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Better-than-expected Danish economy frees up 11 billion kroner for budget

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Ritzau/The Local - [email protected]
Better-than-expected Danish economy frees up 11 billion kroner for budget
Denmark's finance minister, Nicolai Wammen, gives a speech to municipality chiefs at a conference in Aalborg in March. Photo: Bo Amstrup/Ritzau Scanpix

Denmark's finance minister said on Friday that recent good news for the country's economy had freed up an extra 11 billion kroner (€1.5bn) for government spending.

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"The long and the short of it is that the Danish economy is rock solid," Nicolai Wammen told Denmark's Ritzau newswire after the announcement. "But we also live in a world of great uncertainty: it is important to remember that only a year and a half ago we had the highest inflation in 40 years." 

Wammen said that better-than-expected employment figures had pushed the ministry to adjust its estimate of its spending leeway under Denmark fiscal rules by 11.25 billion kroner between 2024 and 2030. As a result, he said, he planned to earmark an addition 4.1 billion kroner for public spending in 2025. 

"Over 3 million are in employment, and the progress in employment has been particularly high in the private sector," he said in a press release. "At the same time, unemployment is low." 

He pointed to the increase in the number of labour migrants coming to Denmark as a result of the government's policies, adding that more reforms would be needed in future to increase the labour supply due to a demographic situation which meant the country was about to see a larger number of people retiring than coming into the system. 

"With the reforms that have been implemented and are underway, the government has increased the labor supply by 29,000 full-time workers in 2030. The government aims to increase the labor supply by 45,000 full-time workers," he said. 

The increased spending leeway, he said, would make it easier for the government to take Denmark through some of the major changes it needs to make in the coming years. 

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"This gives us an even stronger foundation for handling the challenges we face. At the same time, we must also continue to be aware that we still need more hands and minds in both the public and private sectors if we are to ensure growth, welfare, green transition and our security in Denmark, among other things," he said. 

Wammen told the public broadcaster TV2 that much of the extra money would be used to increase funding to municipalities and the regional governments who run Denmark's healthcare system. 

But also warned that it was important that the government does not shift to a more expansive economic policy that breathed life back into inflation.

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