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Has it become harder to pay for unforeseen costs in Denmark?

An increasing number of households in Denmark find it hard to make ends meet, meaning unforeseen bills and costs can be difficult to pay, according to a media report.

Has it become harder to pay for unforeseen costs in Denmark?
More Danes appear to consider themselves vulnerable to unexpected high costs than they did in 2021, but the difference is relatively small according to an expert. Photo: Kristian Djurhuus/Ritzau Scanpix

A ‘weak’ increase has been observed since 2021 in the number of people whose budgets are so tight that an unforeseen cost can bring their finances to the brink of collapse, broadcaster DR reports based on analysis from national data agency Statistics Denmark.

That means fewer people are confident they’d be able to cover the costs of things like emergency home repairs, a car breaking down or costly dental treatment.

The analysis is based on 6,000 interviews conducted from February to May this year and therefore does not take inflation in the latter part of this year into account.

Some 7.4 percent of the Danish population are “economically vulnerable” Statistics Denmark concluded, compared to 7 percent in 2021. That represents an increase from 398,000 to 422,000 people.

“I’m surprised the number hasn’t gone up more. My impression is that a lot more people are worse off,” Danske Bank economist and senior analyst Louise Aggerstrøm told DR, noting the results are based on subjective interview responses.

The proportion of people who said they wouldn’t be able to pay an unexpected cost of 10,000 kroner or more without borrowing was found to be 20 percent, but has nevertheless fallen compared to 2018, DR writes.

The relatively stable figures may represent a good level of savings in private economies, Aggerstrøm noted.

“We’ve been under strain but we are also coming from a period where Danes were good at saving up,” she said.

“That applies both before and after the Covid-19 epidemic,” she said.

READ ALSO: Inflation down in Denmark but forecasts tentative for 2023

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ECONOMY

Better-than-expected Danish economy frees up 11 billion kroner for budget

Denmark's finance minister said on Friday that recent good news for the country's economy had freed up an extra 11 billion kroner (€1.5bn) for government spending.

Better-than-expected Danish economy frees up 11 billion kroner for budget

“The long and the short of it is that the Danish economy is rock solid,” Nicolai Wammen told Denmark’s Ritzau newswire after the announcement. “But we also live in a world of great uncertainty: it is important to remember that only a year and a half ago we had the highest inflation in 40 years.” 

Wammen said that better-than-expected employment figures had pushed the ministry to adjust its estimate of its spending leeway under Denmark fiscal rules by 11.25 billion kroner between 2024 and 2030. As a result, he said, he planned to earmark an addition 4.1 billion kroner for public spending in 2025. 

“Over 3 million are in employment, and the progress in employment has been particularly high in the private sector,” he said in a press release. “At the same time, unemployment is low.” 

He pointed to the increase in the number of labour migrants coming to Denmark as a result of the government’s policies, adding that more reforms would be needed in future to increase the labour supply due to a demographic situation which meant the country was about to see a larger number of people retiring than coming into the system. 

“With the reforms that have been implemented and are underway, the government has increased the labor supply by 29,000 full-time workers in 2030. The government aims to increase the labor supply by 45,000 full-time workers,” he said. 

The increased spending leeway, he said, would make it easier for the government to take Denmark through some of the major changes it needs to make in the coming years. 

“This gives us an even stronger foundation for handling the challenges we face. At the same time, we must also continue to be aware that we still need more hands and minds in both the public and private sectors if we are to ensure growth, welfare, green transition and our security in Denmark, among other things,” he said. 

Wammen told the public broadcaster TV2 that much of the extra money would be used to increase funding to municipalities and the regional governments who run Denmark’s healthcare system. 

But also warned that it was important that the government does not shift to a more expansive economic policy that breathed life back into inflation.

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