Recommendation for a COUNCIL RECOMMENDATION on the 2016 national reform programme of Denmark and delivering a Council opinion on the 2016 convergence programme of Denmark
Date: 2016-05-18
Institutions: European Commission, Secretariat-General
Subjects: Denmark, budget deficit, competition policy, economic policy, economic reform, educational system, job creation, labour market, service, stability programme

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   EUROPEAN COMMISSION  Brussels, 18.5.2016  COM(2016) 325 final   Recommendation for a COUNCIL RECOMMENDATION on the 2016 national reform programme of Denmark  and delivering a Council opinion on the 2016 convergence programme of Denmark  
 
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the 2016 national reform programme of Denmark 

and delivering a Council opinion on the 2016 convergence programme of Denmark 

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 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) 

(2) 

1 
2 
3 
4 
5 
6 

On  26  November  2015,  the  Commission  adopted  the  Annual  Growth  Survey4 
marking  the  start  of  the  2016  European  Semester  of  economic  policy  coordination. 
The priorities of the Annual Growth Survey were endorsed by the European Council 
on 17-18 March 2016. On 26 November 2015, on the basis of Regulation (EU) No 
1176/2011,  the  Commission  adopted  the  Alert  Mechanism  Report5  in  which  it  did 
not  identify  Denmark  as  one  of  the  Member  States  for  which  an  in-depth  review 
would be carried out.  
The  2016  country  report  for  Denmark6  was  published  on  26  February  2016.  It 
assessed  Denmark’s  progress  in  addressing  the  country-specific  recommendations 
adopted by the Council on 14 July 2015 and Denmark’s progress towards its national 
Europe 2020 targets.  

OJ L 209, 2.8.1997, p. 1. 
COM(2016) 325 final. 
P8_TA(2016)0058, P8_TA(2016)0059, and P8_TA(2016)0060. 
COM(2015) 690 final. 
COM(2015) 691 final. 
SWD(2016) 74 final. 

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(3) 

(4) 

(5) 

(6) 

(7) 

On 26 April 2016, Denmark submitted its 2016 national reform programme and its 
2016  convergence  programme.  To  take  account  of  their  interlinkages,  the  two 
programmes have been assessed at the same time. 

recommendations  have  been  addressed 

Relevant  country-specific 
the 
programming  of  the  European  Structural  and  Investment  Funds  for  the  2014-2020 
period.  As  foreseen  in  Article  23  of  Regulation  (EU)  No  1303/2013,  where  it  is 
necessary  to  support  the  implementation  of  relevant  Council  recommendations,  the 
Commission may request a Member State to review and propose amendments to its 
Partnership  Agreement  and  relevant  programmes.  The  Commission  has  provided 
further  details  on  how  it  would  make  use  of  this  provision  in  guidelines  on  the 
application  of  the  measures  linking  effectiveness  of  the  European  Structural  and 
Investment Funds to sound economic governance7. 

in 

Denmark is currently in the preventive arm of the Stability and Growth Pact. In its 
2016 convergence programme, the government plans an improvement in the headline 
balance, reaching a balanced budget in 2020. The medium-term budgetary objective 
—  a  deficit  of  0.5%  of  GDP  in  structural  terms  —  is  projected  to  be  achieved  in 
2016. According to the convergence programme, the government debt-to-GDP ratio 
is expected to reach 35.1% in 2020. The macroeconomic scenario underpinning these 
budgetary  projections  is  plausible.  Based  on  the  Commission  2016  spring  forecast, 
Denmark is forecast to comply with the recommended fiscal adjustment in 2016 and 
2017.  Based  on  its  assessment  of  the  convergence  programme  and  taking  into 
account  the  Commission  2016  spring  forecast,  the  Council  is  of  the  opinion  that 
Denmark is expected to comply with the provisions of the Stability and Growth Pact.   

Ensuring  labour  supply  as  the  population  ages  is  a  precondition  for  sustainable 
growth in Denmark. A series of substantial labour market reforms in recent years aim 
particularly  at  increasing  work  incentives  and  improving  the  efficiency  of  active 
labour  market  policies.  These  reforms  could  contribute  to  achieving  Denmark's 
Europe  2020  employment  target  and  to  the  sustainability  of  the  Danish  welfare 
model.  However,  the  national  Europe  2020  target  for  social  inclusion,  aiming  at 
reducing the number of  people living in  very low work intensity  households, is  far 
from  being  achieved.  Labour  market  inclusion  and  improving  the  employability  of 
disadvantaged groups remain a challenge. This particularly applies to people with a 
non-EU migrant background, including those who have resided longer in Denmark, 
and  young  people  with  low  educational  attainment.  The  job-integration  measures 
agreed  in  the  2016  tripartite  negotiations  could  improve  the  situation  for  newly 
arrived  refugees  and  migrants.  However,  further  measures  should  still  be  taken  to 
include other marginalised groups in the labour market more effectively. 

To  maintain  the  relatively  high  level  of  welfare  provided  in  Denmark,  improved 
productivity  growth  is  essential.  However,  productivity  growth  has  been  sluggish 
during  the  past  two  decades.  One  of  the  contributing  factors  identified  is  the 
continued lack of competition in the domestic services sector, in particular in retail 
and  construction.  Denmark  therefore  needs  to 
improve 
productivity 
in  the  construction  sector  by  removing  barriers  and  ensuring 
proportionate authorisation schemes where such schemes are considered necessary. It 
also needs to ease the restrictions on retail establishments, notably by implementing 
the reforms outlined by the government. 

increase  efforts  to 

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COM(2014) 494 final. 

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(8) 

(9) 

The overall investment level in Denmark has been low since a sharp drop in private 
investments  during  the  economic  crisis.  This  partly  reflects  low  residential 
investment  following  the  burst  of  the  housing  bubble  and  idle  capacity  in  the 
corporate  sector.  Boosting  investment  would  help  Denmark  strengthen  economic 
growth and increase productivity. Barriers to investment have been identified in the 
services sector and research. The retail and construction sectors are facing barriers to 
entry,  which  in  return  affect  competition  and  productivity  growth.  Efforts  to  turn 
university research results into business innovations could be strengthened. 

In  the  context  of  the  European  Semester,  the  Commission  has  carried  out  a 
comprehensive analysis of Denmark’s economic policy and published it in the 2016 
country  report.  It  has  also  assessed  the  convergence  programme  and  the  national 
reform  programme  and  the  follow-up  given  to  the  recommendations  addressed  to 
Denmark  in  previous  years.  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  strengthen  the  overall  economic 
governance of the European Union by providing EU-level input into future national 
decisions.  The  recommendations  under  the  European  Semester  are  reflected  in 
recommendations 1 and 2 below. 

(10) 

In  the  light  of  this  assessment,  the  Council  has  examined  the  convergence 
programme, and its opinion8 is reflected in particular in recommendation 1 below. 

HEREBY RECOMMENDS that Denmark take action in 2016 and 2017 to: 

1. 

2. 

Respect the medium-term budgetary objective in 2016 and achieve an annual fiscal 
adjustment of 0.25% of GDP towards the medium-term budgetary objective in 2017. 

Enhance productivity and private sector investment by increasing competition in the 
domestic  services  sector,  in  particular  by  facilitating  market  entry  in  retail  and 
construction. Incentivise the cooperation between businesses and universities. 

Done at Brussels, 

For the Council 
The President 

8 

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

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