Assessment and recommendations

The Danish economy has only partly recovered from the global crisis that erupted in 2007-08 and from the unwinding of a massive domestic property boom, and now faces weakening global activity and confidence amidst acute uncertainty surrounding the euro area crisis. The new government has to make sure it has sufficient leeway to cope with a potential further deterioration in global economic conditions while in a longer-run perspective promoting strong, sustainable and green growth. Denmark’s fiscal, labour market and well-being indicators compare favourably with those in many other OECD countries, but productivity growth has long been anaemic and weaknesses remain in the financial sector. Implementing policies to achieve the new government’s ambitious goal to raise labour supply is also a key part of the solution.