Europe 2020 in Denmark

The Country-specific Recommendations are documents prepared by the European Commission for each country, analysing its economic situation and providing recommendations on measures it should adopt over the coming 18 months. They are tailored to the particular issues the Member State is facing and cover a broad range of topics: the state of public finances, reforms of pension systems, measures to create jobs and to fight unemployment, education and innovation challenges, etc. The final adoption of Country-specific Recommendations prepared by the Commission is done at the highest level by national leaders in the European Council.

Country overview

The economic crisis hit Denmark relatively hard and resulted in a significant drop in employment, though the authorities have managed to cope with the downturn relatively well. However, in April 2013 the Commission concluded that Denmark was experiencing macroeconomic imbalances, which deserve closer monitoring and effective policy action.

Denmark is making progress in implementing the 2012 CSRs and has an active reform agenda, though most of the reforms will have an impact only in the medium to long term. A comprehensive reform of the early retirement pension schemes has been implemented. Reforms of the disability pension and the subsidised employment schemes have been adopted. Steps have been taken to reform the public school, vocational training and student allowance systems and the government intends to increase competition in a number of services sectors, though only partial progress has been made. Over the short to medium term, Denmark does not seem to face particular challenges with its public finances, though it should continue to lower the deficit sustainably below 3% of GDP.

To stimulate economic growth and secure adequate financing for ambitious welfare policies, Denmark needs to get back on track by boosting productivity growth and competitiveness. The stability of the financial system, in particular the housing market, also remains an issue of concern, while Denmark also needs to enhance its long-term labour supply and the cost effectiveness of the education system.

2013 European Commission's recommendations for Denmark in brief

The Commission has issued three country specific recommendations (CSRs) to Denmark to help it improve its economic performance. These are in the areas of:

  1. Sustainable public finances
    Denmark's public finances are expected to improve compared to 2012, with the budget deficit shrinking from 4% in 2012 to 1.7% of GDP in 2013, thereby meeting the excessive deficit procedure recommendation by the 2013 deadline. Public finances in Denmark are generally sound and the country is already at its medium-term objective. However, also because the country has an ageing population and ambitious welfare policies, it is crucial for Denmark to maintain a sound and sustainable fiscal policy framework.
  2. Labour market and skills
    Denmark has carried out important reforms of the early retirement pension, disability pension and the subsidised employment schemes to enhance labour supply. However, further efforts are needed to improve the employability of those furthest away from employment, including people with a migrant background as the employment rate for non-EU nationals (54.5 % in 2012) is considerably lower than the overall employment rate (75.4%) and is also below the EU average. Education, training and skills upgrading will be important in this respect. Despite Denmark's high proportion of expenditure on education, cost-effectiveness is weak, there is a lack of apprenticeship places and drop-out rates from high school and vocational education are high (9.1% overall in 2012). Ambitious solutions are needed as these measures are vital to improve low productivity growth, increase labour supply and ensure that the future skills demands are met. Steps have been taken to reform the public school, vocational training and student allowance systems and the government, though only partial progress has been made
  3. Competition
    Denmark has lost significant export market shares over the last decade, and prices are about 14% higher for services and 5% higher for goods compared to an average of seven similar EU countries. This is partly because of the low level of competition in some services sectors (for example, the barriers to entry for certain professions in the retail sector). Denmark could generate more economic growth by removing obstacles to competition in services, given the importance of this sector in the Danish economy. While the government has presented a Competition package, policy initiatives are still at an early stage and continued efforts are needed to ensure effective implementation.

See how Denmark compares with other EU Member States in key areas

European Semester Documents