COMMISSION STAFF WORKING DOCUMENT 2022 Country Report – Denmark Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Denmark and delivering a Council opinion on the 2022 Convergence Programme of Denmark
Date: 2022-05-23
Institutions: European Commission, Secretariat-General
Subjects: Denmark, digital transformation, economic policy, economic recovery, economic reform, energy policy, fiscal policy, stability pact, stability programme, waste management

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.5.2022  SWD(2022) 607 final  COMMISSION STAFF WORKING DOCUMENT 2022 Country Report – Denmark Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2022 National Reform Programme of Denmark and delivering a Council opinion on the 2022 Convergence Programme of Denmark {COM(2022) 607 final} - {SWD(2022) 640 final}  
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

were  already  widespread  in  construction  and 
parts  of  other  industry  sectors  since  autumn 
2020,  and  shortages  in  the  services  sector 
have  further  emerged  after  the  reopening  in 
spring 2021.  

Graph 1.1: Total employment 

(1) Total employment rate, non-seasonally adjusted 
Source: Eurostat (Quarterly national accounts) 

Consumer  price  inflation  has  been  on  an 
upward  trend  since  early  2021,  but  still 
remains  below  the  EU  average.  The 
increase  is  driven  mostly  by  energy  and 
commodity  prices,  but  other  factors  are  also 
contributing.  The  ongoing  pressure  on  global 
supply  chains  has  resulted  in  rising  industrial 
goods  prices.  Combined  with  a  marked 
increase in food prices and a hike in cigarette 
duties,  inflation  increased from  0.4%  in  2020 
to 1.9% in 2021. A steep increase in inflation 
is expected in 2022, mainly due to further rise 
in energy, food and raw material prices caused 
by  Russia’s  invasion  of  Ukraine  with  inflation 
projected  to  reach  5.1%  in  2022.  Although 
inflation  is  expected  to  moderate  next  year 
due  to  a  levelling-off  of  energy  prices  and 
normalising  supply  chains, 
labour  market 
pressures  could  nevertheless  drive  higher 
wage growth, potentially adding to inflationary 
pressures.  

Robust recovery facing some 
headwinds  

Denmark  benefited  from  a  prolonged 
period  of 
sustained  and  balanced 
economic  growth  before  the  COVID-19 
pandemic. In 2019, Denmark’s per capita GDP 
was  176%  of  the  EU  average,  with  only  two 
EU  Member  States  ahead  of  it.  Economic 
growth  was  solid,  averaging  2.5%  in  2015-
2019,  well  above  the  EU  average.  However, 
prior  to  2015,  the  2008  financial  crisis  — 
combined  with  a  housing  market  bust  in 
Denmark  —  had  led  to  prolonged  sluggish 
growth,  with  average  GDP  growth  of  0.9% 
between 2011 and 2014 (Annex 18).   

The COVID-19 pandemic had a significant 
impact  on  Denmark,  albeit  less  than  in 
many  other  EU  Member  States.  While 
exports saw large declines, consumer spending 
contracted  only  moderately  thanks  to  the 
housing 
policy  measures 
construction and public investment boomed in 
2020.  The  economy  recovered  strongly,  with 
economic  output  having  already  returned  to 
pre-pandemic  levels  in  the  second  quarter  of 
2021  and  real  GDP  rebounded  at  a  rate  of 
4.7% in 2021 overall.  

taken, 

and 

The  strong  Danish  recovery  is  causing 
major labour shortages. The unemployment 
rate  decreased  by  0.5  percentage  points  to 
5.1%  in  2021.  An  effective  wage  support 
scheme  helped  avoid  significant  lay-offs  and 
any  major  surge 
in  unemployment.  As 
economic  activity  resumed  swiftly  following 
the  easing  of  restrictions,  employment  has 
been  increasing  steadily  and  unemployment 
has  fallen  to  one  of  its  lowest  rates  since 
2008  as  evidenced  by  the  Social  Scoreboard 
under the European Pillar of Social Rights. High 
demand for labour has led to labour shortages 
across  the  economy:  recruitment  challenges 

2 

979899100101102103104DenmarkGermanyEuropean UnionIndex,2018-Q4=100 
  
 
restrictions, 

Russia’s invasion of Ukraine constitutes a 
major  downside  risk  to  the  economic 
situation.  Surging  energy  and  commodity 
prices,  supply-side 
increased 
uncertainty  and  the  slowdown  in  Denmark’s 
main  export  markets  could  dampen  business 
investment  and  household  consumption.  On 
the  other  hand,  the  Danish  fiscal  position  is 
strong,  and  the  slowdown  could  be  partly 
offset  by  increased  government  spending  in 
the  areas  of  public  investment  and  defence. 
The arrival of people fleeing war is expected to 
additional 
accommodated 
be 
government spending. 

through 

for 

top  of 

The Danish economy is advanced in terms 
inclusive 
of  smart,  sustainable  and 
growth,  but  not  without  challenges.  The 
green  transition,  digitalisation  and  innovation 
further 
provide  unique  opportunities 
boosting  productivity,  job  creation  and  health 
benefits. Denmark faces significant investment 
needs  and  policy  challenges  in  particular  to 
achieve  its  ambitious  climate  objectives,  both  
as regards the circular economy (Annex 7) and 
green  research  and  development  (Annex  9). 
Improving skills in the labour force (Annex 12) 
and  addressing  labour  shortages  are  key  to 
fostering  sustainable  and  inclusive  growth 
(Annex  6).  Denmark  ranked 
the 
European Commission’s 2021 Digital Economy 
and  Society  Index,  but  further  digitalisation 
efforts  are  needed  for  small  companies  and 
public administration (see Annexes 8 and 11). 
Despite the high overall  level  of research and 
development (R&D), the concentration of R&D 
activities  in  a  small  number  of  large  firms 
could  be  a  sign  of  insufficient  building  of 
capacity 
research  within  small  and 
medium-sized companies (see also Annexes  9 
and  10).  While  there  are  many  start-up 
companies  created  in  Denmark,  these  and 
small  innovative  companies  struggle  to  scale 
up  and  grow  (Annex  10).  Given  the  high 
household debt, further policy measures could 
be needed to make indebted households more 
resilient  and  the  introduction  of  the  new 
property  tax  system  could  limit  house  price 
increases  and  ensure  fairer  taxation  (Annexes 
16 and 17).  

for 

Denmark  is  making  progress  on  most  of 
Sustainable 
Nation’s 
the 

United 

3 

Development  Goals  (SDGs),  despite  some 
challenges.  Denmark  performs  very  well  on 
SDGs overall, ranking among the global top 5. 
It  excels  —  and  has  further  improved  —  in 
terms of environmental sustainability, fairness 
regards 
and  macroeconomic  stability.  As 
productivity, 
skills 
strengthening 
remains  a  challenge.  On  the  preservation  of 
land,  Denmark  has  made  some 
life  on 
progress, but still scores below the EU average 
(Annex 1) (1). 

digital 

the 

after 

economy 

Under the headline ‘Denmark can do more 
1’  the  government  has 
launched  a 
comprehensive  medium-term  strategy  to 
the 
relaunch 
pandemic.  The  strategy,  which  goes  beyond 
economic  policy,  comprises  a  wide  range  of 
reforms with a focus on innovation, education, 
green and digital transition and an increase in 
the  workforce  as  well  as  foreign  and  security 
policy.  As  an  integrated  element  in  this  first 
set of new policy guidelines, the government is 
putting  forward  a  new  digital  strategy,  of 
which  the  first  stages  are  included  in  the 
Danish  recovery  and  resilience  plan.  The 
strategy,  based  on  recommendations  from  a 
to 
high-level  expert  group, 
encompass a wide array of elements, including 
public sector digitalisation, digital skills for all, 
cyber security and research(see Box 1).  

is  expected 

The  “Denmark  can  do  more  2”  strategy 
presented 
in  April  2022  focuses  on 
medium-term  ambitions  in  the  field  of 
energy 
intentions 
independence.  Policy 
include  the  phasing  out  of  fossil  fuel  boilers 
and  support  for 
low-income  households; 
additional  wind  and  solar  capacity  both 
offshore  and  onshore;  fostering  domestic 
sustainable  biogas  production  capacity  so  as 
to cover 100% national gas demand by 2030; 
new  carbon  tax  combined  with  the  EU 
Emissions Trading System to ensure the Fit for 
55  ambition  is  met  by  2030;  and  boosting 
exports  of  green  solutions  at  international 
level. 

(1)  Indeed, Denmark shows some vulnerabilities in the 

green resilience dashboard, particularly in the area of 
‘ecosystems, biodiversity and sustainable agriculture’ 
(https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en#heatmap). 

 
                                                 
to 

investment 

Supply  side  restrictions  and  price  shocks 
could  severely  hit  certain  sectors. 
Denmark  has  a  relatively  significant  reliance 
on  Russian  imports  for  iron  and  steel (around 
18%  of  total  supply).  Similar  to  other  EU 
countries,  Danish  companies  are  also  facing 
large  increases  in  energy  prices.  High  energy 
prices  could  negatively  affect  companies  in 
the  short  term.  On  the  other  hand  they  are 
expected 
to 
accelerate 
sustainable  energy  solutions  and  further 
energy  savings.  The  government  decided  to 
give a grant of EUR 792 to approximately 419 
000 
in  order  to 
compensate for rising energy costs in heating 
and granted approximately EUR 13.3 million to 
faced  by 
cover 
municipalities  in  relation  to  existing  social 
schemes aimed at pensioners and low-income 
households in need. In addition, an agreement 
with  district  heating  companies  has  been 
made  to  spread  the  price  increase  over  the 
entire  year,  instead  of  only  the  payments  in 
the winter months.     

low-income  households 

the  additional 

costs 

Denmark  expects  to  receive  up  to 
100 000  Ukrainians  fleeing  war.  On  16 
March  2022  Parliament  adopted  a  law  giving 
special  refugee  status  to  Ukrainian  citizens, 
implying  access  to  housing,  schools  and  the 
labour  market.  The  impact  on  the  education, 
social and health systems is expected to be a 
significant challenge.  

Solid public finances helped 
withstand the pandemic 

Public  finances  deteriorated  due  to 
COVID-19  support  measures  and  the 
contraction in GDP. The need for emergency 
measures  hit  public  finances  at  a  time  when 
these were in a sound starting position, as the 
general  government  balance  was  markedly 
positive  in  2019  (to  the  tune  of  4%  of  GDP), 
notably  due 
tax 
revenues.  However,  the  deterioration  turned 
out to be significantly less severe (government 
balance  of  -0.2%  of  GDP  in  2020)  than  in 
most 
to 
extraordinary tax revenue inflows as well as a 

to  particularly  strong 

other  Member 

States, 

due 

Macroeconomic impact of Russia’s 
invasion of Ukraine 

Denmark’s  direct  economic  exposure  to 
Russia is below the EU average. Denmark’s 
exposure  towards  Russia  in  trade  and  foreign 
direct  investment  has  decreased  substantially 
since the sanctions and Russian ban on certain 
products were introduced in 2014 and by now 
it is well below the EU average. Services trade 
represents around one third of the total trade 
with Russia and is mainly related to maritime 
transport.  Accordingly,  employment  directly 
and  indirectly  related  to  exports  to  Russia  is 
relatively  small.  Direct  and  indirect  financial 
links  greatly  decreased  after  the 
largest 
Danish  bank  withdrew  from  Russia  and  the 
Baltic countries in 2016. 

imports 

dependence 

on  Russia 

Energy 
is 
significant  but  could  fall  markedly  by 
next  year.  Coal  accounts  for  4.7%  of 
Denmark’s energy mix and it is almost wholly 
dependent on Russian imports. Denmark has a 
significantly  larger  share  of  oil  in  its  energy 
mix  (37.9%),  but  is  much  less  dependent  on 
(12%) (2).  Lastly,  around 
Russian 
13.8% of Denmark’s energy mix is made up of 
natural  gas.  Although  the  country  does  not 
import  Russian  gas  directly,  its  dependence 
through  import  of  gas  from  Germany  is  likely 
to  be  significant  and  constitutes  an  indirect 
dependence  on  Russia  for  natural  gas.  The 
refurbishment of one of the largest Danish oil 
and gas fields is expected to be finished in Q2 
2023,  which  could  significantly  reduce  the 
import  of  oil  and  make  Denmark  a  net  gas 
exporter  again.  The  government  also  supports 
short-term  measures  to  accelerate  the  exit 
from  Russian  natural  gas  and  oil  by  the 
temporary increase of domestic gas extraction 
increased  use  of 
from 
sustainable  biogas  and  accelerating 
the 
finalisation  of  the  Baltic  Pipe  (which  will 
transport gas from Norway to the Danish and 
Polish markets).  

the  North  Sea, 

(2)  Eurostat (2020), share of Russian imports over total 
imports of natural gas, crude oil and hard coal. For 
Denmark, total imports include intra-EU trade. Crude oil 
does not include refined oil products. 

4 

 
                                                 
the 

return 

less  extensive  take-up  of  emergency  support 
schemes than initially expected. In the second 
half of 2021 public finances recovered, fuelled 
by 
to  near-normal  economic 
activity.  As  a  result,  the  general  government 
balance  stood  at  2.3%  of  GDP  in  2021. 
Meanwhile,  the debt-to-GDP ratio resumed  its 
downward trend of recent years and fell below 
40% of GDP in 2021 (see Annex 18).  

Denmark provided far-reaching COVID-19 
emergency  support  to  businesses  and 
workers.  This  large-scale  response  stabilised 
the  economy,  and  the  choice  of  emergency 
measures  as  well  as  their  timing  appears  to 
have  been  well-judged.  Wage  support  and 
coverage of businesses’ fixed costs during the 
lockdown  periods  were  the  largest  types  of 
schemes.  Also,  state  lending  was  widespread 
to  prevent 
liquidity  squeezes  on  closed 
businesses.  General  emergency  measures 
were  phased  out  last  year  and  current  COVID 
support  measures  have  been  made  more 
targeted.  A  gradual  phasing  out  of  support 
measures  should  balance  the  need  to  allow 
resource 
containing 
reallocation  while 
corporate insolvency for viable firms in highly 
impacted  sectors.  In  this  respect,  gradually 
transitioning to commercial bank lending could 
ensure efficient capital allocation. 

