Crisis underlines Denmark’s strong economic platform

Crisis underlines Denmark’s strong economic platform

Nicolai Wammen, Minister for Finance, Denmark, addresses the reasons Denmark’s economy was so resilient during the COVID-19 pandemic and its current drive to build on this success through digital development and sustainable platforms.


Why has Denmark been so successful at bouncing back after the COVID-19 pandemic?

The Danish economy is currently very strong. If anyone told me a year and a half ago that we would be in this positive situation, I would not have believed it. The COVID-19 pandemic has been a major challenge to Denmark and the world. We had very little experience to lean on as we were hit with both a health and economic crisis that emerged with unprecedented speed and magnitude. We made the decision to go big and go fast. We implemented many initiatives to support both our health and the economy. We met with business and labor entities and created initiatives within 24 hours to keep jobs and companies afloat during the crisis. We did the same with all parties in parliament. We decided we would do whatever it took to get everyone through the crisis.

Creating large initiatives rapidly was significant in our managing the country as well as we did. We did not halt production in Denmark; we kept production running throughout the entire crisis. This meant that when the world economy began to gain speed, Danish companies already had their employees at factories and in businesses ready to take on opportunities that came their way. In some countries, people lost their jobs or companies were shut down. Denmark’s success was also made possible through strong collaboration within Danish society. Everyone participated, including private and public sectors and individuals.

All Danes participating in health measures for family members and society at large combined with the confidence that one would not necessarily lose one’s job and that labor, business and government stood side by side is what got our country through the pandemic. During this time, Denmark was at the very top of public confidence in decision making and steps taken. Maintaining our safety net during the crisis assured citizens that they could have the confidence in the government to get us all through it.


What is the government’s current strategy to grow the economy?

We are experiencing very high growth numbers in Denmark. We are also seeing the biggest growth in Danish industry in 15 years. We currently have the highest number of employees ever in Denmark and the lowest unemployment in 12 years. The Danish economy has made a very strong come back. We were not hit as hard as many countries, and we rebounded faster than most. We have promised, along with our municipalities and regions, that we will guarantee that money follows the coming increase in children and elderly. Our foundation to provide welfare for both young and old is a core part of our budget initiatives. We are reluctant to set new initiatives in place because we want the budget to stay down.


How well did the Danish banking sector survive the pandemic?

Luckily, the Danish banking system and financial institutions have weathered the storm in a very strong and confident way. We did not see banks go under in Denmark. Surprisingly, we have seen fewer bankruptcies than in normal times, which is somewhat of a paradox. This is because of the financial packages we created. Low bankruptcy rates and people not losing their jobs had an impact on our banks and major financial institutions.


What current hurdles does Denmark’s economy need to overcome?

The biggest challenge we face is overheating our economy. It is a very different scenario from a year and a half ago. Due to things going well, we are lifting our foot from the accelerator to have sustainable growth of the Danish economy instead of encountering problems caused by moving too quickly. Danish inflation is lower than in most countries, but we follow this very closely; global inflation is going up. We see shortages when it comes to the delivery of goods. Additionally, energy prices are rising. We are very affected by what happens on the world stage due to us being a small and open economy.

Additionally, labor shortage is felt in many parts of the Danish economy. Our economy is moving fast and there is a great sense of optimism; companies are hiring, and they are doing it all at the same time. The economy is booming, and companies require a matched level of workers. Companies require skilled and unskilled labor at the same time. We have what we call the Danish model, which is the government working closely with businesses. We are looking at a reformed program. We presented it from the government side, and we are negotiating with parliament. The agreement will make it easier for companies to hire people they need. We are also looking into the international arena to attract more people into Denmark. We honor the Danish system by doing it in a way that protects the Danish welfare model. We already have farm workers, especially from the EU. We need labor across the board. The steps we have taken will deliver around 70,000 more people into the workforce by 2025.


How significant is digitization in bolstering Denmark’s public and private sectors?

Digitalization has been a core part of our success. Denmark is one of the most digitized countries in the world when it comes to the digitization of the public sector. The United Nations has named Denmark as the world leader in this area for the past two years. When it comes to the private sector, it is a very developed field. Companies with digital agendas have performed very well, whereas companies that lack digital strategies have been hit harder. The public and private sectors are working very closely on the digital agenda. For example, the COVID-19 passport for use in the country and abroad was adopted very quickly. Denmark is a very digitized country, which allowed a very substantial part of our workforce to work from home without hindering production.


How important is sustainability to the Ministry of Finance?

The green transition is an essential part of the ministry’s job; It is an essential part of boosting the Danish economy. Our job is not only to balance the budget. We must make sure we do it in a responsible way that considers climate change and green mechanisms. This agenda is now part of the mission statement of the Ministry of Finance; it is a clear priority in our mission. We are working on a green economic model and have already come part of the way at better estimating what green initiatives mean for the economy. We are a leading country in creating economic models that consider sustainability. We have a coalition of finance ministers for climate action, and Denmark has been used as an example country in this regard. Most major agreements on climate change have been negotiated by the Ministry of Finance; these are not only a matter for the Ministry of Environment.


Why should foreign investors consider entering the Danish market?

We have a strong economy with a triple A rating. We also have a very strong society that was tested during the COVID-19 pandemic and proved resilient. We are a very digitized country with a green economy. We have great opportunities. It is also a safe country, with a high degree of work-life balance. Danes have been listed as the happiest people on the planet due to a strong welfare state and strong potential for business opportunities. The investment climate is doing very well. Denmark is a very nice country to live in and an excellent place to do business.


What are your current goals as Minister of Finance?

I want to make sure we create reforms that make Denmark richer, greener and wiser. I want to make sure we invest in both the green transition and digital transformation. We will use the COVID-19 crisis as a stepping stone for new investment. We do not want to go back to Denmark as it was before the pandemic. We want to use our experience and victories we gained during this time to make sure Denmark has even more momentum and enable the country to be in an even stronger position five to 10 years from now.