# EUR-Lex - 52013DC0354 - EN

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# 52013DC0354

**Recommendation for a COUNCIL RECOMMENDATION on Denmark’s 2013 national reform programme and delivering a Council opinion on Denmark’s convergence programme for 2012-2016 /* COM/2013/0354 final */**

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Recommendation for a

COUNCIL RECOMMENDATION

on Denmark’s 2013 national reform
programme
and delivering a Council opinion on Denmark’s convergence programme for
2012-2016

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union, and in particular Articles 121(2) and 148(4)
thereof,

Having regard to Council Regulation (EC) No
1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary
positions and the surveillance and coordination of economic policies[1], and in particular Article 9(2)
thereof,

Having regard to Regulation (EU) No
1176/2011 of the European Parliament and of the Council of 16 November 2011 on
the prevention and correction of macroeconomic imbalances[2], and in particular Article 6(1)
thereof,

Having regard to the recommendation of the
European Commission[3],

Having regard to the resolutions of the
European Parliament[4],

Having regard to the conclusions of the
European Council,

Having regard to the opinion of the
Employment Committee,

After consulting the Economic and Financial
Committee,

Whereas:

(1)       On 26 March 2010, the
European Council agreed to the Commission’s proposal to launch a new strategy
for growth and jobs, Europe 2020, based on enhanced coordination of economic
policies, which will focus on the key areas where action is needed to boost
Europe’s potential for sustainable growth and competitiveness.

(2)       On 13 July 2010, on the
basis of the Commission's proposals, the Council adopted a recommendation on
the broad guidelines for the economic policies of the Member States and the
Union (2010 to 2014) and, on 21 October 2010, adopted a decision on guidelines
for the employment policies of the Member States[5],
which together form the ‘integrated guidelines’. Member States were invited to
take the integrated guidelines into account in their national economic and
employment policies.

(3)       On 29 June 2012, the Heads
of State or Government decided on a Compact for Growth and Jobs, providing a
coherent framework for action at national, EU and euro area levels using all
possible levers, instruments and policies. They decided on action to be taken
at the level of the Member States, in particular expressing full commitment to
achieving the objectives of the Europe 2020 Strategy and to implementing the
country-specific recommendations.

(4)       On 6 July 2012, the
Council adopted a recommendation on Denmark’s national reform programme for
2012 and delivered its opinion on Denmark’s updated convergence programme for 2011-2015.

(5)       On 28 November 2012, the
Commission adopted the Annual Growth Survey[6],
marking the start of the 2013 European Semester for economic policy
coordination. Also on 28 November 2012, the Commission, on the basis of
Regulation (EU) No 1176/2011, adopted the Alert Mechanism Report[7], in which it identified Denmark
as one of the Member States for which an in-depth review would be carried out.

(6)       On 14 March 2013, the
European Council endorsed the priorities for ensuring financial stability,
fiscal consolidation and action to foster growth. It underscored the need to
pursue differentiated, growth-friendly fiscal consolidation, to restore normal
lending conditions to the economy, to promote growth and competitiveness, to
tackle unemployment and the social consequences of the crisis, and to modernise
public administration.

(7)       On 10 April 2013, the
Commission published the results of its in-depth review[8] for Denmark, under Article 5 of
Regulation (EU) No 1176/2011 on the prevention and correction of macroeconomic
imbalances. The Commission’s analysis leads it to conclude that Denmark is experiencing
macroeconomic imbalances, although these are not excessive.

(8)       On 30 April 2013, Denmark
submitted its 2013 convergence programme covering the period 2012-2016 and its
2013 national reform programme. In order to take account of their
interlinkages, the two programmes have been assessed at the same time.

(9)       Based on the assessment of
the 2013 convergence programme pursuant to Council Regulation (EC) No 1466/97,
the Council is of the opinion that the macroeconomic scenario underpinning the
budgetary projections in the programme is plausible. The scenario projecting
GDP growth at 0.7% and 1.6% in 2013 and 2014 is broadly in line with the
Commission’s 2013 spring forecast of 0.7% and 1.7 %. The programme
outlines a budgetary strategy aimed at correcting the excessive deficit and to
fulfil its medium-term objective (MTO), of a structural deficit of no more than
0.5% of GDP, by 2013, reflecting the objectives of the Pact. The programme
targets a general government deficit of 1.7% of GDP in 2013 and 1.8% in 2014,
which is in line with the EDP deadline proposed by the Commission. The average
annual fiscal effort over the period 2011-2013, based on the structural budget
balance calculations, is in line with the Council recommendation under the
excessive deficit procedure. The real government expenditure (including
discretionary income measures) is estimated to show zero growth in 2013 and to
be at 0.4% in 2014, thus meeting the expenditure benchmark in both years. Public
finances in Denmark are generally sound and the country is already at its MTO. However,
also because the country has an ageing population and ambitious welfare
policies, it is crucial for Denmark to maintain a sound and sustainable framework
for fiscal policies and to keep the deficit below the 3 % of GDP reference
value in the Treaty.