Danish  public  finances  are  considered 
sustainable  over  the  longer  term.  The 
expected  increases  in  pension  ,  health  and 
long-term  care  expenditure  due  to  an  ageing 
population should remain manageable, thanks 
among  other 
to  already  agreed 
increases in the future pensionable age (linked 
to increases in life expectancy).  

things 

As  part  of  a  broad  political  agreement, 
the  government  has  also  presented  a 
plan for a new defence agreement. As part 
of the agreement, defence expenditure will be 
gradually raised from the current 1.2% of GDP 
to 2% of GDP by 2033. Additionally, 0.15% of 
GDP  will  be  spent  in  2022  and  2023  on 
defence, 
humanitarian 
purposes. To finance the increased spending, a 
change 
in  the  Budget  Law  will  allow  a 
structural  deficit  of  maximum  1%  of  GDP,  up 
from the current ceiling of 0.5% of GDP.  

diplomacy 

and 

5 

 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

The  Danish  recovery  and  resilience  plan 
(RRP)  was  submitted  in  April  2021.  It 
includes  major  measures  to  accelerate  the 
twin  green  and  digital  transitions.  The  formal 
submission  followed  a  consultation  process 
with  social  partners  and  other  civil  society 
organisations.  The  plan  includes  a  total  of  34 
measures  (29  investments  and  5  reforms) 
structured  around 
(i) 
advancing the green transition; (ii) accelerating 
and 
and 
digital 
transformation; 
and 
research/development. These are all helping to 
address  challenges 
to  all  four 
dimensions  of  competitive  sustainability  (see 
Annex 2).  

three  components: 

reforms 
social 

expanding 

relevant 

and 

(iii) 

tax 

incentives 

reform  creates 

The  Danish  RRP  promotes  environmental 
sustainability.  The  share  in  the  Danish  RRP 
dedicated to the green transition is among the 
highest  in  the  EU.  A  green  tax  reform  will 
accelerate the decarbonisation of the economy 
and  is  one  of  the  plan’s  landmark  initiatives..  
The 
for 
companies in 2021-22 to help them frontload 
green  and  digital  investment.  This  will  also 
help  them  prepare  for  higher  energy  taxes 
from 2023 onwards, which over time are to be 
replaced by a universal CO2 emission tax. The 
plan’s measures to foster the green transition, 
include  action  on  biodiversity  and  sustainable 
agriculture (‘green transition of agriculture and 
environment’).  The  plan’s  energy  efficiency 
component  (‘energy  efficiency,  green  heating 
(CCS) 
and  carbon  capture  and  storage 
capacity’) 
to 
is  expected 
significant  decreases  in  energy  consumption 
and 
The 
gas 
sustainable road transport component aims to 
the 
accelerate 
transport  sector.  Another  component  aims  to 
promote  R&D  projects  to  accelerate  research 
in  various  green  policy  areas:  CCS  and  use  of 
CO2,  green  fuels,  climate-friendly  agriculture 
and, to a limited extent, the circular economy.  

the  decarbonisation  of 

to  contribute 

greenhouse 

emissions. 

Several  RRP  measures  address  digital 
and productivity related challenges. A new 
‘Digital  Strategy’  was  adopted  to  further 
digitalise  the  public  sector  and  prepare  it  for 
future 
challenges.  The  National  Digital 
Strategy  entails  nine  ‘visions’  or  sub-reform 
areas  covering  both  the  public  and  private 
sector.  The  digital  sub-measures  include  a 
strategy  to  promote  the  adoption  of  AI  and 
update the cybersecurity strategy. Funding will 
be  provided  to  digitalise  small  and  medium-
sized  enterprises  and  extend  rural  broadband 
coverage.  In  addition,  digital  measures  in  the 
health  component  (including  expansion  of 
telemedicine  use)  aim  to  make  the  sector 
more resilient (see Annex 14).   

for 

The  measures  in  the  plan  will  contribute 
to  ‘Shaping  Europe’s  digital  future’ (3). 
Several  measures  to  support  the  digital 
small  and  medium-sized 
transition 
enterprises  have  the  potential  to  further 
improve  competitiveness.  The 
investment 
window  combined  with 
targeted  support 
schemes  for  smaller  firms  will  continue  to 
promote  digitalisation 
in  business.  The 
forthcoming  digital  strategy  is  expected  to 
address the challenges of the digital transition, 
namely  by  investing  in  the  digitalisation  of 
companies  and  digital  skills.  As  regards 
innovation,  the  Danish  RRP  will  fund  public-
private  research  partnerships  focusing  on  the 
low carbon economy, resilience and adaptation 
to  climate  change.  Focused  research  projects 
are 
transport, 
agriculture  and  assessing  CCS  potential.  With 
the help of the RRP and existing tax incentives 
for  R&D,  investment  will  foster  private  green 
and digital research projects.  

the  field  of 

included 

in 

(3)  European Commission 2019-24 priority axis: Shaping 

Europe's digital future | European Commission 
(europa.eu) 

6 

 
 
                                                 
 
country-specific  recommendations (4) 
issued 
by the European Commission in the context of 
the  European  Semester 
(see  Annex  4). 
Regarding the health sector, the plan includes 
measures  on  digitalisation  as  well  as 
infrastructure  and  logistics  support  for  critical 
medical  products,  as  well  as  support  for 
COVID-related research. 

to 

and 

objective 

The Danish plan includes a distinct social 
dimension,  which  contributes  to  the 
fairness 
the 
implementation of the European Pillar of 
Social  Rights.  The  plan  is  expected  to  help 
maintain  a  high  degree  of  social  cohesion 
through  supporting  employment  across  the 
country  and  by  extending  digital  services.  It 
therefore  underpins  Denmark’s  economic, 
social 
institutional  and 
The 
resilience. 
measures 
strengthen  Denmark’s 
should 
capacity to absorb economic and social shocks. 
together,  several  components  and 
Taken 
measures  are  expected  to  support  social  and 
territorial  cohesion  and  convergence (see  also 
Annex  3).  The  plan  further  contains  some 
measures  that  are  expected  to  help  address 
the country’s challenges in the area of gender 
equality and equal opportunities for all.   

Box 1: 

Key deliverables under the recovery and resilience plan in 2022-23 

  Launch of the National Digital Strategy 

 

Implement  digital  solutions  in  the  health  care  sector  as  well  as  infrastructure  and  logistics 
support for critical medical products, and support for COVID-related research 

  3 500 households to gain very high-speed broadband coverage 

 

Increase the number of scrapped diesel cars, up by 36 000 vehicles 

  Select research partnerships  for green R&D projects  

  Call for tenders for energy efficiency measures in industry 

  Complete calls for tender aiming to implement climate technologies and remove carbon-rich 

soils in agriculture 

  Further increase emissions tax on industry and publish an expert report on the introduction of 

uniform CO2 emissions taxation. 

will 

plan 

contribute 

The 
to 
macroeconomic  resilience  and  economic 
growth.  It  is  also  in  line  with  the  European 
update  of  the  2020  new  industrial  strategy. 
Economic  modelling  simulations  show  that 
Denmark’s  value  added  could  increase  by 
between  0.4%  and  0.6%  by  2024  thanks  to 
the  Next  Generation  EU  package,  generating 
up  to  8  000  additional  jobs.  Being  a  small, 
open  economy,  Denmark  is  likely  to  reap 
substantial 
spill-over 
effects. Lastly,  the  plan  will  help  address  the 

benefits 

from 

(4)  European Commission website: https://eur-

lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:52020DC0504&from=E
N 

7 

 
 
 
 
                                                 
 
FURTHER PRIORITIES AHEAD 
FURTHER PRIORITIES AHEAD 

resilience  of 

Beyond  the  challenges  addressed  by  the 
RRP,  as  outlined  in  section  2,  Denmark 
faces  additional  key  challenges  not 
sufficiently  covered 
in  the  plan,  as 
outlined  in  the  following  section.  This 
in  particular  certain  aspects  of 
concerns 
reducing  dependence  on  fossil  fuels,  circular 
economy,  labour  supply  and  skills  as  well  as 
the  housing  market. 
the 
Addressing  these  challenges  will  also  help  to 
make  further  progress  in  achieving  the  SDGs 
related  to  affordable  and  clean  energy  (goal 
7),  responsible  consumption  and  production 
(goal  12),  decent  work  and  economic  growth 
(goal  8)  and 
innovation  and 
industry, 
infrastructure  (goal  9).  In  April  2022  the 
Danish  government  presented  the  ‘Denmark 
Can Do More II’ Strategy to phase out Russian 
gas  and  accelerate  the  green  transition.  The 
new  roadmap  covers  five  key  elements  for 
weaning  households  off  gas,  mostly  by 
switching  400,000  households 
to  district 
heating  and  heat  pumps,  increase  production 
of sustainable biogas, accelerate renovation of 
North  Sea  gas  fields,  quadruple  solar  and 
onshore  wind  before  2030  and  introduce  a 
CO2-tax. 

Further reducing energy 
dependence on fossil fuels 

supply  dependence  due 

Denmark  has  traditionally  had  a  low 
to 
energy 
substantial  oil-  and  gas  fields  in  the 
North  Sea  and  significant  investment  in 
renewable  energy.  Production  of  domestic 
oil and gas has decreased and Denmark is, on 
a temporary basis,  a net oil and gas importer 
until  the  re-opening  of  the  country’s  largest 
oil- and gas field (Tyra) in 2023. The share of 
renewable  energy  and  sustainable  biogas 
reached 43.6% in the total energy mix in 2020 
which is expected to increase to 54% by 2030. 

8 

Denmark has also a high biogas' share of 25% 
in  2021  (out  of  its  overall  gas  consumption), 
up from just over 21% in 2020. 

Table 3.1: Energy mix 

(1) % of Gross Inland Consumption 
(2) The share of renewables includes non-renewable 
waste 
Source: Eurostat (2019/2020 data) 

Danish  energy  dependence  on  Russia  has 
increased significantly since 2019 due to 
temporary  factors.  Oil  makes  up  37.9%  of 
the  total  energy  mix,  with  12% (5)  of  it  as 
direct  Russian  import  in  2020.  Gas  makes  up 
13.8%  of  the  energy  mix  and  is  mainly 
imported  via  Germany  (87%  of  the  total 
supply),  where  a  significant  share  of  gas  is 
Russian-sourced.  While  coal  accounts  for  a 
very  small  share  of  the  energy  mix  (4.7%), 
Denmark  is  almost  completely  dependent  on 
Russia 
imports.  The  total 
its 
dependency  on  Russian  energy  imports  for 
Denmark  is    21.1%  (EU  average  24.4%). 
Denmark’s oil and gas imports have increased 
substantially  since  2019  due  to  the  closure 
and  ongoing  refurbishment  of  one  of  the 
largest  oil-  and  gas  fields  (Tyra)  in  the  North 
Sea.  Once  this  investment  is  finished  in  Q2 

(97%)  for 

(5)  Eurostat (2020), share of Russian imports over total 

imports of natural gas, crude oil and hard coal. For the 
EU27 average, the total imports are based on extra-
EU27 imports. For Denmark, total imports include intra-
EU trade. Crude oil does not include refined oil products. 
Denmark has an indirect dependency on Russian 
imports through intra-EU trade. Accounting for the 
secondary dependence on Russian gas through intra-EU 
imports would lead to the estimation that Denmark has 
a 65% Russian import dependency on gas / 98% on 
coal. 

  2020203020202030Solids 4.7% 0.6% 10.8%5.8%Oil 37.9% 33.6% 32.7%32.1%Gas 13.8% 11.8% 24.4%21.5%Nuclear 0.0% 0.0% 13.1%12.0%Renewables and biofuels 43.6% 54.0% 19.0%28.7%DENMARKEU 
 
 
  
 
                                                 
 
2023,  Danish  oil  imports  should  decrease 
significantly,  possibly  eliminating  Russian 
imports  and make  Denmark  a  net  exporter  of 
gas  again.  The  government  also  supports 
exploring  short-term  measures  to  accelerate 
the exit from Russian natural gas and oil by a 
temporary increase in domestic gas extraction 
from  the  existing  fields in  the North  Sea,  and 
increased use of sustainable biogas.  

Due  to  Denmark’s  ambitious  climate 
objectives,  several  measures  (including 
those  financed  by  the  RRP)  are  already 
being 
implemented  top  reduce  fossil 
energy  dependence  but  overall  ambition 
could be increased. Denmark's climate policy 
objectives  aim  to  reduce  greenhouse  gas 
emissions  by  70%  by  2030,  compared  to 
1990, and achieve climate neutrality by 2050 
at the latest, including a commitment to a full 
coal  phase-out  by  2028.  Denmark’s  National 
Energy  and  Climate  Plan  (NECP)  estimated 
additional investments needs between EUR 4-
12  billion  until  2030  in  energy  efficiency 
measures  to  meet  this  target.  The  Danish 
RRP’s green tax reform provides a general tax 
incentive  for  companies  to  frontload  their 
Sustainable 
energy 
transport  and  mobility-related  measures  are 
also  helping  to  reduce  the  dependence  on 
fossil  fuels.  Energy  efficiency  investment  in 
private  and  public  buildings  as  well  as  for 
companies,  replacing  oil  and  gas  burners  will 
reduce  oil  and  gas  dependence. 
further 
Nevertheless,  Denmark 
low 
contribution to the EU  energy efficiency 2030 
targets  in  its  NECP,  hence  overall  ambitions 
could be further increased. 

indicated  a 

investment. 

saving 

the 

island  on  Bornholm 

natural  land  mass  of  Bornholm  in  the  Baltic 
Sea.  The  energy 
is 
currently planned to have a capacity of 2 GW, 
while  the  plan  for  the  energy  island  in  the 
North Sea will have an envisaged capacity of 3 
GW  in  2033,  rising  to  10  GW  as  soon  as 
possible,  with  2040  as  a  target  date,  subject 
to 
realisation  of  necessary  grid 
interconnections.  A  Commission  study (6)  has 
identified  numerous  moderate  and  minor 
barriers  in  Denmark  that  tend  to  disrupt  the 
often  already  lengthy  and  complex  permitting 
and  administrative  procedures  for  deploying 
renewable  energy  installations,  in  particular 
for  onshore  and  offshore  wind  as  well  as 
larger  rooftop  solar  PV  plants.  In  particular, 
these projects face a growing reluctance from 
responsible  authorities  in  the  planning  and 
preparation  processes  and  complaints  from 
third-parties. 

in 

The  increasing  share  of  renewables  and 
the  expected  large  increase  in  energy 
require  significant 
consumption  will 
upgrades 
transmission 
energy 
networks.  As  also  highlighted  in  the  Danish 
National  Energy  and  Climate  Plan  further 
investment  in  the  electricity  grid  is  necessary 
to  ensure  that  the 
increasing  share  of 
renewable  energy  can  be  integrated  in  the 
electricity  system.  An  efficient  electricity 
network, including expansion and upgrading of 
the 
and 
transmission 
interconnections  with  neighbouring  countries, 
is 
continued 
development  of  efficient  and  competitive 
renewable energy production and distribution.  

precondition 

Danish 

grids 

the 

for 

a 

is  strongly  committed 

to 
Denmark 
increasing  renewable  energy  capacity  in 
the  form  of  offshore  wind  capacity.  The 
Danish  NECP  estimates  investment  needs  of 
EUR  8-12  billion 
in  renewable  electricity 
generation  until  2030  to  achieve  the  climate 
objectives.  The  country  currently  has  2,3  GW 
of offshore wind installed and has taken steps 
to  add  a  further  6,15-6,55  GW  of  offshore 
wind capacity towards 2030. In June 2020, the 
Danish Parliament (Folketing) decided to begin 
preparations  for  the  construction  of  two 
energy islands in Denmark – an artificial North 
Sea  energy  island  and  another  one  on  the 

increasing 

Further 
cross-country 
interconnection  would  help  to  achieve 
decarbonisation,  energy  efficiency,  and 
security  of  supply.  Denmark’s  geographical 
location  is  particularly  promising  for  energy 
links  Denmark’s  electricity  grid.  It  is  already 
well 
interconnected  with  other  countries. 
Speeding  up  ongoing  interconnection  projects 
can also foster diversification of energy supply 
Denmark’s  potential  could  be  developed  even 
further, in order to increase security of supply 
and adaptability to regional variances.   

