Denmark’s coalition government on Friday presented its draft budget for next year in a briefing at the Ministry of Finance.

A so-called “negotiation reserve” (forhandlingsreserve), a pool of money in the budget that can be allocated at a later date based on agreements between parties, is normally part of the draft budget. That has been set at 500 million kroner for the 2025 draft budget.

Opposition parties are customarily invited to talks with the government to decide on how this money will be spent.

Normally, the government seeks a “broad” backing for its budget with opposition parties also voting for it. This is achieved by negotiating and giving some concessions to other parties through the autumn political session, before a final budget is adopted by parliament in December.

Key points of the draft budget, presented by Finance Minister Nicolai Wammen, include:

Return of tax subsidy for home improvements

A tax deduction for home improvements, the “håndværkerfradrag”, scrapped in 2022 by the minority Social Democratic government of the time, will return under the proposal.

When it was repealed, the government said that the popular subsidy was contributing to an “overheating” of the construction and housing markets.

READ ALSO: Could Denmark reinstate popular tax deduction for home improvements?

The old version of the subsidy could be used on expenses paid to builders for home improvements including energy and climate adaptations.

Another tax subsidy that benefits homeowners, for home services will continue with funding provided by the budget.

Cuts to civil service

Some 1,000 “years of work”, årsværk in Danish, meaning the number of hours of work which would be completed by 1,000 full-time employees, are to be cut from state administration. 

The decision is aimed at cutting bureaucratic costs.

The two ministries which will be pared back the most are the Defence Ministry (150 “years of work”), and the Tax Ministry (128 “years of work”).

Spending on CO2 emissions deal

Some 1.7 billion kroner is earmarked for 2025 in the draft budget for the implementation of a major agricultural agreement, known as the “tripartite deal”, which was made in June between the government, agricultural industry and nature conservation groups.

After 2025, 900 million kroner will be spent on the area yearly until 2028.

READ ALSO: Denmark announces agreement on landmark CO2 tax for agriculture

The deal will eventually will see Denmark impose a world-first CO2 tax on emissions from farming, but is yet to be passed by parliament.

A new government ministry was created this week specifically to oversee the agreement’s implementation. 

Police and security services

Denmark’s police intelligence service PET will be boosted by 790 million kroner annually from 2025-2027, should the budget be passed in its current form.

Two billion kroner will go to the police and state prosecutors in 2025.

Municipalities

Denmark’s local authorities are also given some priority in the draft budget. They will get 2.5 billion kroner.

“We have experienced… a number of municipalities with major liquidity problems. Even though they are permitted to spend more on welfare [by law, ed.], they don’t have money in the bank for it,” Wammen said according to newswire Ritzau.