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Denmark ‘finds’ extra 52 billion kroner in state funds

The Danish state raised 128.7 billion kroner in 2022, some 52.4 billion kroner more than the country’s finance ministry expected in calculations made last summer.

Published: 5 January 2023 17:23 CET

Denmark 'finds' extra 52 billion kroner in state funds

Denmark's national finances are in a better position than they were expected to be at the end of 2022. Photo: Kristian Djurhuus/Ritzau Scanpix

New data reported by news wire Ritzau shows that Denmark’s state coffers are over 52 billion kroner healthier than the Ministry of Finance said in August they expected by the end of 2022.

The 2022 result is a huge win for public finances and shows that the country’s economy is faring better than previously thought, senior economist Las Olsen of Danske Bank said.

“2022 was a high with high growth after corona. That tells us more than anything something about why public finances are so strong,” he said.

Another explanation for the figure is the boost given to tax revenues by high growth, he said.

A similar situation occurred in 2021, Ritzau writes. A year ago, an “extra” 33.3 billion kroner was present in state finances in comparison to government expectations.

“We have seen time and again that public finances have been markedly better than expected and that is characterised by many things but not least that revenues keep on positively surprising us,” he said.

READ ALSO: Denmark reduces national debt by 25 percent since 2021

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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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