(6)  European Commission: Technical support for RES policy 

development and implementation, forthcoming.  

9 

 
                                                 
Strengthening the circular 
economy to support the green 
transition 

Denmark  is  pursuing  ambitious  climate 
objectives  and  the  Danish  RRP  has  a 
strong  focus  on  the  green  transition, 
earmarking  60%  of  the  funds  for  green 
initiatives.  The  country  has  set  a  target  to 
reduce  greenhouse  gas  emissions  by  70%  by 
2030  (relative  to  1990  levels)  and  wants  to 
achieve  climate  neutrality  by  2050  at  the 
latest.  In  2020,  Denmark’s  total  greenhouse 
gas  emissions  were  42%  below  1990 
levels (7).  Most  of  this  reduction  has  come 
through a shift from fossil fuels to renewable 
energy.  Currently,  construction,  transport  and 
agriculture  are  the  largest  greenhouse  gas-
emitting  sectors  outside  the  EU  Emissions 
Trading  System.  Denmark  has  put  in  place 
comprehensive  policies  and  measures 
to 
further  reduce  greenhouse  gas  emissions  in 
these sectors, which will be partially supported 
by the Danish RRP (see Annex 5).  

use are well below the EU average. Graph 3.1 
even  shows  a  small  decline  in  secondary 
material  use  over  the  past  years.  Denmark 
would  thus  benefit  from  investment  to  boost 
the circular economy,  including through waste 
prevention  and  better  waste  management,  as 
well  as  improved  resource  efficiency  and 
secondary material usage (see Annex 7).  

Graph 3.1: Circular material use rate, 2010-
2020 

Source: Eurostat 

Denmark would benefit from an improved 
municipal  waste  management  system.  It 
currently  produces  the  highest  amount  of 
municipal  waste1  per  capita  in  the  EU,  with 
845  kg/capita/year.  After  a  downward  trend 
until  2017,  municipal  waste  generation  in 
Denmark  has  started  to  increase  in  recent 
years  (see  Graph  3.2).  Further  efforts  to 
prevent  or  recycle  waste  can  contribute  to 
achieving  Denmark’s 
climate 
objectives.  While  Denmark’s  landfill  rate  is 
its 
below  1%, 
municipal  waste,  close  to  double  the  EU 
average 
terms 
incineration exceeds recycling by roughly 20% 
and despite energy recovery it implies  missed 
opportunities  for  the  circular  economy  (see 
also Annex7).  

incinerated  45.2%  of 

kg/capita/year 

ambitious 

rate. 

In 

it 

the 

circular 

remain 

agriculture 

in 
challenges 
Nevertheless, 
reaching  Denmark’s  ambitious  climate 
goals.  Additional  investment,  in  particular  in 
research,  technology  and  infrastructure,  is 
likely  to  be  needed.  Further  action  is  also 
warranted in other key sectors and areas such 
as 
economy  and  waste 
management,  and  by  enhancing  carbon  sinks 
in 
water/fisheries 
management. In taking climate policy forward, 
attention  needs  to  be  paid  to  regions  most 
to  high 
affected  by 
concentration of oil  and gas industry in South 
Denmark and North Jutland (See Annex 15). In 
Denmark, energy poverty overall stands at 3% 
(EU: 8.2%), with approximately 10% of the two 
lowest-income  deciles  in  the  population  being 
unable  to  keep  their  homes  adequately  warm 
(see Annex 6). 

transition  due 

and 

the 

is 

Denmark 
under-performing  with 
respect to certain aspects of the circular 
economy.  Danish  rates  of  circular  material 

(7)  2021 Commission Staff Working Documented annexed 

to the EU Climate Action Progress Report 

10 

02468101214DenmarkEuropean Union% 
                                                 
   
Graph 3.2: Municipal waste by treatment in 
Denmark, 2011-2020 

induced  a  drop 

pandemic level in the second half of 2021. The 
COVID-19  outbreak 
in 
economic activity, although its adverse effects 
on  the  labour  market  were  to  some  extent 
cushioned by a short-time work scheme. From 
2019  to  2020,  the  employment  rate  for 
people  aged  20-64  in  Denmark  decreased, 
albeit  less  than  in  most  Member  States.  Both 
the  employment  and  unemployment  rate  in 
Denmark improved considerably during 2021.  

Graph 3.3: Real unit labour cost, real 
compensation per employee and real 
productivity 

Source: Eurostat 

Existing  national  programmes  and  plans 
for waste and the circular economy need 
to be implemented. Preventing products and 
materials from needlessly becoming waste for 
as  long  as  possible  is  the  most  efficient  way 
to improve resource efficiency and reduce the 
environmental 
impact  of  waste.  Waste 
prevention  and  re-use  are  the  preferred 
options  at  the  top  of  the  waste  hierarchy  in 
in 
terms  of  achieving  circularity.  Already 
2019 (8), 
two 
recommendations  for  priority  action  in  the 
field  of  waste:  (i)  introducing  of  new  policy 
instruments to promote waste prevention, and 
(ii) increasing the country’s recycling share and 
shifting  away  from  incineration  to  greener 
sources  of  heating  generation.  While  less 
waste  would  imply  lower  energy  generation, 
this  could  over  time  be  replaced  by  other 
environmentally-friendly methods. 

Denmark 

received 

Training the labour force for the 
green and digital transition 

Denmark saw strong employment growth 
after  gradually  reopening  its  economy. 
After receding in early 2020 due to the COVID-
19  pandemic,  employment  surpassed  its  pre-

(8)  2019 European Commission: Environmental 

Implementation Review 

11 

Source: Eurostat 

Labour  shortages  are  significant  across 
all  sectors,  with  gaps  being  historically 
large  in  the  construction  and  services 
sectors. For the construction sector, the share 
of  firms  reporting  labour  shortages  was  at 
43%  in  April  2022,  while  services  industries 
reached  a  new  record  of  37%  in  the  same 
month. Wages  are  on  the  rise,  partly 
in 
response  to  the  tight  labour  market.  In  the 
fourth quarter of 2021, nominal compensation 
per employee increased by 2.3%, which is the 
largest 
since  2010. 
Meanwhile,  real  compensation  per  employee 
decreased  marginally 
(Graph  3.4).  Labour 
shortages 
in  greening  sectors  such  as 
professional,  scientific  and  technical  activities 
have also been identified (see Annex 6).   

increase  observed 

Upskilling  and  reskilling  could  be  key  to 
perpetuating 
economic 
expansion. There is still a sizeable reserve of 
people  able  to  join  the  labour  market  and  fill 
vacancies  in  a  range  of  sectors,  provided  the 

current 

the 

86280681380882283082081484484502004006008001,0002011201220132014201520162017201820192020Difference waste generated& treatmentLandfill / disposalTotal incinerationComposting / digestionMaterial recyclingEuropean UnionKg/capita90951001051101151201252000200120022003200420052006200720082009201020112012201320142015201620172018201920202021index 2000=100DKReal compensation per employeeReal productivity per personReal unit labour cost 
   
                                                 
  
training  offers,  notably  vocational 
right 
training,  are  available  and  sufficiently  used. 
Denmark  has  increased  public  expenditure  in 
this area with additional funding for upskilling 
measures to be implemented during 2020-22. 
Individuals’ digital skills are high, with 69% in 
2021  possessing  at  least  basic  digital  skills, 
according  to  the  Digital  Economy  and  Society 
Index.    The  Digital  Scoreboard  (2020)  shows 
that  20.4%  of  ICT  specialists  are  women, 
above 
further 
strengthening  participation  in  adult  learning, 
Denmark  would  contribute  to  reaching  the 
2030 EU headline target on skills.  

average. 

the 

EU 

By 

Denmark  is  one  of  the  Member  States 
with the highest level of digital skills, yet 
further  improvements  would  facilitate 
keeping  pace  with  the  digital  transition. 
The  country  ranks  first  in  digital  performance 
at EU level, scoring well above the EU average 
in  basic  and  above  basic  digital  skills.  An 
above-average  percentage  of  people  possess 
least  basic  digital  skills.  Technological 
at 
change  and  digitalisation  are  making  jobs 
increasingly  skills-intense  –  both  in  terms  of 
level and types of skills. Therefore, despite the 
overall  positive  relative  performance,  it  is 
important  to  further  improve  the  digital  skills 
(see also Annex 8). 

Attracting  foreign  students  remains  a 
challenge. The introduction of additional work 
visa  categories  has  helped  reduce  labour 
shortages.  However, 
fully 
compensate  lost  hiring  opportunities  entailed 
by  the  decrease  in  foreign  students  following 
the 
education 
of 
programmes for English-speaking students.   

it  might  not 

curtailment 

higher 

Graph 3.4: Participation, unemployment and 
NEET rates 

(1) NEET: not in education, employment or training. 
Source: Eurostat 

labour  market 

Some 
trends  pose 
challenges for Denmark in the quest for a 
skilled  workforce.  Denmark 
performs 
strongly in adult learning, but enrolment rates 
are  falling.  While  above  the  EU  average 
(10.8%),  the  rate  of  adult  participation  in 
learning  has  declined  over  recent  years  .  A 
relatively large share of young adults (17% in 
2018)  do  not  finish  high  school  or  have  no 
vocational qualification. At the same time, the 
share  of  early  leavers  from  education  and 
training has decreased, albeit remaining above 
the  2015  low  (see  Annex  13).  According  to 
PISA  2018  data,  pupils  with  a  migrant 
background  continue  to  show  considerably 
worse  basic  reading  skills  (twice  the  EU 
average).  Denmark  intends  to  address  these 
challenges  as  part  of  its  efforts  to  have  an 
adequately  skilled  workforce,  in  line  with  the 
European Pillar of Social Rights.   

Denmark’s  ambitious  climate  objectives 
will  require  re-skilling  and  upskilling  in 
several  sectors.  To  ensure  a  fair  transition 
the  work  force  in  several  sectors  (such  as 
industry, energy, transport and agriculture) will 
need  to  adapt  to  significant  technological 
changes  (see  Annex  6).  Further  investment  in 
skills  would  help  the  transition  and  preserve 
the competitiveness of these sectors. The high 
level  of  digitalisation  in  the  country,  both  at 
public and private level, can further the green 
transition  in  the  Danish  economy,  including  in 
the utility sectors.  

12 

78798081828305101520200920102011201220132014201520162017201820192020Activity rate 20-64 (rhs)Unemployment rate 15-74 (lhs)Long-term unemployment rate 15-74 (lhs)Youth unemployment rate 15-24 (lhs)NEET rate 15-29 (lhs)%% 
  
Improving the resilience of the 
housing market   

Graph 3.5: House price to income ratio 
evolution 

from 

can  benefit 

Danish  households  have  long  carried  one 
of  the  highest  mortgage  debt  burdens  in 
the  EU.  Several  factors  contribute  to  Danish 
households’  high  debts,  including  a  unique 
mortgage financing system providing very low 
rates,  sizeable  pension  savings, 
interest 
taxation  policy  as  well  as 
idiosyncratic 
features  of  the  mortgage  market.  Mortgage 
owners 
interest-only, 
deferred amortisation types of loans (similarly 
for  instance  to  Sweden  and  the  Netherlands), 
thereby  significantly  expanding  their  loan-
taking  capacities.  The  Danish  tax  system  also 
allows  one  of  the  highest  tax  deductions  for 
mortgage  interest  payments  in  the  EU,  which 
incentivises  debt  financing  of 
residential 
property  (Annex  17).  As  a  result,  Danish 
households (together  with  Swedish  and  Dutch 
households) have one of the highest levels of 
mortgage debts in the EU compared to GDP or 
household incomes.  

for 

demand 

Following  years  of  moderate  growth, 
increased 
residential 
property  during  the  pandemic  led  to  a 
new spike in house prices. The demand for 
residential  properties  more  than  doubled  in 
2021  and  house  price  growth  accelerated 
from  4.5%  in  2020  to  13.4%  in  the  first  half 
of  2021  in  annual  terms.  Elevated  demand 
has  eased  since  the  second  half  of  2021, 
returning  to  the  pre-pandemic  average,  and 
accordingly  the  house  price 
increase  has 
gradually slowed to around 4.1% by the end of 
2021,  but  started  to  increase  again  in  early 
2022.  The  house  price  increase  has  been 
particularly  steep  in  the  Copenhagen  area 
compared  to  the  rest  of  Denmark  (see  Graph 
3.5).  

Source: Statistics Denmark 

The  new  property  taxation  system  would 
increase  housing  market  resilience  and 
taxes  are 
fairness.  Recurrent  property 
currently  capped,  hence  they  do  not  increase 
with  market  prices  and  so  are  not  able  to 
dampen  house  price  cycles.  The  current 
system  also  raises  fairness  questions,  as 
effective  property  tax  rates  can  be  currently 
lower  in  the  main  urban  cities  where  owners 
have benefitted from the highest housing price 
increase. The introduction of the new property 
tax  system  was  already  approved  by 
Parliament  in  May  2017 (9)  but  is  still  not  in 
place. The implementation of the new system 
would  restore  the  link  between  market  prices 
and  taxes,  smoothen  house  price  cycles  and 
ensure  a  fairer  property  taxation  system (10). 
Reducing  high  mortgage  interest  deductibility 
would lower households’ incentives to take on 
debt,  while  using  this  saving  to  increase  the 
personal  income tax  allowance  could  increase 
welfare and economic equality (11). 

Residential  construction  has  kept  pace 
with  rising  demand,  but  high  demand 
poses  challenges  for  affordable  housing 
in  urban  areas.  Investment  in  dwellings 
surged  during  the  pandemic,  growing  at 
around  9-10%  both  in  2020  and  2021  also 

(9)  The government announced the introduction of the new 

tax system from 2024, following several delays. 

(10)  See for instance Danmarks Nationalbank (2017): 

Housing Taxation Agreement Stabilises House Prices. 

(11)  European Commission, Country Report Denmark 2020, 

Commission Staff Working Document. 

