Recommendation for a COUNCIL RECOMMENDATION on Denmark’s 2014 national reform programme and delivering a Council opinion on Denmark’s 2014 convergence programme
Date: 2014-06-02
Institutions: European Commission
Subjects: Denmark, budget deficit, economic convergence, economic disparity, economic growth, economic recovery, economic reform, economic stabilisation, job creation, macroeconomics, multilateral surveillance, stability programme













EUR-Lex - 52014DC0405 - EN











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52014DC0405

Recommendation for a COUNCIL RECOMMENDATION on Denmark’s 2014 national reform programme and delivering a Council opinion on Denmark’s 2014 convergence programme /* COM/2014/0405 final */









 
Recommendation for a
COUNCIL RECOMMENDATION
on Denmark’s 2014 national reform
programme
and delivering a Council opinion on Denmark’s 2014 convergence programme
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 the recommendation of the
European Commission[2],
Having regard to the resolutions of the
European Parliament[3],
Having regard to the conclusions of the
European Council,
Having regard to the opinion of the
Employment Committee,
Having regard to the opinion of the
Economic and Financial Committee,
Having regard to the opinion of the Social
Protection Committee,
Having regard to the opinion of the
Economic Policy 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, the Council, on the basis of
the Commission's proposals, 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, 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 9 July 2013, the Council adopted a recommendation
on Denmark’s national reform programme for 2013 and delivered its opinion on
Denmark’s updated convergence programme for 2013-2016.
(5)                   
On 13 November 2013, the Commission adopted the
Annual Growth Survey[4],
marking the start of the 2014 European Semester of economic policy
coordination. On the same day on the basis of Regulation (EU) No 1176/2011, the
Commission adopted the Alert Mechanism Report[5],
in which it identified Denmark as one of the Member States for which an
in-depth review would be carried out. 
(6)                   
On 20 December 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 5 March 2014, the Commission published the
results of its in-depth review for Denmark[6],
under Article 5 of Regulation (EU) No 1176/2011. The Commission's analysis leads
it to conclude that Denmark's macroeconomic challenges related to private debt
and external competitiveness were no longer identified as imbalances in the sense
of the Macroeconomic Imbalance Procedure. In particular, the adjustment on the
housing market and the implications of high private-sector debt for the real
economy and the stability of the financial sector seem contained. However,
these developments, as well as drivers of external competitiveness, deserve
continued monitoring.
(8)                   
On 15 April 2014, Denmark submitted its 2014
convergence programme and its 2014 national reform programme. In order to take
account of their interlinkages, the two programmes have been assessed at the
same time.
(9)                   
The objective of the budgetary strategy outlined
in the 2014 Convergence Programme is to ensure the sustainability of the correction
of the excessive deficit and to maintain the structural budget balance at or
above the medium-term objective. The medium-term objective, at -0.5% of GDP,
reflects the requirements of the Stability and Growth Pact. Denmark's general
government deficit has been sustainably brought below 3% of GDP in 2013. The
programme targets a general government headline deficit of 1.3% of GDP in 2014
and 2.9% in 2015, which is consistent with a (recalculated) structural balance
at or above the medium-term objective. Overall, the budgetary strategy outlined
in the programme is in line with the requirements of the Stability and Growth
Pact. The debt level, at 44.5% of GDP in 2013, is planned to temporarily
increase in 2015 and to decline thereafter. The macroeconomic scenario
underpinning the budgetary projections in the programme is plausible. The
scenario projects GDP growth at 1.6% in 2014 and 1.9% in 2015 and is broadly in
line with the Commission 2014 spring forecast of 1.5% and 1.9%. Based on the
assessment of the 2014 Convergence Programme and the Commission forecast,
pursuant to Council Regulation (EC) No 1466/97, the Council is of the opinion
that Denmark's public finances are sound and the Convergence Programme's
objective can be expected to be achieved. 
(10)               
Denmark has not yet made enough progress on
addressing the situation for groups at the margins of the labour market as well
as advancing the cost-effectiveness of the education system. The reform of
disability pensions and flex-jobs has begun to show results, the cash benefit
reform has entered into force, a sickness benefit reform has been agreed and the
government launched a reform proposal for active labour market policies in
April. Challenges remain so as to ensure a sufficient number of apprenticeships
and enhance the quality and image of this type of learning, upgrade vocational
education and training systems and address high rates of school drop-outs. Due
to the early stage of implementation of the reforms, the full effect remains
yet to be seen. Regarding vocational education and training, a reform agreement
was reached in February 2014 and is expected to come into force in mid-2015, with
a view to improving the quality of vocational education and training through a
wide range of initiatives. 
(11)               
Reinvigorating productivity remains a challenge
for the Danish economy. The European Commission’s
assessment is broadly in line with the Productivity Commission’s findings. In
April 2014, the Productivity Commission published 25
main recommendations and more than 100 concrete proposals within areas such as competition, public procurement, education, internationalisation,
innovation, taxation and infrastructure. The problem of tackling the challenge
of low productivity growth will be addressed by the implementation of the
Productivity Commission’s recommendations.
(12)               
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. It has taken into account not only their relevance for sustainable
fiscal and socio-economic policy in Denmark 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.
(13)               
In the light of this assessment, the Council has
examined Denmark’s convergence programme, and its opinion[7] is reflected in
particular in recommendation (1) below.
HEREBY RECOMMENDS that Denmark take
action within the period 2014-2015 to:
1.                      
Following the correction of the excessive
deficit, continue to pursue a growth-friendly fiscal policy and preserve a
sound fiscal position, ensuring that the medium-term budgetary objective
continues to be adhered to throughout the period covered by the Convergence
Programme.
2.                      
Take further measures to improve the
employability of people at the margins of the labour market. Improve
educational outcomes, in particular for young people with a migrant background,
and the effectiveness of vocational training. Facilitate the transition from
education to the labour market, including through a wider use of work-based
training and apprenticeships.
3.                      
Increase efforts to remove barriers to entry and
reduce regulatory burden with a view to increasing competition in the domestic
services sector, in particular in retail and construction, as recommended by
the Productivity Commission.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 209, 2.8.1997, p. 1.
[2]               COM(2014) 405 final.
[3]               P7_TA(2014)0128 and P7_TA(2014)0129.
[4]               COM(2013) 800 final.
[5]               COM(2013) 790 final.
[6]               SWD(2014) 77 final.
[7]               .               Under Article 9(2) of Council Regulation
(EC) No 1466/97.