Country Report Denmark November 2009

Outlook for 2010-11

• The minority Liberal-Conservative government is expected to retain parliamentary support from the populist Danish People's Party (DF), and should remain in office for much of the outlook period.
• An election must be held by November 2011. Although an earlier vote is possible, the government is likely to wait until an economic recovery is well under way before seeking a fourth term in office.
• The government may call a referendum on whether to scrap Denmark's opt-outs from EU policies concerning defence and security, and justice and home affairs, but a vote on adopting the euro is unlikely.
• The government's main short-term policy priorities will be to ensure the stability of Denmark's financial institutions and to alleviate the effects of the sharp economic downturn, through tax cuts and higher public spending.
• Fiscal policy will be expansionary. Personal income taxes will be cut in 2010-11. The budget balance will swing into deficit. Interest rates should remain stable until late 2010 or early 2011, rising only gradually thereafter.
• The Danish economy is experiencing one of the most prolonged recessions in Europe. Real GDP is forecast to shrink by a revised 5.1% in 2009, with a gradual recovery to growth of 0.5% in 2010 and of 1.3% in 2011.

Monthly review

• National opinion polls show the ruling Liberal-Conservative-DF alliance running neck and neck with the opposition parties.
• The prime minister, Lars Lokke Rasmussen, has tried to lower expectations that a new international treaty to limit emissions of greenhouse gases will be agreed at the UN climate change conference in Copenhagen in December.
• Mr Lokke Rasmussen said that the aim of the negotiations was to secure a binding political deal on the content of a new treaty and to agree a specific set of initiatives that would lead to immediate action to combat climate change.
• Government fiscal policy has received a critical appraisal from the Danish Economic Council, or "Wise Men". The Council believes that a further fiscal easing of Dkr10bn (US$1.9bn) is necessary to help Denmark out of recession.
• The government has established a new commission charged with finding ways to strengthen competition policy.
• New-car sales fell further during the third quarter. Bankruptcies continue to rise. The unemployment rate climbed to 4.1% in September. Manufacturers expect to increase output in the fourth quarter, despite a fall in new orders.

This report covers the following industry codes:
SIC Code: 48;39
NAICS Code: 517;31