13 

901101301501701902102000200120022003200420052006200720082009201020112012201320142015201620172018201920202021*DenmarkCopenhagenIndex, 2000=100 
  
                                                 
due to energy renovation in the social housing 
stock. However, high prices for owner occupied 
housing  and  long  waiting  times  for  social 
housing in the main urban areas increased the 
need  for  additional  supply  of  affordable 
housing  units.  As  a  response  the  Danish 
government  has  put  in  place  a  range  of  new 
initiatives    to  further  increase  construction  of 
affordable  rental  housing,  primarily  social 
housing. A total budget of EUR 1.35 billion has 
been appropriated to support the initiatives, of 
which EUR 0.67 billion are to be implemented 
until  2031.  The  initiative  aims  to  construct 
22,000 new affordable rental homes (1.6% of 
the  total  stock), 
including  4,000  student 
accommodations  (10%  of  the  total  stock),  in 
the four largest  cities of Copenhagen, Aarhus, 
Odense  and  Aalborg  by  2035.  Amongst  the 
new initiatives is an initiative with a budget of 
EUR  0.12  billion  which  enables  social  housing 
organisations  to  buy  private  rental  housing 
and convert it into social housing.  

Graph 3.6: Share of loans from new mortgages 
with debt-to-income above 4 and loan-to-
value above 60% 

Source: Nationalbanken 

lending 
some 

Although  mortgage 
growth 
Danish 
remained  modest, 
households  remain  vulnerable  to  an 
interest  rate  hike,  or  major  house  price 
adjustment.  The  share  of  loans  from  new 
mortgages  with  a  debt-to-income  (DTI)  ratio 
above  4  and  loan-to-value  (LTV)  ratio  above 
60%  has  increased  in  the  Copenhagen  area, 
but  mya  be  showing  first  signs  of  declining 
again  (see  Graph  3.6).  To  avoid  further 
building up  of risk, the resilience of such loan 
takers  could  be  strengthened  by  opting  for 
the 
rates  and 
fixed 
amortisation  requirement (12)  to  prevent  rises 
in  debt  service  costs,  especially  during 
economic downturns.  

increasing 

interest 

(12)  Similar recommendations were issued by the European 
Systemic Risk Board (ESRB) in its report of February 
2022. In June 2021 the Danish Systemic Risk Council 
recommended limiting access to interest-only loans for 
borrowers who have a loan-to-value ratio above 60%, 
but the proposal was rejected by the Government. 

14 

05101520253035402019Q42020Q12020Q22020Q32020Q42021Q12021Q22021Q32021Q4CopenhagenRest of Denmark% 
                                                 
  
 
 
 
  Making further progress with respect to the 
circular  economy  and  waste  management, 
in  particular  on  prevention,  recycling  and 
reducing incineration of (municipal) waste.   

and 

  Supporting  digitisation  of  small  and 
medium-sized 
public 
firms 
administration  to  improve  productivity  and 
competitiveness  as  well  as  boost  the 
toward  a  greener  Danish 
transition 
economy 
increased 
(for 
digitalisation of utility services).   

instance  by 

  Securing an adequate labour supply as well 
as investing in re- and upskilling the labour 
force  and  increasing  vocational  training 
participation  to  promote  the  green  and 
digital transitions. 

  Introducing  the  delayed  new  property  tax 
system  to  ensure  fairer  property  taxation 
and mitigate house price increases, address 
shortages  of  affordable  housing  in  urban 
through  new  construction  and 
areas 
resilience  of  highly 
increase  financial 
indebted  borrowers  by  further  limiting  the 
reliance  on  variable  interest  rates  and 
deferred amortisation mortgage loans.  

KEY FINDINGS 
KEY FINDINGS 

Denmark’s  recovery  and  resilience  plan 
includes measures to address a series of 
its structural challenges through: 

  Accelerating  the  green  transition  by 
supporting  the  implementation  of  a  green 
tax  reform,  fostering  investment  in  the 
energy  efficiency  of  public  and  private 
buildings,  funding  measures  to  reduce 
greenhouse  gas  emissions  in  transport, 
agriculture and other sectors; 

a 

new 

the  digital 

  Accelerating 
transition  by 
adopting 
strategy, 
modernising  public  administration,  helping 
small  and  medium-sized  firms  invest  in 
digital  technology  and  extending  rural 
broadband coverage;  

digital 

  Promoting  R&D  investment  and  involving 
more  companies  in  research  activities,  as 
well  as  supporting  green  research  and 
development projects;   

  Increasing  the  resilience  of  the  healthcare 
system,  including  digitalising  healthcare, 
infrastructure  and 
logistics  support  for 
critical  medical  products,  and  support  for 
COVID-related research.   

Beyond  the  reforms  and  investments  in 
the RRP, Denmark would benefit from:  

  Reducing  dependence  on  fossil  fuels  and 
further  decarbonising  the  economy  by 
accelerating  the  deployment  of  renewable 
energies  by  streamlining  and  accelerating 
permitting  procedures,  upgrading  energy 
increasing 
transmission  networks  and 
interconnections 
neighbouring 
countries, while improving energy efficiency 
to reduce energy consumption. 

with 

15 

 
 
 
 
ANNEXES 

 
 
 
LIST OF ANNEXES 

Cross-cutting progress indicators 

Annex 1: Sustainable Development Goals 

Annex 2: Recovery and Resilience Plan - Implementation 

Annex 3: Other EU instruments for recovery and growth 

Annex 4: Progress in the implementation of country-specific recommendations 

Environmental sustainability 

Annex 5: Green Deal 

Annex 6: Employment and social impact of the green transition 

Productivity 

Annex 7: Resource efficiency and productivity 

Annex 8: Digital transition 

Annex 9: Innovation 

Annex 10: Industry and single market data 

Annex 11: Public administration 

Fairness 

Annex 12: Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

Annex 13: Education and skills 

Annex 14: Health and health systems 

Annex 15: Economic and social performance at regional level 

Macroeconomic Stability 

Annex 16: Key financial sector developments 

Annex 17: Taxation 

Annex 18: Key economic and financial indicators 

Annex 19: Debt sustainability analysis 

LIST OF TABLES 

Table A2.1: 
Table A4.1: 
Table A5.1: 
Table A7.1: 
Table A8.1: 
Table A9.1: 
Table A10.1: 

Key elements of the Danish RRP 
Summary table in 2019, 2020 and 2021 CSRs 
Indicators underpinning progress on European Green Deal from a macroeconomic perspective 
Selected resource efficiency indicators 
Key Digital Economy and Society Index Indicators 
Key research, development and innovation indicators 
Key Single Market and Industry Indicators 

19 

21 

21 

23 

24 

26 

28 

28 

31 

33 

33 

35 

37 

39 

42 

44 

44 

46 

48 

50 

52 

52 

54 

56 

57 

23 
27 
30 
34 
36 
38 
40 

 
 
 
Table A11.1: 
Table A12.1: 
Table A13.1: 
Table A14.1: 
Table A15.1: 
Table A16.1: 
Table A17.1: 
Table A18.1: 
Table A19.1: 
Table A19.2: 

Public administration indicators 
Social Scoreboard 
EU-level targets and other contextual indicators under the European Education Area strategic framework 
Key health indicators 
Denmark, selected indicators at regional level 
Financial soundness indicators 
Taxation indicators on taxation 
Key economic and financial indicators 
Debt sustainability analysis for Denmark 
Heatmap of fiscal sustainability risks for Denmark 

LIST OF GRAPHS 

Graph A1.1: 

Progress towards SDGs in Denmark in the last five years 

Graph A2.1: 

Share of RRF funds contributing to each policy pillar 

Graph A3.1: 

2014-20 European Structural and Investment Funds, - total budget by fund 

Graph A3.2: 

Cohesion policy contribution to the SDGs 

Graph A4.1: 

Denmark's progress on the 2019-2020 CSRs (2022 European Semester cycle) 

Graph A5.1: 

Fiscal aspects of the green transition  Taxation and government expenditure on environmental protection 

Graph A5.2: 

Thematic – Energy  Share in energy mix (solids, oil, gas, nuclear, renewables) 

Graph A5.3: 

Thematic – Biodiversity   Terrestrial protected areas and organic farming 

Graph A5.4: 

Thematic – Mobility   Share of zero-emission vehicles (% of new registrations) 

Graph A6.1: 

Fair green transition challenges 

Graph A6.2: 

Energy poverty by income decile 

Graph A7.1: 

Municipal waste treatment 

Graph A11.1: 

Performance on evidence-based policy- making indicators 

Graph A13.1: 

Low achievement in reading by migrant background, PISA 2018 

Graph A14.1: 

Life expectancy at birth, years 

Graph A14.2: 

Projected increase in public expenditure on health care over 2019-2070 (reference scenario) 

Graph A15.1: 

GDP per head (2010) and GDP growth (2010-2019) 

Graph A15.2: 

Evolution of labour productivity across Danish regions 

Graph A15.3: 

CO2 emissions from fossil fuels per person in Danish regions (2018) 

Graph A15.4: 

Territories most affected by the climate transition in Denmark 

Graph A17.1: 

Tax wedge indicators 

43 
44 
47 
49 
51 
53 
54 
56 
57 
58 

22 

23 

24 

25 

26 

28 

28 

29 

29 

32 

32 

33 

42 

46 

48 

48 

50 

50 

51 

51 

55 

20 

 
 
 
 
CROSS-CUTTING PROGRESS INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

system.  Denmark  improved  on  various  related 
indicators  like  ‘Positions  held  by  women  in  senior 
management’  (27.1%  in  2016,  34.9%  in  2021), 
‘Employment rate’ (76% in 2016, 79% in 2021) or 
‘People  at  risk  of  poverty  or  social  exclusion’ 
(18.6% in 2015, 16.8% in 2020).   

While  Denmark  performs  very  well  on  some 
SDG  indicators  related  to  productivity  (SDG 
8, 9), it still needs to catch up on others (SDG 
4).  In  Denmark,  the  share  of  households  with 
high-speed  internet  connections  in  2021  (94.9%) 
is  well  above  the  EU  average  (70.2%)  and 
represents  significant  progress  on  this  indicator 
since 2015 (58.1% in 2016, EU: 25.2%). Denmark 
has one of the highest gross domestic expenditure 
on  R&D  (3.03%  of  GDP  in  2020)  despite  a  small 
decrease  since  2015  (3.06%  of  GDP).  As  regards 
quality  of  education  (SDG  4),  while  Denmark 
outperforms  EU  average,  several  indicators  have 
shown negative trends, such as early leavers from 
education (7.5% in 2017 to 9.8% in 2021) and the 
share  of  underachieving  pupils  in  science  (15.9% 
in  2015  to  18.7%  in  2018).  For  this  reason,  the 
RRP  includes  a  large  share  of  investments  in  the 
digital component with measures to further tackle 
remaining  digitalisation  challenges,  notably  by 
promoting  further  digitalisation  measures  across 
the economy and society.  

in 

Denmark  performs  very  well  on  SDG 
indicators related to macroeconomic stability 
(8, 16). Denmark performs very well, and further 
institutions, 
improved,  on  the  quality  of 
its 
including  trust 
institutions  (SDG  16).  The 
percentage  of  the  population  in  Denmark  with 
confidence  in  the  EU  Parliament  increased  from 
51% in 2016 to 67% in 2021 (EU: 50% in 2021). 
Denmark  also  outperforms  the  EU  average  on 
indicators  related  to  ‘Decent  work  and  economic 
growth’  (SDG  8).  Real  GDP  per  capita  in  Denmark 
increased  from  EUR  45  720  in  2016  to  EUR  50 
200 in 2021 (EU: 27 810 in 2021). 

the 

This  annex  assesses  Denmark’s  progress 
towards  the  Sustainable  Development  Goals 
(SDGs)  along 
four  dimensions  of 
competitive  sustainability.  The  17  SDGs  and 
their related indicators provide a policy framework 
under  the  UN’s  2030  Agenda  for  Sustainable 
Development.  The  aim  is  to  end  all  forms  of 
poverty,  fighting  inequalities  and  tackling  climate 
change,  while  ensuring  that  no  one is  left  behind. 
The  EU  and  its  Member  States  are  committed  to 
this  historic  global  framework  agreement  and  to 
playing  an  active  role  in  maximising  progress 
towards  the  SDGs.  The  graph  below  is  based  on 
the  EU  SDG indicator  set which  was  developed to 
monitor progress towards SDGs in an EU context. 

(7.8 

SDG 

related 

indicators 

ranges  above 

the  EU  average 

While  Denmark  performs  very  well  on 
several 
to 
environmental  sustainability  (SDG  7,  9,  11, 
12,  13), compared  to the  EU  average,  it still 
needs to catch up on others (SDG 14 and 15). 
Notably, ‘Net greenhouse gas emissions per capita 
(as  estimated  by  Eurostat)’  improved  from  9.8  t 
CO2e/capita in 2014 to 8.6 t CO2e/capita in 2019 
but 
t 
CO2e/capita).  In  addressing  ‘Affordable  and  clean 
energy’  (SDG  7),  Denmark  has  achieved  further 
progress  in  regard  to  the  share  of  renewable 
energy 
total  energy  consumption,  which 
increased from 30.5% in 2015 to 31.6% in 2020, 
significantly  over-performing  the  EU  average  in 
this indicator (22.1% in 2020). Measures included 
in  the  energy  and  green  R&D  components  of  the 
RRP  aim  to  further  increase  innovation  in  the 
energy  performance  field. The  Danish  government 
assessed  that  there  is  still  progress  to  make  on 
several goals, including on SDG 12 (13). Generation 
of municipal waste has increased from 814 to 845 
kg per person between 2018 and 2020, while the 
circular material use rate decreased from 8.3% to 
7.7% between 2016 and 2020. 

in 

Denmark  performs  well  on  most  SDG 
indicators related to fairness (SDG 1, 2, 3, 4, 
5, 8, 10). Denmark outperforms the EU average in 
most indicators related to gender equality, poverty, 
inclusive growth and inequality (SDGs 1, 5, 8, 10), 
which  can  be  attributed  to  its  social  benefits 

(13)  See "Voluntary National Review 2021: Progress on 
Sustainable Development Goals 2017-2021" 
https://fm.dk/udgivelser/2021/juni/voluntary-national-review-
denmark/ 

21 

 
 
                                                 
 
 
 
Graph A1.1: Progress towards SDGs in Denmark in the last five years 

For detailed datasets on the various SDGs see the annual ESTAT report ‘Sustainable development in the European Union’, 
https://ec.europa.eu/eurostat/product?code=KS-09-22-019; Extensive country specific data on the short-term progress of Member 
States can be found here: Key findings - Sustainable development indicators - Eurostat (europa.eu). 
Source: Eurostat, latest update of 28 April 2022. Data mainly refer to 2015-2020 and 2016-2021. 

