Government Solvency, Social Security and Debt Reduction in Denmark

From a macroeconomic perspective, the Danish economy has performed very well in recent years. After a long period of recession, the rate of economic growth since 1993 has been relatively high, the unemployment rate has fallen and no significant wage–price pressure has been evident. The discretionary impact of fiscal policy has on the whole been neutral – with the period 1993–5 being a possible exception, as a result of the so-called fiscal ‘kick start’ – so the upturn has mainly been driven by non-government demand.

Also the track record of public finances has been good: the ratio of public debt–GDP has fallen considerably, and the budget turned into surplus in 1997. If it so wished, Denmark could join EMU by 1999.