Denmark In Danger Of Becoming The "New Greece"

A debt bomb threatens Denmark, local economists says. The alarms are screaming out loud;  the national debt is increasing rapidly, and if not intervened, Denmark will soon approach a situation similar to Greece, calculations provided by the Danish AE-board shows. According to economists the deficit has been hidden for many years.

“There’s not a shadow of doubt on the fact that the big deficits, and a rapidly growing public debt, will be a huge problem for Denmark over the next decade.”

Jan Rose Skaksen


The Public debt in Denmark will explode over the coming years, the Danish news paper Berlingske Tidende reports.

The debt could rise so sharply that it could reach the same levels seen in Greece right now.  That means nearly 2000 billion Danish kroner, which correspond to a scary 120 percent of future GDP.

Public debt will grow to if the government is not making substantial reforms are the Danes become more productive, calculations done by the AE-board shows.

The AE-Board has prepared an preleminary report ahead of the governments so-called “Convergence Report”, which describes how the public finances and debt are expected to develop in the future.

Professor Jan Rose Skaksen at Copenhagen Business School says that “there is not a shadow of doubt on the fact that the big deficits, and a rapidly growing public debt, will be a huge problem for Denmark over the next decade.”

“It is a fact we can not ignore.  It’s just like in our private economy;  problems will also arise if we spend more than what’s entering into the account,” he says.

A Straitjacket

He adds that the growing indebtedness, are to dominate the economic policy totally in the future.

“The large debt becomes a straitjacket for Denmark. We will no longer have the same freedom to tackle future crises, invest more in education or other things,” says Professor Jan Rose Skaksen.

Chief Economist at RI, Klaus Rasmussen suggests that it has been clear for many years that there would be huge deficit of public finances when the number of retired people really began to grow.

“Therefore we should have built a fortune by 2015, which we could feed on. But now that has fallen completely apart. The debt is growing dramatically at a time we hoped it would drop. Therefore we need to tighten up on public finances and make structural reforms. The sooner action is taken, the better. If nothing is done, the financial markets will sooner or later force us to,” says Klaus Rasmussen.

Hidden Deficit

According to Professor Jan Rose Skaksen the Danish deficit have been “hiding” for many years  and could not be found. It’s been hidden, among other things, in the revenues from oil and gas production in the North Sea, which concealed the public overspending. But the economists underline that they for decades have warned about the demographic trends that would remove large groups from the labor market and increase government spending dramatically.

“That’s exactly what is happening now.  It is very big numbers, we’re talking about.  It’s pouring out from the labor market, and the number of pensioners grows with equally great strength,” says Mr. Skaksen.

Deeply Irresponsible

Chief Consultant of the AE-Board, Martin Madsen, says that if the government doesn’t make reforms that increase the labor force and the country’s productivity, the public debt in 2050 will be more than DKK 2 000 billions,  (converted to the present exchange rate), and at a dangerously high level that might result in the same problems as Southern Europe, Iceland, Dubai and similar locations.

“The debt can be even higher if unemployment become entrenched at high levels and we get a large alienated group of labor. In the a light of this facts, the government is conducting a deeply irresponsible economic policy.  It is untenable to adopt an economic policy that allows the debt to grow this much,” Mr. Martin Madsen says.

This year alone, Denmark is expected to have a national deficit of 100 billion kroner. It is the largest deficit since the early 1970’s, and far beyond the deficit border of three percent of GDP which is set up by the EU.

It corresponds with an extra tax burden of 25 000 kroner for every taxpayer i Denmark.

Link to original article in Danish.

Reblog this post [with Zemanta]

0 thoughts on “Denmark In Danger Of Becoming The "New Greece"

  1. Ya. But I think Danes are not minding it as carefree. A bottle of beer would save a day. Don’t mind the problem, let those problem, problems you. Nah, just don’t mind it. Every issue has its best solution. And in order to resolved and get the least one, just be happy. 🙂

  2. Danes are wise men. They can handle this problem. And of course, the government knows it and probably they are now doing some formula to solve that kind of problem. Isn’t it that Denmark is the happiest country on earth?

    • LOL! Well, living in Denmark for several years makes me share your view on the Danes. They’ll be okay.

      In Denmark, no problem is so big or complicated that it can’t be solved before “fyr-aftens-bayer” (the afternoon beer).
      Great people !

      Thanks for the visit 🙂

      KindRegards
      econotwist

  3. Pingback: Tweets that mention Denmark In Danger Of Becoming The “New Greece” « Econotwist's Blog -- Topsy.com

  4. Pingback: Denmark In Danger Of Becoming The “New Greece” « Econotwist's Blog | Denmark News BaVaBa

  5. Pingback: Denmark In Danger Of Becoming The “New Greece” « Econotwist's Blog | Denmark News BaVaBa

  6. Influence can be defined as the power exerted over the minds and behavior of others. A power that can affect, persuade and cause changes to someone or something. In order to influence people, you first need to discover what is already influencing them. What makes them tick? What do they care about? We need some leverage to work with when we’re trying to change how people think and behave.

    http://www.onlineuniversalwork.com

  7. Pingback: Denmark In Danger Of Becoming The “New Greece” « Econotwist's Blog | Denmark today

  8. Pingback: Denmark In Danger Of Becoming The “New Greece” « Econotwist's Blog | Denmark today

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s