22 

 
 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 
ANNEX 2: RECOVERY AND RESILIENCE PLAN - IMPLEMENTATION 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the  centrepiece  of  the  EU’s  efforts  to 
support  its  recovery  from  the  COVID-19 
pandemic,  fast  forward  the  twin  transition 
and  strengthen  resilience  against  future 
shocks.  Denmark  submitted  its  recovery  and 
resilience  plan  (RRP)  on  30  April  2021.  The 
Commission’s  positive  assessment  on  17  June 
2021 and the Council’s approval on 13 July 2021 
paved the way for disbursing EUR 1.551 million in 
grants  under  the  RRF  in  2021-26.  The  financing 
agreement  was  signed  on  27  August  2021.  The 
key  elements  of  the  Danish  RRP  are  set  out  in 
Table A2.1. 

The  share  of  funds  contributing  to  each  of  the 
RRF’s  six  policy  pillars  is  outlined  in  Graph  A2.1 
below.  

The  progress  made  by  Denmark 
in 
implementing  its  plan  is  published  in  the 
Recovery  and  Resilience  Scoreboard.  The 
Scoreboard  also  gives  a  clear  of  the  progress 
made in implementing of the RRF as a whole. 

Table A2.1: Key elements of the Danish RRP 

(1) See Pfeiffer P., Varga J. and in ’t Veld J. (2021), 
“Quantifying  Spillovers  of NGEU investment”, European 
Economy Discussion Papers, No. 144 and Afman et al. (2021), 
“An overview of the economics of the Recovery and Resilience 
Facility”, Quarterly Report on the Euro Area (QREA), Vol. 20, 
No. 3 pp. 7-16.  
Source: European Commission 

Graph A2.1: Share of RRF funds contributing to each policy pillar 

(1) Each measure contributes towards two policy areas of the six pillars, therefore the total contribution to all pillars displayed on 
this chart amounts to 200% of the estimated cost of the Danish RRP. The bottom part represents the amount of the primary 
pillar, the top part the amount of the secondary pillar. 
Source: RRF Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-scoreboard/country_overview.html  

23 

Total allocation EUR 1,551 million in grants (0.5% of 2019 GDP)Investments and Reforms 29 investments and 5 reforms Total number of Milestones and Targets77Estimated macroeconomic impact (1) Raise GDP by 0.4%-0.6% by 2026 (0.5% in spillover effects)Pre-financing disbursed EUR 201 millionFirst instalment Denmark did not yet submit a first payment request0%10%20%30%40%50%60%70%80%90%100%GreentransitionDigitaltransformationSmart,sustainable andinclusivegrowthSocial andterritorialcohesionHealth, andeconomic,social andinstitutionalresiliencePolicies for thenext generation 
 
 
 
 
 
  
 
 
   
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 
ANNEX 3: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The EU’s budget of more than EUR 1.2 trillion 
for  2021-2027  is  the  investment  lever  to 
help  implement  EU  priorities.  Underpinned  by 
an  additional  amount  of  about  EUR  800  billion 
largest 
through  NextGenerationEU  and 
instrument, the Recovery and Resilience Facility, it 
represents  significant  firepower  to  support  the 
recovery and sustainable growth. 

its 

In 2021-27, EU cohesion policy funds (14) will 
support long-term development objectives in 
Denmark  by  investing  EUR  0.61  billion (15) 
including  EUR  89.0  million  from  the  Just 
Transition  Fund  to  alleviate  the  socio-
economic  impacts  of  the  green  transition  in 
the  most  vulnerable  regions.  The  2021-27 
cohesion policy funds Partnership agreements and 
programmes are designed taking into account the 
2019-20  country-specific  reports  and  investment 
guidance  provided  as  part  of  the  European 
Semester, ensuring this money fully complements 
other EU funding. In addition, Denmark will benefit 
from  EUR  4.8  billion  support  for  the  2023-27 
period from the Common Agricultural Policy, which 
supports  social,  environmental,  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas,  contributing  to  the  European  Green 
Deal, and ensuring long-term food security. 

In  2014-20,  the  European  Structural  and 
Investment Funds (ESIF) for Denmark are set 
to  invest  EUR  1.96  billion (16)  from  the  EU 
budget.  The  total  investment  including  national 
financing  amounts  to  EUR  2.75  billion  (Graph 
A3.1),  representing  around  0.14%  of  GDP  for 
2014-20  and  3.97%  of  public  investment (17).  By 
31  December  2021,  93%  of  the  total  was 
allocated  to  specific  projects  and  50%  was 
reported  as  spent,  leaving  EUR  1.39  billion  to  be 

(14)  European Regional Development Fund (ERDF), European 

Social Fund+ (ESF+), Cohesion Fund (CF), Just Transition Fund 
(JTF), Interreg. 

(15)  Current prices, source: Cohesion Open Data  

(16)  ESIF includes cohesion policy funds (ERDF, ESF+, CF, Interreg) 
and European Agricultural Fund for Rural Development 
(EAFRD) and European Maritime and Fisheries Fund (EMFF). 
According to the ‘N+3 rule’, the funds committed for the 
years 2014-2020 must be spent by 2023 at latest (by 2025 
for EAFRD). Data source: Cohesion Open data, cut-off date 
31.12.2021 for ERDF, ESF+, CF, Interreg; cut-off date 
31.12.2020 for EAFRD and EMFF. 

and 

spent  by  the  end  of  2023 (18).  Among  the  11 
objectives  the  most  relevant  ones  for  cohesion 
policy funding in Denmark are those of sustainable 
and quality employment, research and innovation, 
education 
and 
vocational 
competitiveness of SMEs (in total EUR 0.6 billion). 
By  the  end  of  2020,  Cohesion  policy  investments 
helped  improve  skills  and  job  opportunities  for 
almost  80  000  persons  of  which  5500  gained 
qualifications;  supported  almost  14  000  SMEs; 
created over 700 new products, and led to over 20 
000 tonnes of reduction in CO2eq. 

training 

Graph A3.1: 2014-20 European Structural and 
Investment Funds, - total budget by fund 

(1) EUR billion, % 
(2) The data for the EAFRD and REACT-EU refer to the period 
2014-2022 
Source: European Commission 

are 

funds 

policy 

already 
Cohesion 
substantially contributing to the Sustainable 
Development  Goals  (SDGs)  objectives. 
In 
Denmark,  cohesion  policy  funds  are  supporting  5 
of the 17 SDGs with up to 93% of the expenditure 
contributing to the attainment of the goals.   

REACT-EU  under  NextGenerationEU  provided 
EUR  181.0  million  of  additional  funding  to 
2014-2020  Cohesion  policy  allocations  for 
Denmark  to  ensure  a  balanced  recovery, 
foster convergence and provide vital support 
for  regions  following  the  impact  of  the 
coronavirus  outbreak.  REACT-EU  support 
in 
Denmark  focuses  on  the  green  and  digital 
the  economy,  notably  helping 
transition  of 
companies  develop  and  adapt  to  the  transitions, 
and train their workforce.   

(17)  Public investment is gross fixed capital formation plus 

(18)  Including REACT-EU. ESIF data 

capital transfers, general government. 

on https://cohesiondata.ec.europa.eu/countries/DK   

24 

1.4954%0.2810%0.5219%0.4717%EAFRDEMFFERDFESF 
 
                                                 
  
                                                 
 
Graph A3.2: Cohesion policy contribution to the SDGs 

(1) EUR billion 
Source: European Commission 

In  2022,  new  projects  using  the  Commission’s 
Technical  Support  Instrument  will  start  to  (i) 
support the green and circular economy transition 
through  standardisation  of  product  data  in  digital 
and  automated  processes  and  (ii)  develop  a 
methodology  for  reviewing  existing  legislation  for 
digital-readiness. 

include 

Denmark  also  benefits  from  other  EU 
programmes.  These 
the  Connecting 
Europe Facility, which allocated EU funding of EUR 
867.3  million  to  specific  projects  on  strategic 
transport  networks,  and  Horizon  2020,  which 
allocated EU funding of EUR 1,760.0 million. 

25 

0.020.080.090.130.460.00.10.20.30.40.5SDG 9 Industry, innovation, infrastructureSDG 1 No povertySDG 7 Affordable and clean energySDG 4 Quality educationSDG 8 Decent work and economic growth 
 
 
  
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
ANNEX 4: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 
RECOMMENDATIONS 

Graph A4.1: Denmark's progress on the 2019-2020 
CSRs (2022 European Semester cycle) 

The  Commission  assessed  the  2019-2021 
country-specific  recommendations  (CSRs) (19) 
addressed  to  Denmark  in  the  context  of  the 
European  Semester.  The  assessment  takes  into 
account  the  policy  action  taken  by  Denmark  to 
date (20),  as  well  as  the  commitments  in  the 
recovery and resilience plan (RRP) (21). At this early 
stage  of  the  RRP  implementation,  overall  92%  of 
the CSRs focusing on structural issues in 2019 and 
2020  have  recorded  at  least  “some  progress”, 
while  8%  recorded  “limited”  (see  Graph  A4.1). 
Considerable  additional  progress  in  addressing 
structural  CSRs  is  expected  in  the  years  to  come 
with the further implementation of the RRP. 

Source: European Commission 

(19)  2021 CSRs: https://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX%3A32021H0729%2804%29&qi
d=1627675454457  

2020 CSRs https://eur-

lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2020&andText0=recommendation&DD_M
ONTH=07  

2019 CSRs https://eur-

lex.europa.eu/search.html?textScope0=ti&lang=en&scope=E
URLEX&qid=1526385017799&type=quick&AU_CODED=CO
NSIL&DD_YEAR=2019&andText0=recommendation&DD_M
ONTH=07 

(20)  Incl. policy action reported in the National Reform 

Programme, as well as in the RRF reporting (bi-annual 
reporting on the progress with implementation of milestones 
and targets and resulting from the payment request 
assessment). 

(21)  Member States were asked to effectively address all or a 

significant subset of the relevant country-specific 
recommendations issued by the Council in 2019 and 2020 in 
their RRPs. The CSR assessment presented here takes into 
account the degree of implementation of the measures 
included in the RRP and of those done outside of the RRP at 
the time of assessment.  Measures foreseen in the annex of 
the adopted Council Implementing Decision on the approval 
of the assessment of the RRP which are not yet adopted nor 
implemented but considered as credibly announced, in line 
with the CSR assessment methodology, warrant “limited 
progress”. Once implemented, these measures can lead to 
“some/substantial progress” or “full implementation”, 
depending on their relevance. 

26 

Limited Progress8%Some Progress50%Substantial Progress42% 
 
                                                 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A4.1: Summary table in 2019, 2020 and 2021 CSRs 

* See footnote 21 
Source: European Commission 

27 

DenmarkAssessment in May 2022*RRP coverage of CSRs until 20262019 CSR1Some ProgressFocus investment-related economic policy on education and skills,Some Progressresearchandinnovationtobroadentheinnovationbasetoincludemore companies, Limited ProgressRelevant RRP measures planned as of 2021, 2022and on sustainable transport to tackle road congestion.Some ProgressRelevant RRP measures planned as of 2021, 2022, 20242019 CSR 2Some progressEnsure effective supervision and the enforcement of the anti-money laundering frameworkSome Progress2020 CSR1Substantial ProgressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuring debt sustainability, while enhancing investment. Not relevant anymoreNot applicableEnhancetheresilienceofthehealthsystem,includingbyensuringsufficientcriticalmedicalproductsandaddressingtheshortageofhealth workers. Substantial ProgressRelevant RRP measures planned as of 20212020 CSR2Substantial ProgressFront-load mature public investment projects andSubstantial ProgressRelevant measures planned as of 2021, 2022promote private investment to foster the economic recovery. Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2023Focus investment on the green and digital transition, in particular on clean and efficient production and use of energy,Some ProgressRelevant RRP measures planned as of 2021, 2025sustainable transport Substantial ProgressRelevant RRP measures planned as of 2021, 2022, 2024as well as research and innovation. Substantial ProgressRelevant RRP measures planned as of 2021, 2025Supportanintegratedinnovationstrategywithabroaderinvestmentbase. Some ProgressRelevant RRP measures planned as of 2021, 20222020 CSR 3Some progressImprove the effectiveness of anti-money laundering supervision and effectively enforce the anti-money laundering framework. Some Progress2021 CSR1Substantial ProgressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Some ProgressNot applicableWheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Full ImplementationNot applicableAt the same time, enhance investment to boost growth potential.Payparticularattentiontothecompositionofpublicfinances,bothontherevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasures,toensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,notably supporting the green and digital transition.Full ImplementationNot applicableGiveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,includingbystrengtheningthecoverage,adequacy,andsustainabilityofhealthandsocialprotection systems for all.Full ImplementationNot applicable 
 
  
 
ENVIRONMENTAL SUSTAINABILITY 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 5: GREEN DEAL 
ANNEX 5: GREEN DEAL 

The  European  Green  Deal  aims  to  transform 
the  EU  into  a  fair  and  prosperous  society, 
with  a  modern, 
resource-efficient  and 
competitive economy where there are no net 
emissions  of  greenhouse  gases  in  2050  and 
where  economic  growth  is  decoupled  from 
resource use. This annex offers a snapshot of the 
most  significant  and  economically 
relevant 
developments 
in  the  respective 
building  blocks  of  the  European  Green  Deal.  It 
should  be  viewed  together  with  Annex 6  on  the 
employment  and  social  impact  of  the  green 
transition  and  Annex  7  for  circular  economy 
aspects of the Green Deal. 

in  Denmark 

Denmark  is  not  yet  in  a  position  to  meet 
European  and  domestic  greenhouse  gas 
emission  reduction  targets.  In  2020  its  total 
greenhouse gas emissions were 42% below 1990 
levels (22). To meet its domestic reduction target of 
70% by 2030 (relative to 1990 levels) and achieve 
climate  neutrality by  2050  it  will  be  necessary  to 
significantly  step-up  investments  and  reforms 
across the Danish economy. In sectors covered by 
the EU Effort Sharing Regulation (ESR) – including 
buildings,  road  transport,  agriculture,  waste  and 
small industry – greenhouse gas emissions fell by 
over  25%  between  2005  and  2020,  overshooting 
Denmark’s  EU  2020  reduction  target  for  these 
its  ESR 
sectors  of  20%.  However,  to  meet 
emissions 
(39% 
reduction  relative  to  2005  levels),  efforts  beyond 
the  measures  currently  slated 
in  Denmark’s 
National  Energy  and  Climate  Plan  may  still  be 
needed.  Additional  action  will  in  any  case  be 
required to achieve the revised Danish ESR target 
for  2030  (-50%)  that  the  European  Commission 
has proposed as part of its Fit for 55 package. In 
its recovery and resilience plan, Denmark allocates 
59%  of  the  available  resources  to  climate 
objectives  and  outlines  crucial 
reforms  and 
investments  to  further  the  transition  to  a  more 
sustainable, 
low-carbon  and  climate-resilient 
economy.   

for  2030 

reduction 

target 

to  environmental 

Denmark  is  performing  relatively  well  with 
respect 
Its 
environmental  tax  revenues  as  a  percentage  of 
total tax revenues, as well as in terms of GDP, are 
above the EU average (see Graph A5.1). This holds 

taxation. 

