The challenges of Denmark's economic crisis

10 May 2012

Denmark's Prime Minister Helle Thorning-Schmidt is promoting internal and international measures to secure her nation's economic prosperity, asserts Editor Jonathan Miles

In October 2011, Denmark's first female Prime Minister, Helle Thorning-Schmidt, took office after having led the Danish Social Democrats for six years and served as a member of the European Parliament from 1999-2004. Due to the multi-party structure of the Danish political system, Thorning-Schmidt's government is made up of a coalition of her own party, along with the Danish Social-Liberal Party and the Socialist People's Party.

Having convened during a period of global financial uncertainty, the current Danish government has inherited the burden of securing the country's economic standing. During her first opening address to the Folketing, Thorning-Schmidt declared that their "first major task is to lead Denmark responsibly out of the crisis".¹ Consequently, the government will target the issue of increasing unemployment by channelling investment towards projects that will create new jobs. "As its first major initiative, the Government will kick-start the Danish economy in an effective and targeted way," explained Thorning-Schmidt.² "We will push forward investments totalling DKK 10 billion. Those projects which were scheduled to get under way in one, two or three years, we will now set in motion as quickly as possible."

While focus on internal initiatives is important to promote economic growth, it is also imperative to foster international cooperation if the challenges of this generation are to be overcome. From 1st January until 30th June, Denmark will hold the Presidency of the Council of the European Union.

This is a significant opportunity to promote international relations, and one that Thorning-Schmidt is determined to take advantage of. "Unity and cooperation is the identity of modern Europe," she affirmed at the opening ceremony of the Danish presidency. "The answer to the challenges ahead is to work harder. To work together. The answer is to put Europe to work." The presidency of the EU is a positive chance for Thorning-Schmidt to get to grips with the deficit left behind by previous administrations. Its main objectives have been identified as stimulating economic growth, creating new jobs, enhancing budget discipline, promoting green policies and ensuring the safety of EU citizens.

However, it will not be plain sailing ahead for Denmark, as the country faces a challenging time of paying for welfare with money that it does not have. Thorning-Schmidt remarked in her 2012 New Year address that this situation cannot continue, nor can Denmark afford to sustain its decline in competitiveness on the international stage, as this results in companies and, consequently, jobs leaving the country.3 Elaborating on this point, Thorning-Schmidt went on to declare: "Danish companies are some of the most innovative and responsible in the world. We are a country where small family businesses grow big and become among the best in the world. We are a country where the collaboration between employees and employers is based on a unique relationship of trust – collaboration that attracts international attention.

"However, when investment in education and research has been insufficient, and when new rules are introduced instead of a helping hand, then it will get harder and not easier to do business and create jobs in Denmark," Thorning-Schmidt continued. "We face two huge challenges. We must bring public deficits under control. And our companies must again become among the most competitive in the world. In this way, we create new and sustainable growth and we create the right fertile ground for new jobs. In this way, we make both ends meet."

¹www.stm.dk/_p_13523.html
²www.stm.dk/_p_13590.html
³www.stm.dk/_p_13581.html