Country Report Denmark

Summary

The minority Liberal-Conservative coalition has only a slim parliamentary majority with support from the Danish People's Party (DF), but will seek broader alliances to pass important legislation.
The government will need to offer concessions, particularly to the DF, to steer a number of politically sensitive pieces of legislation through parliament.
The government is planning to hold referendums on whether to maintain Denmark's EU opt-outs from defence, judicial policy and the euro.
Reform of the welfare system and public services will dominate the policy agenda. The government will seek to address labour shortages, but will have to respect agreements with the DF on maintaining tight immigration controls.
Fiscal policy will be mildly expansionary. Spending on public services is set to rise. Income taxes will be cut in 2008-09.
The Economist Intelligence Unit expects economic growth to be fairly sluggish in 2008-09. Turmoil in global financial markets means that there are major downside risks.

The government is preparing to devolve additional powers to Greenland. Greenlandic voters will vote on a "self-government act" in a referendum in November 2008, with the law expected to take effect from mid-2009.
The strikes by child carers and healthcare workers, which started in mid-April, continued into early June. Public support for the strike has fallen sharply.
Eight people were killed when a suicide bomber attacked the Danish embassy in Islamabad, Pakistan, on June 2nd. The attack has triggered a debate in Denmark over how, if at all, the government should respond.
The Nationalbank (central bank) announced a surprise increase in its 14-day lending rate in mid May in order to relieve downward pressure on the krone.
In response to the global credit crunch, the Nationalbank has opened a new seven-day secured lending facility to support liquidity in the money market.
Retail sales fell sharply in March, as Danish households cut back on purchases of food, and consumer and other durable goods.
Consumer confidence fell further in May, although consumers’ assessment of their own financial situation remained stable, reflecting low unemployment.
Denmark's current account remained in deficit in the first quarter of 2008, although the deficit was slightly narrower than in the year-earlier period.