It 

is 

especially  for  transport  taxes,  which  contribute  to 
one  of  the  highest  revenue  shares  in  the  EU,  as 
well as, to a smaller extent, taxes on pollution and 
resources (23). 
interesting  to  note  that 
environmental tax revenues have been decreasing 
over  time,  largely  due  to  a  reduction  in  the  tax 
base,  as  environmental  taxation  has  managed  to 
reduce  harmful  economic  activity.  The  share  of 
expenditure  on  environmental  protection  in  total 
government expenditure is below EU average 

Graph A5.1: Fiscal aspects of the green transition  
Taxation and government expenditure on 
environmental protection 

Source: Eurostat 

Graph A5.2: Thematic – Energy  
Share in energy mix (solids, oil, gas, nuclear, 
renewables) 

The energy mix is based on gross inland consumption, and 
excludes heat and electricity. The share of renewables 
includes biofuels and non-renewable waste. 
Source: Eurostat 

With  41%  of  renewables  in  its  energy  mix, 
Denmark  is  a  frontrunner.    Nevertheless,  oil 
and petroleum still represent 38% of the country’s 
energy  mix 
(see  Graph  A5.2).  Substantial 
investments and further streamlining of permitting 
procedures  to  remove  administrative  barriers,  in 

(22)  2021 Commission Staff Working Documented annexed to 

the EU Climate Action Progress Report 

(23)  For more information on taxation see Annex 18. 

28 

0.02.04.06.08.0Environmental taxes (%of GDP)Environmental taxes (%of total taxation)Government expenditureon environmentalprotection (% of totalexpenditure)DK (2020)EU27 (2020)0102030405060708090100200520102015201820192020Solid fossil fuels, peat and oil shaleOilGasNuclearRenewables 
 
 
                                                 
   
 
   
                                                 
 
 
particular  in  the  offshore  wind  sector,  will  be 
its  domestic 
required  for  Denmark  to  meet 
objective of reducing its greenhouse gas emissions 
by  70%  by  2030  (from  a  1990  baseline)  and  for 
renewables to cover at least 55% of the country’s 
gross  final  consumption  by  2030.  In  December 
2020,  the  government  announced  a  moratorium 
on  oil  &  gas  exploration,  with  the  objective  of 
ending existing production by 2050.  

In  terms  of  biodiversity  and  ecosystem 
health,  Denmark  presents  a  mixed  picture. 
Considering both Natura 2000 and other nationally 
designated protected areas, in 2019 Denmark was 
legally  protecting  14.8%  of  its  land  areas  (EU 
average 26%) and about 19% of marine areas (EU 
average  8%)  (see  Graph A5.3).  At  the  same time, 
the  share  of  habitats  with  bad  or  poor 
conservation status had increased to 61% and the 
share of assessments for species with bad or poor 
conservation  status  had  increased  to  95%.  The 
percentage of land covered by forests was 16.4% 
in  2018,  well  below  EU  average  of  43.5%.  The 
share of organic farming has increased from 6.3% 
in  2015  to  11.55%  in  2020,  just  above  the  EU 
average of 9.7% (2020).   

As regards pollution, the situation of nitrates 
needs to be carefully monitored (24). Regarding 
air  quality,  air  quality  limit  values  were  not 
exceeded in 2020.  

In  terms  of  mobility,  Denmark  presents  a 
mixed picture. It is among the EU frontrunners in 
terms of zero-emission passenger cars as a share 
of new registrations (see Graph A5.4). At the same 
time, compared to many other EU Member States, 
electrification 
is 
underdeveloped. 

network 

railway 

its 

of 

Graph A5.3: Thematic – Biodiversity   
Terrestrial protected areas and organic farming 

For terrestrial protected areas data for 2018, and data for the 
EU average (2016, 2017) is lacking. 
Source: EEA (terrestrial protected areas) and Eurostat 
(organic farming) 

Graph A5.4: Thematic – Mobility   
Share of zero-emission vehicles (% of new 
registrations) 

Zero-emission vehicles (passenger cars) include battery and 
fuel cell electric vehicles (BEV, FCEV) 
Source: European Alternative Fuels Observatory 

(24)  No data from Eurostat, but according to the last report on the 
implementation of the Nitrates Directive (SWD/2021/1001 
final. 10.11.2021) referring to the change between the 
periods 2008-11 and 2016-19, groundwater quality has 
slightly improved as compared to the previous reporting 
period, with the percentage of stations reaching or exceeding 
40 or 50 mg nitrate per L that decreased from 6.9% to 6.7% 
and from 19.3% to 14.3%, respectively. Annex 15 of 
the Staff Working Document accompanying the report on the 
implementation of the Nitrates Directive for the period 
2016-2019  

29 

020402016201720192020Terrestrial protected areas (% total area)Area under organic farming (% total utilised agricultural area)EU27 (terrestrial)EU27 (organic)0.05.010.015.0201620172018201920202021% of new registrationsDKEU27 
                                                 
  
 
   
 
Table A5.1: Indicators underpinning progress on European Green Deal from a macroeconomic perspective 

(1)  The 2030 non-ETS GHG target is set in the Effort Sharing Regulation. The Fit for 55 targets are those in the Commission’s 
proposal to increase EU's climate ambition by 2030. Renewables and Energy Efficiency targets and national contributions under 
the Governance Regulation (Regulation (EU) 2018/1999).  
(2) Distance to target is the gap between Member States’ 2030 target under the Effort Sharing Regulation and projected 
emissions, with existing measures (WEM) and with additional measures (WAM) respectively, as a percentage of 2005 base year 
emissions.  
(3) Percentage of total revenues from taxes and social contributions (excluding imputed social contributions). Revenues from the 
ETS are included in environmental tax revenues (in 2017 they amounted to 1.5% of total environmental tax revenues at the EU 
level).  
(4) Covers expenditure on gross fixed capital formation to be used for the production of environmental protection services (i.e. 
abatement and prevention of pollution) covering all sectors, i.e. government, industry and specialised providers.  
(5) The climate protection gap indicator is part of the European adaptation strategy (February 2021), and is defined as the share 
of non-insured economic losses caused by climate-related disasters.  
(6) Sulphur oxides (SO2 equivalent), Ammonia, Particulates < 10µm, Nitrogen oxides in total economy (divided by GDP). 
(7) Transportation and storage (NACE Section H).  
(8) Zero emission vehicles include battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV).  
(9) European Commission Report (2019) 'Benchmarking smart metering deployment in the EU-28'.  
(10) European Commission (2021). Each year the DESI is re-calculated for all countries for previous years to reflect any possible 
change in the choice of indicators and corrections to the underlying data. Country scores and rankings may thus differ compared 
with previous publications. 
Source: Eurostat, JRC, European Commission, EEA, EAFO 

30 

TargetTarget2005201920202030WEMWAM2030WEMWAMNon-ETS GHG emission reduction target (1)MTCO2 eq; %; pp (2)40.4-20%-25%-39%-3-3-50%-14-14200520162017201820192020Share of energy from renewable sources in gross final consumption of energy (1)%16%32%34%35%37%32%55%Energy efficiency: primary energy consumption (1)Mtoe19.417.317.417.416.815.318.3Energy efficiency: final energy consumption (1)Mtoe15.514.514.614.614.313.115.8201520162017201820192020201820192020Environmental taxes (% of GDP)% of GDP4.03.93.73.63.33.22.42.42.2Environmental taxes (% of total taxation)% of taxation (3)8.68.68.08.27.06.86.05.95.6Government expenditure on environmental protection% of total exp.0.780.770.800.780.780.751.661.701.61Investment in environmental protection% of GDP (4) ------0.420.380.41Fossil fuel subsidiesEUR2020bn1.511.461.421.331.37-56.8755.70-Climate protection gap (5)score 1-4Net GHG emissions1990 = 100697271706558797669GHG emissions intensity of the economykg/EUR'100.330.330.320.320.290.290.320.310.30Energy intensity of the economykgoe/EUR'100.070.070.060.060.060.060.120.110.11Final energy consumption (FEC)2015=100100.0102.5103.0103.1101.292.9103.5102.994.6FEC in residential building sector2015=100100.0103.2101.3100.298.997.3101.9101.3101.3FEC in services building sector2015=100100.0102.7105.0104.6101.196.1102.4100.194.4Smog-precursor emission intensity (to GDP) (4)tonne/EUR'10 (6)4.854.754.925.064.63-0.990.93-Years of life lost caused due to air pollution by PM2.5per 100.000 inh.532487478611530-863762-Years of life lost due to air pollution by NO2per 100.000 inh.151562< 1-12099-Nitrate in ground watermg NO3/litre------21.720.7-Terrestrial protected areas% of total-14.816.3-14.814.8-25.725.7Marine protected areas% of total-18.2--18.7--10.7-Organic farming% of total utilised agricultural area6.37.88.69.811.111.58.08.59.100-0606-1212-18Net land takeper 10,000 km213.011.05.0201520162017201820192020201820192020GHG emissions intensity of transport (to GVA) (7)kg/EUR'102.992.973.023.142.813.550.890.870.83Share of zero emission vehicles (8)% in new registrations2.20.60.30.72.57.21.01.95.464569188812Share of electrified railways%24.324.525.426.132.3-55.656.0-22.924.324.625.225.8-28.928.8-YearDKEUShare of smart meters in total metering points (9) - electricity% of total201869.135.8Share of smart meters in total metering points (9) - gas% of total20180.013.1ICT used for environmental sustainability (10)%202153.965.9Progress to policy targetsNational contribution to 2030 EU targetDENMARKEU'Fit for 55'DistanceDistanceDigitalFiscal and financialindicators0 out of 4 (decrease from historical level of 1.5). This is a no risk category (4 being a high risk).ClimateEnergyPollutionBiodiversity2000-20062006-20122012-201822.218.79.4MobilityNumber of plug-in electric vehicles per charging pointCongestion (average number of hours spent in road congestion per year by a representative commuting driver) 
 
 
  
 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 
ANNEX 6: EMPLOYMENT AND SOCIAL IMPACT OF THE GREEN TRANSITION 

The  green  transition  not  only  encompasses 
environmental 
to 
improvements 
sustainability, but also includes a significant 
social  dimension. While  measures  in this  regard 
include the opportunity for sustainable growth and 
job creation, it must also be ensured that no one is 
left  behind  and  all groups  in  society  benefit  from 
the  transition.  Denmark  envisages  a  continuation 
of substantial green investments, providing strong 
potential  for  job  creation;  at  the  same  time,  the 
green economy is significant. The social dimension 
of  the  green  transition  is  less  likely  to  be  an 
issue.   

crucial 

several 

Denmark’s recovery and resilience plan (RRP) 
outlines 
reforms  and 
investments  for  a  fair  green  transition.  With 
EUR  923  million  allocated 
towards  green 
measures, these funds make up 59% of the total 
Danish  RRP  budget.  This  includes  measures  to 
improve  energy  efficiency  by  renovating  private 
and  public  buildings,  and  by  supporting  such 
measures for small and medium-sized enterprises 
(SMEs).  Among  other  things,  these  initiatives  will 
help  mitigate  pollution,  create  labour-intensive 
renovation  jobs  and  support  local  supply  chains, 
while  generating  demand  for  highly  energy  and 
resource  efficient  equipment.  In  synergy  with  the 
Recovery  and  Resilience  Facility,  the  European 
Social  Fund  Plus  (ESF+)  will  help  unlock  the 
potential for ‘green jobs’ in Denmark; and the Just 
Transition Fund (EUR 89 million) will help mitigate 
the  social 
transition. 
Denmark’s  National  Energy  and  Climate  Plan 
(NECP) briefly considers the just and fair transition 
aspects of its policies, and provides information on 
the  social,  employment  and  skills  impacts  of  the 
transition  to  a  climate-neutral  economy,  including 
the need for skills and employment in the energy 
sector  and  in  clean  transition  industries.  Energy 
poverty  is  partially  addressed  in  the  NECP,  with 
Denmark  indicating  that  the  issue  is  addressed 
through national social measures, such as heating 
supplements  and  supplementary  benefits,  though 
a  target  of  reducing  energy  poverty  could  further 
enable  support  for  vulnerable  consumers  through 
specific and measurable objectives (25). 

impact  of 

the  green 

The  carbon  footprint  of  the  economy  has 
slightly decreased and major greenhouse gas 
emitting sectors (such as the cement sector) 
remain sizeable. However, the green economy 

(25)  SWD(2020) 903 final 

31 

is  significant  and  provides  strong  potential 
for  further  quality  job  creation.  The  intensity 
of  greenhouse  gas  emissions 
in  the  Danish 
economy  decreased  between  2015  and  2020  (in 
terms  of  gross  value  added)  and  stands  17% 
above  the  EU  average.  In  contrast,  Denmark  has 
the highest average carbon footprint per worker at 
24.66  tonnes  of  greenhouse  gas  emissions in  the 
EU (where the average is 13.61 tonnes) (see Graph 
A6.1). Energy-intensive industries (EII) provide jobs 
for  a  low  percentage  of  the  total  workforce 
(1.31%), which is well below the EU average (3%). 
Cement  has  been  identified  as  a  transforming 
sector (26),  with  job  losses  estimated  at  around 
350  direct  jobs,  as  well  as  further  impact  on  the 
subcontractors  and  the  regional  economy (27). 
Modernising  regional  economies  and  increasing 
their competitiveness is key, in which the transition 
to a circular economy, innovation, implementation 
of  advanced  technologies  and  up-  and  reskilling 
could  play  an  important  role  (see  Annex  15).  The 
environmental  goods  and  services  sector  already 
provides 
jobs  to  a  significant  share  of  the 
employed population (2.6% vs. 2.2% in the EU) (28) 
and  wind  and  solar  energy  potential  as  well  as 
energy  efficiency 
improvements  offer  further 
opportunities  for  green  jobs (29).  Labour  shortages 
in greening sectors such as professional, scientific 
and technical activities have been identified (30). 

As regards the social dimension of the green 
transition,  ensuring  access  to  essential 
transport  and  energy  services  appears 
overall to be less of a challenge for Denmark 
than for other EU countries. A relatively low but 
stable  share  of  the  population  at  risk  of  poverty 
lives in rural areas (10.2% vs 18.7% in the EU) (31). 

(26)  SWD(2021) 275 final 

(27)  2020 European Semester: Overview of Investment Guidance 
on the Just Transition Fund 2021-2027 per Member State 
(Annex D) 

(28)  There is currently no common EU-wide definition of green 
jobs. The environmental goods and services sector (EGSS) 
accounts only report on an economic sector that generates 
environmental products, i.e. goods and services produced for 
environmental protection or resource management. 