(10)     In 2012, Denmark concluded
the reform of the disability pension and flex-job schemes, which came into
effect on 1 January 2013. These reforms constitute important measures to
enhance the Danish labour supply. However, improving the employability of those
furthest away from employment, including people with a migrant background, the long-term
unemployed and low-skilled workers, remains a challenge. While acknowledging
the ambitious reform agenda of the Danish government, it is important to ensure
that the renowned Danish ‘flexicurity’ model continues to facilitate a smooth
transition between unemployment and work, while also limiting marginalisation
and social exclusion. The role of education, training and skills upgrading is
important in this respect.

(11)     For Denmark, education is
rightly a clear priority. Continued efforts are nonetheless needed to improve
the quality and cost-effectiveness of its education and training systems,
including by carrying through initiated reforms. The proposed reform of the
primary and lower secondary education system points in the right direction and
can be expected to have a positive impact on the cost-effectiveness of the
school system and the quality of education, including pupils’ attainment
levels. As regards vocational training, the Danish government has taken steps
to strengthen the quality of youth vocational training and secure the necessary
private apprenticeships. A committee has been set up between the government,
municipalities, regions and social partners to find a permanent solution to
securing the necessary provision of apprenticeships and increasing the quality
of the vocational education and training (VET) system. Finding lasting and
ambitious solutions to both the lack of apprenticeships and the high drop-out
rates in the vocational youth educational system would indeed prepare Denmark
better for future skill demands on the labour market and improve productivity
performance.

(12)     Denmark could generate more
economic growth by removing obstacles to competition in local and retail
services, given the importance of this sector in the Danish economy. In 2012,
the Danish government presented a new competition act, which constitutes an
important step in the right direction. The revision of the competition law
introduced more effective mechanisms to enforce competition regulation, which
fully responds to the corresponding part of the 2012 recommendation. However,
more can be done to ensure the effectiveness of measures taken in sectoral and
public services areas to enhance competition and market functioning. Various
policy initiatives in this field are still at an early stage and continued
efforts are needed to ensure effective implementation.

(13)     There has been significant
analysis in the past year of household indebtedness at national and EU level to
assess the threats to financial and economic stability. For the moment, risks
to financial stability seem contained, but require continuous monitoring. The Danish
authorities have taken a number of measures to improve the robustness of the
mortgage credit system. These include a risk labelling scheme for housing
mortgage loans and restrictions on variable-interest and/or deferred-amortisation
loans. The mortgage credit institutes have taken, on their own initiative,
measures to ensure the provision of additional collateral. All these measures
go in the right direction, but close monitoring will be required in order to
ascertain whether they have the desired impact. The Commission will examine
Denmark's regular reports on the impact of measures taken in this context. Over
time, property taxation in Denmark should be reviewed to reduce distortions and
strengthen its countercyclical features.

(14)     In the context of the
European Semester, the Commission has carried out a comprehensive analysis of
Denmark’s economic policy. It has assessed the convergence programme and the
national reform programme, and presented an in-depth review. It has taken into
account not only their relevance for sustainable fiscal and socio-economic
policy but also their compliance with EU rules and guidance, given the need to
reinforce the overall economic governance of the European Union by providing EU-level
input into future national decisions. Its recommendations under the European
Semester are reflected in recommendations (1) to (3) below.

(15)     In the light of this
assessment, the Council has examined Denmark’s convergence programme, and its
opinion[9]
is reflected in particular in recommendation (1) below,

(16)     In the light of the
Commission’s in-depth review and this assessment, the Council has examined
Denmark’s national reform programme and convergence programme. Its
recommendations under Article 6 of Regulation (EU) No 1176/2011 on the
prevention and correction of macroeconomic imbalances are reflected in
recommendation (3) below.

HEREBY RECOMMENDS that Denmark
should take action within the period 2013-2014 to:

1.           Implement the budgetary
strategy in 2013 as envisaged, so as to ensure the correction of the excessive
deficit by 2013. Furthermore, implement the budgetary strategy for 2014 and
beyond to ensure an adequate fiscal effort to remain at the medium-term
objective.

2.           Take further steps to improve
the employability of people at the margins of the labour market, including
people with a migrant background, the long-term unemployed and low-skilled
workers. Improve the quality of vocational training to reduce drop-out rates
and increase the number of apprenticeships. Implement the reform of primary and
lower secondary education in order to raise attainment levels and improve the
cost-effectiveness of the education system.

3.           Continue efforts to remove
obstacles to competition in the services sector including in the retail and
construction sectors and enhance effectiveness in the provision of public
services.

Done at Brussels,

For
the Council

The
President

[1]               OJ L 209, 2.8.1997, p. 1.

[2]               OJ L 306, 23.11.2011, p. 25.

[3]               COM(2013) 354 final .

[4]               P7_TA(2013)0052 and P7_TA(2013)0053.

[5]               Council Decision 2013/208/EU of 22 April 2013.

[6]               COM(2012) 750 final.

[7]               COM(2012) 751 final.

[8]               SWD(2013) 115 final.

[9]               Under Article 9(2) of Council Regulation (EC) No
1466/97.