg) are also among groups to be assisted with the inflation spending.

READ ALSO: Danish government agrees inflation package for vulnerable families 

‘Acute plan’ for hospitals

An agreement with regional health authorities on an “acute” spending plan to address the most serious challenges faced by the health services has already been agreed, providing 2 billion kroner by the end of 2024.

The agreement was announced by the government along with regional and municipal officials in February.

READ ALSO: What exactly is wrong with the Danish health system?

‘Lower than ever’ reserve fund

A so-called “negotiation reserve” (forhandlingsreserve), a pool of money in the budget that can be allocated at a later date based on agreements between parties, has been significantly cut to 200 million kroner.

A 2023 budget proposal from August last year, which was not adopted due to the election, had the fund at 600 million kroner. The reserve has been as high as 1.5 billion kroner in the past, according to broadcaster DR’s report on Thursday’s proposal.

The previous, single-party Social Democratic government was reported to favour mental health services and the elderly as areas which could benefit from the fund in 2023.

The lower amount is partly due to the shorter timescale of this year’s budget. The 2024 budget will be proposed and passed in late 2023 under the regular timetable.

“There are still things we can prioritise but we are asking you to take responsibility to get Denmark through while inflation is still a major challenge,” Wammen said.

Spending on courts system

Some 32.2 million kroner has been put aside to specifically target a reduction in waiting times for court dates, DR writes. The money is part of a larger amount, 185 million kroner, to be spent on the courts.

Denmark’s courts system has in recent years seen a rising number of criminal cases and lengthy processing times.

Broadband internet to get boost in rural spending

The “broadband fund” or bredbåndspulje will get an additional 100 million kroner to improve coverage in areas that still have patchy connection.

Another 100 million kroner will go into the landsbypulje or “Village Fund”, giving rural municipalities funding for demolition or renovation of deteriorated buildings.

Ukraine

A majority in parliament has already voted in favour of a seven-billion kroner fund in 2023 to help Ukraine defend itself against the Russian invasion.

The fund will be spent on Danish military, civilian and commercial assistance to Ukraine.

Part of the spending is funded by Denmark’s international development budget, while over 5 billion comes from spending an increased portion of the national GDP on the 2023 budget.

READ ALSO: Denmark announces seven-billion kroner Ukraine fund

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