(29)

https://publications.jrc.ec.europa.eu/repository/handle/J

RC126047  

(30)  Eurofound (2021), Tackling labour shortages in EU Member 

States, Publications Office of the European Union, 
Luxembourg. 

(31)  Based on COM(2021) 568 final (Annex I) as a proxy for 

potential transport challenges in the context of the green 
transition (e.g. due to vulnerability to fuel prices). 

 
 
                                                 
                                                 
 
 
Graph A6.1: Fair green transition challenges 

The  share  of  the  population  who  are  unable  to 
keep  their  homes  adequately  warm  slightly 
improved between 2015 and 2020 (from 3.6% to 
3%),  which  remains  significantly  below  the  EU 
average  (8.2%),  with  a  higher  incidence  among 
A6.2). 
lower-income 
Consumption  patterns  vary  across  the  population: 
the  average  carbon  footprint  of  the  top  10%  of 
emitters is  about  5  times  higher  than  that  of  the 
bottom  50%  of  the  population  (5.3  times  in  the 
EU). 

groups 

Graph 

(see 

Tax  systems  are  key  to  ensuring  a  fair 
transition  towards  climate  neutrality (32). 
Denmark’s  revenues  from  total  environmental 
taxes  decreased  from  3.97%  of  GDP  in  2015  to 
3.29%  in  2019,  and  remained  relatively  stable  in 
2020,  reaching  3.17%  of  GDP  (against  2.24%  in 
the  EU).  The  labour  tax  wedge  for  low-income 
earners (33) slightly decreased from 31.1% in 2015 
to  30.4%  in  2019.  It  stood  at  30.5%  in  2021 
compared  to  31.9%  in  the  EU  (see  Annex  18). 
Redistributive 
accompanying 
measures 
environmental  taxation  could  potentially  promote 
progressive  measures  and  have  a  positive  impact 
on  the  disposable  income  of  households  in  the 
bottom 20% of the income distribution (34). 

(1) Numbers are the normalised indicator performance, 
signifying factors relative to EU27 average 

Source: Eurostat, World Inequality Database 

Graph A6.2: Energy poverty by income decile 

Source: Eurostat EU-SILC survey (2020) 

(32)  COM(2021) 801 final 

(33)  Tax wedge for a single earner at 50% of the national 

average wage. Source: Tax and benefits database, European 
Commission/OECD. 

(34)  SWD(2021) 641 final PART 3/3 

32 

0.00.51.01.52.02.5GHG tonnes perEuro of grossadded value(MS/EU)GHG tonnes perworker (MS/EU)Employment sharein energy-intensiveindustries (MS/EU)Share of populationin rural areas atrisk of poverty(MS/EU)Energy poverty(MS/EU)Carbon inequality(MS/EU)DenmarkEU 2020Denmark 20150%5%10%15%20%25%12345678910Unable to keep home adequately warm (per income decile)Income decileDenmarkEuropean Union 
 
                                                 
  
 
 
  
 
 
PRODUCTIVITY 
PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 
ANNEX 7: RESOURCE EFFICIENCY AND PRODUCTIVITY 

while 

minimising 

The  efficient  use  of  resources  is  key  to 
ensuring  competitiveness  and open strategic 
autonomy, 
the 
environmental  impact.  The  green  transition 
presents  a  major  opportunity  for  European 
industry 
clean 
creating  markets 
technologies  and  products.  It  will  have  an  impact 
across  the  entire  value  chains  in  sectors  such  as 
energy and transport, construction and renovation, 
food  and  electronics,  helping  create  sustainable, 
local and well-paid jobs across Europe. 

for 

by 

845  kg/year/inhabitant  in  2020  (EU  average  505 
kg/year/inhabitant).  Furthermore,  in  2020,  45.2% 
of  municipal  waste  was  still  incinerated  (albeit 
with energy recovery) compared to the EU average 
of  27.1%.  In  terms  of  municipal  waste  collected 
for  recycling,  Denmark  ranks  just  above  the  EU 
average (53.9% in 2020 (EU average 47.8%)), but 
In  2018, 
with  clear  room  for 
hazardous waste also accounted for 10% of total 
waste generated.  

improvement. 

Graph A7.1: Municipal waste treatment 

Source: Eurostat 

With  respect  to  the  circular  economy, 
Denmark  could  do  better.  Between  2016  and 
2020,  the  circular  (secondary)  use  of  material  in 
Denmark  declined  from  8%  in  2016  to  7.7%  in 
2020,  well  below  the  EU  average  of  12.8%.  With 
1.62  PPS (35)  generated  per  kg  of  material 
consumed  in  2020,  resource  productivity (36)  in 
Denmark is below the EU average of 2.23 PPS per 
kg and showed no signs of convergence in the last 
years  on  record.  Denmark  also  fell  below  the  EU 
average  for  three  circular  economy  indicators 
relating  to  employment,  value-added  and  private 
investments.  

Denmark  is  taking  some  steps  to  become 
more  circular.  The  national  Action  Plan  for 
Circular Economy from July 2021 (37) contains 129 
measures  running  up  to  2032,  with  a  focus  on 
waste prevention and recycling, and gives an extra 
focus  on  how  value  chains  within  biomass, 
construction  and  plastics  can  become  more 
circular. Furthermore, Denmark is leveraging ERDF 
programmes  that  provide  support  for  the  circular 
economy, 
in  particular  for  strengthening  the 
competitiveness and innovativeness of SMEs. 

In  certain  areas  of  waste  management 
Denmark is underperforming. It has the highest 
municipal  waste  per  capita  figure  in  the  EU  with 

(35)  'PPS per Kilogram' (GDP in current prices expressed in 

Purchasing Power Standards). Purchasing Power Standards 
are fictive 'currency' units that remove differences in 
purchasing power, hence eliminate differences in price levels 
across countries; to be used when comparing across 
countries at one point in time 

(36)  Resource productivity expresses how efficiently the economy 

uses material resources to produce wealth. Improving 
resource productivity can help to minimise negative impacts 
on the environment and reduce dependency on volatile raw 
material markets. 

(37)  Danish Action Plan for Circular Economy July 2021 

33 

8228308208148448450100200300400500600700800900201520162017201820192020Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU 27 
 
 
                                                 
  
 
 
 
 
 
 
 
 
Table A7.1: Selected resource efficiency indicators 

Source: Eurostat 

34 

SUB-POLICY AREA201520162017201820192020EU27 CircularityResource Productivity (Purchasing power standard (PPS) per kilogram)1.51.51.61.61.61.72.22020Material Intensity (kg/EUR)0.60.60.60.60.60.60.42020Circular Material Use Rate (%)8.38.07.98.17.67.712.82020Material footprint (Tones/capita)22.222.723.423.024.0-14.62019Waste Waste generation (kg/capita, total waste)-3663-3702--52342018Landfilling (% of total waste treated)-28.7-5.9--38.52018Recycling rate (% of municipal waste)47.448.347.649.951.553.947.82020Hazardous waste (% of municipal waste)-9.6-9.8--4.32018CompetitivenessGross value added in environmental goods and services sector (% of GDP)3.03.23.33.23.43.22.32018Private investment in circular economy (% of GDP)0.10.10.10.1--0.12018Latest year EU 27 
 
 
 
  
 
of  green  action  through  ICT  is  below  the  EU 
average  (54%  compared  to  66%).  Improvements 
in 
the  country's 
this  field  could  accelerate 
transition towards a greener economy. 

Denmark is in the leading group, but not the 
top performer concerning wide availability of 
digital public services. The country scores above 
EU  average  for  digital  public  services  for  both 
citizens and businesses. 

ANNEX 8: DIGITAL TRANSITION 
ANNEX 8: DIGITAL TRANSITION 

The Digital Economy and Society Index (DESI) 
monitors EU Member States’ digital progress. 
The  areas  of  human  capital,  digital  connectivity, 
the 
technologies  by 
businesses  and  digital  public  services  reflect  the 
Digital  Decade’s  four  cardinal  points.  This  Annex 
describes Denmark’s DESI performance.  

integration  of  digital 

The Danish recovery and resilience plan (RRP) 
dedicates 25% of its allocation to measures 
supporting  the  digital  transformation.  The 
Danish government has taken the first steps in its 
new  National  Digital  strategy  with the  budget  act 
of 2022. Further initiatives will be presented, when 
the overall National Digital Strategy is launched in 
2022..  The  planned  sub  reforms  in  the  strategy 
will  focus  on  further  digitalising  the  public 
administration  and  preparing 
future 
challenges,  including,  targets  to  increase  public-
private 
innovation  partnerships,  uptake  of  AI 
technologies  in  public  sector  and  adopting  a  new 
cybersecurity  strategy.  In  addition,  the  plan  aims 
to  improve  broadband  connectivity  and  digital 
solutions in the health sector. 

for 

it 

The  shortage  of  ICT  specialists  is  a  key 
challenge for Denmark in the DESI dimension 
on human capital. The country scores well above 
the  EU  average  in  basic  and  above  basic  digital 
skill  and  the  percentage  of  ICT  specialists  is 
slightly above the EU average. However, there is a 
growing  problem  filling  ICT  specialist  vacancies 
and  the  share  of  firms  reporting  hard-to-fill 
vacancies  for  jobs  requiring  ICT  specialist  skills  is 
above  the  EU  average  (58.1%  compared  to 
55.4%) (38).  

Denmark is a leader when it comes to digital 
connectivity  ensuring  wide  coverage  of  fast 
scores 
broadband 
significantly  above  the  EU  average  both  in  terms 
of  Very  High  Capacity  Network  and  5G  coverage, 
but take-up of at least 1 Gbps is only close to EU 
average (7.25% compared to 7.58%).   

internet. 

Denmark 

embrace 

companies 

Danish 
digital 
technologies. 79% of SMEs have at least a basic 
level of digital intensity. Twice as many companies 
use  big  data  and  cloud  technologies  as  the  EU 
average.  On 
Intelligence  Danish 
companies  are  the  top  performers  in  the  EU.  The 
share of enterprises having medium/high intensity 

Artificial 

(38)  Source: Eurostat – European Union Survey on ICT Usage and 

eCommerce in Enterprises 

35 

 
 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A8.1: Key Digital Economy and Society Index Indicators 

(*) The 5G coverage indicator does not measure users’ experience, which may be affected by a variety of factors such as the type 
of device used, environmental conditions, number of concurrent users and network capacity. 5G coverage refers to the percentage 
of populated areas as reported by operators and national regulatory authorities. 
Source: Digital Economy and Society Index 

36 

EUEU top-performanceHuman capitalDESI 2020DESI 2021DESI 2022DESI 2022DESI 2022At least basic digital skillsNANA69%54%79%% individuals202120212021ICT specialists5.1%5.3%5.6%4.5%8.0%% individuals in employment aged 15-7420192020202120212021Female ICT specialists22%23%23%19%28%% ICT specialists20192020202120212021ConnectivityFixed Very High Capacity Network (VHCN) coverage93%94%95%70%100%% households201920202021202120215G coverage (*)NA80%98%66%99.7%% populated areas2020202120212021Integration of digital technologySMEs with at least a basic level of digital intensityNANA79%55%86%% SMEs202120212021Big data14%27%27%14%31%% enterprises20182020202020202020CloudNANA62%34%69%% enterprises202120212021Artificial IntelligenceNANA24%8%24%% enterprises202120212021Digital public servicesDigital public services for citizensNANA8375100Score (0 to 100)202120212021Digital public services for businessesNANA8982100Score (0 to 100)202120212021Denmark 
 
  
 
ANNEX 9: INNOVATION 
ANNEX 9: INNOVATION 

This  Annex  provides  a  general  overview  of 
the performance of the Danish research and 
innovation  system.  In  the  2021  edition  of  the 
European  Innovation  Scoreboard (39),  Denmark  is 
an innovation leader, and is in third place overall in 
the  EU.  Although  still  largely  exceeding  the  EU 
average,  Denmark’s 
innovation  performance 
relative  to  the  EU  has  decreased  somewhat  over 
time.   

solutions  to  address  the  challenges  to  achieving 
Denmark’s  ambitious  climate  goals.  The  focus  on 
broadening  the  innovation  base  and  R&D  for  the 
green  transition  is  also  evident  in  the  Danish 
Cohesion Policy programmes.  

scientific, 

technological 

Denmark  has  a  good  R&D  ecosystem,  which 
is underpinned by significant investment and 
and 
excellent 
innovation outputs. Denmark ranked first in the 
EU  in  2020  in  terms  of  public  research  intensity 
(public  expenditure  on  R&D  as  a  percentage  of 
GDP)  and  it  also  ranks  high  on  overall  R&D 
intensity  (GERD  as  %  of  GDP)  and  business 
enterprise  expenditure  on  R&D  (BERD).  This  high 
R&D investment translates into high scientific and 
technological  outputs,  performing  well  above  the 
EU  average  in  terms  of  high-quality  publications 
and  patents, 
including  environmental-related 
patents,  where  it  more  than  doubles  the  EU 
average.  This  strong  performance  reflects  the 
connection  of  the  Danish research  and  innovation 
(R&I)  system  with  its  ambition  to  take  advantage 
of the opportunities that the green transformation 
will open up.   

of 

technological 

Despite  the  many  strengths  of  the  Danish 
R&I  system,  investment  is  concentrated  in  a 
small  number  of 
large  companies  and 
growing productivity gaps between large and 
small  companies  suggest  weaknesses  in  the 
advances. 
diffusion 
Broadening  the  innovation  base  and  involving 
more  companies  in  R&D  activities  would  promote 
innovation  diffusion (40).  Denmark’s  recovery  and 
resilience plan has a strong R&D focus, with more 
than  17%  of  the  total  spending  earmarked  for 
R&D  projects.  Achieving  Denmark’s  ambitious 
greenhouse  gas  emissions  reduction  targets  also 
requires  incentives  for  research  and  innovation. 
Therefore,  the  ‘green  research  and  development’ 
component  contains  a  temporary increase in  R&D 
tax  deductibility  for  all  companies,  while  the 
mission-based R&D partnerships will focus on four 

(39)  2021 European Innovation Scoreboard, Country 

profile: Denmark  https://ec.europa.eu/docsroom/documents/4
5911   

(40)  Peer review of Danish R&I system, Horizon 2020 Policy 

Support Facility, 2019 

37 

 
 
                                                 
 
Table A9.1: Key research, development and innovation indicators 

Source: DG Research and Innovation - Common R&I Strategy and Foresight Service - Chief Economist Unit. Eurostat, OECD, DG 
JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

38 

CompoundEUannual growthaverage2010-20R&D Intensity (GERD as % of GDP)2.923.052.972.933.030.42.32Public expenditure on R&D as % of GDP0.951.111.081.091.182.20.78Business enterprise expenditure on R&D (BERD) as % of GDP1.961.941.871.841.84-0.631.53Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 14.914.413.7::-1.19.9PCT patent applications per billion GDP (in PPS)6.36.06.0::-0.73.5Public-private scientific co-publications as % of total publications12.412.112.812.511.7-0.69.05New graduates in science & engineering per thousand pop. aged 25-3415.817.119.619.6:2.916.3Total public sector support for BERD as % of GDP0.0700.089:0.093:3.10.196R&D tax incentives: foregone revenues as % of GDP0.0030.0200.0310.031:31.80.100Share of environment-related patents in total patent applications filed under PCT (%)22.520.425.7::1.712.8Venture Capital (market statistics) as % of GDP0.0450.0280.0570.0800.0947.70.054Employment in fast-growing enterprises in 50% most innovative sectors6.54.55.65.7:-1.45.5Key indicators 20102015201820192020DenmarkQuality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation Finance for innovation and Economic renewal 
 
 
  
 
ANNEX 10: INDUSTRY AND SINGLE MARKET DATA 
ANNEX 10: INDUSTRY AND SINGLE MARKET DATA 

market  for  goods  and  services  is  in  line  with  the 
EU  average.  It  has  slightly  increased  in  recent 
years regarding trade in goods, while it has slightly 
decreased  regarding  trade  in  services.  Overall, 
Denmark  is  performing  relatively  well  on  the 
Single Market Scoreboard. 

