Council Opinion of 28 February 2000 on the updated convergence programme of Denmark for the period 1999 to 2005
Date: 2000-02-28
Institutions: Council of the European Union
Subjects: Denmark, economic convergence, economic cooperation, economic stabilisation, public finance

C 98/6

EN

Official Journal of the European Communities

6.4.2000

COUNCIL OPINION

of 28 February 2000

on the updated convergence programme of Denmark for the period 1999 to 2005

(2000/C 98/06)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

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(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

On 28 February 2000 the Council examined Denmark’s
updated convergence programme, which covers the period
1999 to 2005. The updated
convergence programme
envisages budgetary surpluses of above 2 % of GDP over the
entire programme period and projects the gross debt to be
further reduced to 36 % of GDP in 2005.

The updated programme is based upon a macroeconomic
scenario which assumes that, following a slowdown in 1999
to 2000, the Danish economy will grow at an average rate of
about 2 % per year between 2001 and 2005. The Council
notes that, while such a growth scenario appears realistic, it
is based on an ambitious target for employment growth while
the assumed gains in labour productivity seem moderate.
the
increases
Moderate
programme combined with relatively high wage rises could
lead to a further erosion of cost competitiveness of Denmark
vis-(cid:224)-vis its trading partners, in particular in the euro-area, on
top of those experienced already in the recent past.

productivity

assumed

as

in

Despite a considerable increase in consumer prices in the
course of 1999, due mainly to strong wage increases and a
rise
the
in energy taxes, Denmark continued to fulfil
convergence criterion on inflation. The updated convergence
programme notes, however, that there is a risk that inflation
temporarily exceeds the reference value by a small margin in
the first half of 2000. Although inflationary pressures should
ease in the course of 2000 as the slowdown in domestic
the Council encourages the Danish
demand feeds through,

to monitor

government
inflation closely and reiterates its
if needed (2).
recommendation to
actions
importance in
Moderate wage developments are of utmost
this regard and this year’s wage negotiations at company
level might prove challenging.

further

take

The Council notes with satisfaction that Denmark continues to
fulfil the convergence criterion on the long-term interest rate
and that the exchange rate has been stable vis-(cid:224)-vis the euro.
This indicates that Denmark’s participation in the ERM II has
further strengthened the credibility of its monetary policy.

The Council welcomes the Danish government’s strategy of
continued budgetary surpluses of above 2 % of GDP over the
entire programme period. Denmark should thus (cid:151) with a
comfortable margin (cid:151) continue to fulfil the requirement of
the Stability and Growth Pact of a government position of
(cid:145)close to balance or
the healthy
finances the Council also
situation of Danish government
welcomes
in the
finances
lower weight of public
economy in the forthcoming years as this would increase
economic incentives and contribute to a more favourable
medium-term outlook for growth and employment.

In view of

in surplus(cid:146).

the

expected to be

The Council notes that the government gross debt ratio in
the
Denmark is
programme period and considers this priority commendable
in facing the future budgetary challenges arising from the
ageing population.

reduced over

further

labour market, which are

The Council encourages the Danish authorities to keep up the
momentum which its comprehensive structural reforms.
In
particular, the recent reforms regarding the tax system and
the
in line with the Broad
Economic Policy Guidelines, are essential stepping stones in
the achievement of the policy aims of the updated convergence
currently
programme. However,
experiences
since the
lowest
1970s, the reforms already undertaken in the labour market
may need to be complemented by further measures to reach
the ambitious
in the
programme. Finally, in view of the future budgetary challenges
deriving from the ageing population in Denmark,
further
structural labour market reforms may prove necessary in the
medium term to keep public finances on a sustainable path.

that Denmark
level of unemployment

target on employment growth set

given

its

(1) OJ L 209, 2.8.1997, p. 1.

(2) Council opinion of 14 December 1999 on the convergence

programme of Denmark, 1998 to 2005.