The Danish economy has not escaped the global financial and economic crisis. The deterioration in financial conditions and collapse of world trade, along with the ending of the property boom, have all hit Denmark hard, although GDP has not fallen as much as in some neighbouring countries. Unemployment is now on the rise, providing the first hard test of the “flexicurity” model, which to date has operated primarily in better times. With labour utilisation already high, though needing to improve further, the key here is boosting productivity, the Achilles heel of the Danish economy over the recent past. This will require maintaining the traditional strengths in the economy, described below, as well as pursuing an agenda focussed on productivity-enhancing reforms in education and the business sector.