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
Date: 2013-05-29
Institutions: European Commission
Subjects: Denmark, budget deficit, budgetary equilibrium, labour market, liberalisation of the market, tax reform, tertiary sector, youth unemployment

EUROPEAN 
COMMISSION 

Brussels, 29.5.2013  
COM(2013) 354 final 

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

{SWD(2013) 354 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 
policies1, 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 
imbalances2, and in particular Article 6(1) thereof, 
Having regard to the recommendation of the European Commission3, 
Having regard to the resolutions of the European Parliament4, 

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) 

(2) 

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. 

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  States5,  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 

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OJ L 209, 2.8.1997, p. 1. 
OJ L 306, 23.11.2011, p. 25. 
COM(2013) 354 final . 
P7_TA(2013)0052 and P7_TA(2013)0053. 
Council Decision 2013/208/EU of 22 April 2013. 

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(4) 

(5) 

(6) 

(7) 

(8) 

(9) 

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. 

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. 
On  28  November  2012,  the  Commission  adopted  the  Annual  Growth  Survey6, 
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 Report7, in which it identified Denmark as 
one of the Member States for which an in-depth review would be carried out. 

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. 
On  10  April  2013,  the  Commission  published  the  results  of  its  in-depth  review8  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. 

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. 

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.  

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COM(2012) 750 final. 
COM(2012) 751 final. 
SWD(2013) 115 final. 

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(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 

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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. 

In  the  light  of  this  assessment,  the  Council  has  examined  Denmark’s  convergence 
programme, and its opinion9 is reflected in particular in recommendation (1) below, 

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. 

(15) 

(16) 

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

1. 

2. 

3. 

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.  

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. 

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 

9 

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

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