As  in  other  countries,  global  supply  chain 
disruptions  are  currently  denting  growth. 
Danish  manufacturing  firms  have  been  grappling 
with  supply  problems  for  key  raw  materials  and 
components,  as  well  as  price  increases.  25%  of 
firms  reported  disruptions  to  their  operations  due 
to  shortages  in  materials  or  equipment  in  2021 
(vs.  26%  for  the  EU  average).  At  the  same  time, 
firms  in  the  logistics  sector  benefited  from  the 
surge  in  demand  and  increased  prices.  At  the 
beginning of 2022 business confidence has fallen 
to an 11-month low and has turned pessimistic for 
the first time since February 2021 (42). 

prosperity,  well-being 

Productivity  growth  is  a  critical  driver  of 
and 
economic 
convergence over the long run. A major source 
of  productivity  for  the  EU  economy  is  a  well-
functioning single market, where fair and effective 
competition  and  a  business-friendly  environment 
are  ensured, 
in  which  Small  and  Medium 
Enterprises  (SMEs)  can  operate  and  innovate 
without  difficulty.  Businesses  and  industry  rely 
heavily  on  robust  supply  chains  and  are  facing 
bottlenecks that bear a negative impact on firms’ 
productivity 
levels,  employment,  turnover  and 
entry/exit  rates.  This  may  impact  the  Member 
States’  capacity  to  deliver  on  Europe’s  green  and 
digital transformation. 

sector,  with 

Denmark’s  labour  productivity  level  is  high 
compared  to  other  EU  Member  States  and 
productivity  growth  has  been 
strong, 
especially  in  manufacturing.  Denmark  has  a 
labour 
strong  manufacturing 
productivity  above  the  average  of  other  Nordic 
countries,  while  productivity  growth  in  services  is 
slightly  lagging  behind.  The  Danish  economy  is  a 
frontrunner  in  green  growth  and  digitalisation. 
However,  skills  shortages  are  denting  further 
R&D 
growth.  Moreover, 
remains 
large  firms,  while  the 
concentrated 
contribution  of  SMEs  is  modest  (see  Annex  8). 
Productivity 
for 
maintaining  the  relatively  high  level  of  welfare  in 
country’s 
for  ensuring 
Denmark  and 
competitiveness in the longer term. 

fundamental 

in  few 

activity 

growth 

the 

is 

Denmark  has  a  stable  and  favourable 
business  environment.  Firms  benefit  from  an 
easy  access  to  digital  public  services.  Among  the 
long-term  barriers  to  investment,  Danish  firms 
most  frequently  cite  availability  of  skilled  staff 
(75%) (41).  While  many  companies  are  created  in 
Denmark,  start-ups  and  small  and  innovative 
companies  struggle  to  grow  and  scale  up.  Late 
payments  can  be  a  problem  for  certain  small 
companies  and  the  rate  of  SMEs  whose  bank 
loans’  applications  were  refused  or  rejected  as 
well as the share of finance constrained firms are 
above  the  EU  average.  Equity  financing  is  less 
pronounced  than  in  some  of  the  other  Nordic 
countries but better than EU average. 

Denmark  is  well-integrated  into  the  single 
market. Denmark's trade integration in the single 

(41)  https://www.eib.org/en/publications/econ-eibis-2021-eu  

(42)  Statistics Denmark, Business Tendency Survey  

39 

 
 
                                                 
                                                 
 
Table A10.1: Key Single Market and Industry Indicators 

(Continued on the next page) 

40 

SUB-POLICY AREAINDICATOR NAMEDESCRIPTION20212020201920182017Growth ratesEU27 average*Value added by source (domestic)VA that depends on domestic intermediate inputs, % [source: OECD (TiVA), 2018]68,4862,6%Value added by source (EU)VA imported from the rest of the EU, % [source: OECD (TiVA), 2018]16,7819,7%Value added by source (extra-EU)% VA imported from the rest of the world, % [source: OECD (TiVA), 2018]14,717,6%Cost competitivenessProducer energy price (industry)Index (2015=100) [source: Eurostat, sts_inppd_a]189,186,9114,3124,210187,2%127,3Material Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]255485400%26%Labour Shortage using survey dataAverage (across sectors) of firms facing constraints, % [source: ECFIN CBS]23510119156%14%Sectoral producer pricesAverage (across sectors), 2021 compared to 2020 and 2019, index [source:Eurostat]7,4%5,4%Concentration in selected raw materialsImport concentration a basket of critical raw materials, index [source: COMEXT]0,160,150,150,150,17-6%17%Installed renewables electricity capacity Share of renewable electricity to total capacity, % [source:Eurostat, nrg_inf_epc]46,1045,4045,9043,007%47,8%Net Private investmentsChange in private capital stock, net of depreciation, % GDP [source: Ameco]4,44,14,54,24,8%2,6%Net Public investmentsChange in public capital stock, net of depreciation, % GDP [source: Ameco]10,60,80,743%0,4%Investment dynamicsHEADLINE INDICATORSEconomic structureRESILIENCEShortages/supply chain disruptionsStrategic dependencies 
 
 
  
 
Table (continued) 

(*) latest available 
Source: See above in the table the respective source for each indicator in the column “Description” 

41 

Single Market integrationIntra-EU tradeRatio of Intra-EU trade to Extra-EU trade, index [source: Ameco]1,551,481,451,511,466%1,59Professional services restrictivenessRegulatory restrictiveness indicatorRestrictiveness of access to and exercise of regulated professions (professions with above median restrictiveness, out of the 7 professions analysed in SWD (2021)185 [source: SWD (2021)185; SWD(2016)436 final])2   20%3,37Professional qualifications recognitionRecognition decisions w/o compensationProfessionals qualified in another EU MS applying to host MS, % over total decisions taken by host MS [source: Regulated professions database]73,445%Transposition - overall5 sub-indicators, sum of scores [source: Single Market Scoreboard]Above averageOn averageOn averageAbove averageInfringements - overall4 sub-indicators, sum of scores [source: Single Market Scoreboard]Above averageOn averageOn averageAbove averageInvestment protectionConfidence in investment protectionCompanies confident that their investment is protected by the law and courts of MS if something goes wrong, % of all firms surveyed [source: Flash Eurobarometer 504]7656%BankruptciesIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.228,2187,4162,140,8%70,1Business registrationsIndex (2015=100) [source: Eurostat, sts_rb_a]n.a.n.a.141,7142,8125,90,125105,6Late paymentsShare of SMEs experiencing late payments in past 6 months, % [source: SAFE]35,124,938,7n.a.n.a.-9%45%EIF Access to finance index - LoanComposite: SME external financing over last 6 months, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0,380,260,210,3123,5%0,56EIF Access to finance index - EquityComposite: VC/GDP, IPO/GDP, SMEs using equity, index from 0 to 1 (the higher the better) [source: EIF SME Access to Finance Index]0,30,230,480,33-9,7%0,18% of rejected or refused loansSMEs whose bank loans’ applications were refused or rejected, % [source: SAFE]26,726,528,26,711,1140,0%12,4%SME contractorsContractors which are SMEs, % of total [source: Single Market Scoreboard]50454355-9,1%63%SME bidsBids from SMEs, % of total [source: Single Market Scoreboard]545552532%70,8%Business demographyAccess to financeBUSINESS ENVIRONMENT - SMEsPublic procurement SINGLE MARKETCompliance - cooperation EC and MS 
 
  
 
assessment of legislation is below the EU median 
(see Graph 10.1)  

Graph A11.1: Performance on evidence-based 
policy- making indicators 

(1) RIA: regulatory impact assessment 
Source: OECD iREG indicators 

The  justice  system  performs  efficiently.  The 
clearance  rate  for  litigious  civil  and  commercial 
cases  improved  markedly  in  2020  (111.1%,  up 
from  91.78%  in  2019).  The  overall  quality  of  the 
justice  system  is  good.  Digital  tools  are  used  in 
courts;  however,  a  number  of  gaps  regarding 
digitalisation  in  the  justice  system  remain  to  be 
addressed.  As  regards  judicial  independence,  no 
systemic deficiencies have been reported. (45) 

ANNEX 11: PUBLIC ADMINISTRATION 
ANNEX 11: PUBLIC ADMINISTRATION 

capacity 

administrative 

Good 
enables 
economic  prosperity,  social  progress,  and 
fairness. Public administrations at all government 
levels deliver crisis response, ensure the provision 
of  public  services,  and  contribute  to  building 
resilience  for  the  sustainable  development  of  the 
EU economy.   

Denmark’s  public  administration  is  ranked 
among  the  most  effective  in  the  EU27 (43). 
The  Danish  authorities  work  on  various  initiatives 
to  improve  administrative  performance.  Areas  of 
particular  focus  are  cross-policy  coordination, 
digital services, as well as increasing and ensuring 
the proximity of public services. (44)  

Denmark is among the best performers when 
it  comes  to  e-government,  offering  highly 
mature  digital  services.  It  ranks  above  the 
average  on 
the  e-government  benchmark’s 
composite indicator  (84.3 vs.  70.9 in  the  EU).  The 
share of users of e-government services is high at 
93%  in  2021.  Against  this  backdrop,  the  Danish 
Recovery  and  Resilience  Plan  aims  to  strengthen 
the capacity and resilience of public administration 
by  modernising 
infrastructure, 
improving  cyber  and  information  security  in  the 
public administration, and promoting better access 
to data and interoperable data infrastructure. The 
latter  will  also  be  addressed  with  the  regional 
development support.  

digital 

the 

Administrative capacity is strong. The share of 
civil  servants  participating  in  adult  learning  is 
above  the  EU  average,  as 
is  the  share  of 
employees  in  public  services  who  have  tertiary 
education  qualifications.  Denmark  has  one  of  the 
EU’s  youngest  public  workforces  with  43%  of 
employees under 39 years old, and a relatively low 
share of public sector employees between 55 and 
74 years (20.9% in 2021). However, gender parity 
for  senior  positions  is  relatively  low,  with  a 
deviation  from  parity  nearly  twice  as  high  as  the 
average (47.2 vs 21.8 in the EU).   

Denmark  could  improve  its  performance  on 
evidence-based policy making. Its performance 
ex-post 
on 

engagement 

stakeholder 

and 

(43)  Worldwide Governance Indicators, 2020.  

(44)  European Commission, Directorate-General for Structural 
Reform Support, Public administration and governance: 
"European Public Administration Country Knowledge, Country 
brief 2021, Denmark", Publications Office, 2022. 

(45)  For more detailed analysis of the performance of the justice 
system in Denmark, see the 2022 EU Justice Scoreboard 
(forthcoming) and the country chapter for Denmark of the 
Commission’s 2022 Rule of Law Report (forthcoming).  

42 

00.20.40.60.811.21.41.61.8DKEU27averageDKEU27averageMethodologyRIAOversightStakeholder consulationSystematic adoptionEx-post evaluationTransparency 
 
                                                 
   
                                                 
 
Table A11.1: Public administration indicators 

(1) High values stand for good performance barring indicators # 7 and 8. 
(2) Measures the user centricity (including for cross-border services) and transparency of digital public services as well as the 
existence of key enablers for the provision of those services. 
(3) Break in the series in 2021. 
(4) Defined as the absolute value of the difference between the share of men and women in senior civil service positions.  
Source: ICT use survey, Eurostat (#1); E-government benchmark report (#2); Open data maturity report (#3); Fiscal Governance 
Database (#4, 9, 10); Labour Force Survey, Eurostat (#5, 6, 8); European Institute for Gender equality (#7); Single Market 
Scoreboard public procurement composite indicator (#11); OECD Indicators of Regulatory Policy and governance (#12) 

43 

20172018201920202021EU27192.094.094.092.093.070.82nananana84.370.93nananana91.381.1446.346.346.346.3na56.8558.159.361.662.364.755.3634.829.735.027.031.518.6750.652.639.640.047.221.8822.622.422.020.720.921.390.620.620.620.62na0.72101.01.01.01.0na1.5117.74.07.75.0na-0.7121.61nana1.61na1.7E-government Public Financial Management Evidence-based policy makingIndicator (1)Medium term budgetary framework indexStrength of fiscal rules indexPublic procurement composite indicatorShare of individuals who used internet within the last year to interact with public authorities (%)2021 e-government benchmark´s overall score (2) 2021 open data maturity indexScope Index of Fiscal InstitutionsShare of public administration employees with tertiary education, levels 5-8  (3)Index of regulatory policy and governance practices in the areas of stakeholder engagement, Regulatory Impact Assessment (RIA) and ex post evaluation of legislation Educational attainment level, adult learning, gender parity and ageingOpen government and independent fiscal institutionsParticipation rate of public administration employees in adult learning (3)Gender parity in senior civil service positions (4)Share of public sector workers between 55 and 74 years (3) 
 
 
 
 
 
 
 
   
 
FAIRNESS 
FAIRNESS 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
ANNEX 12: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

Table A12.1: Social Scoreboard 

The European Pillar of Social Rights provides 
for  upward  convergence 
the  compass 
towards better working and living conditions 
in the EU. The implementation of its 20 principles 
on  equal  opportunities  and  access  to  the  labour 
market,  fair  working  conditions,  social  protection 
and inclusion, supported by the 2030 EU headline 
targets  on  employment,  skills  and  poverty 
reduction, will strengthen the EU’s drive towards a 
digital,  green  and  fair  transition.  This  Annex 
provides  an  overview  of  Denmark’s  progress  in 
achieving  the  goals  under  the  European  Pillar  of 
Social Rights. 

The  Danish  labour  market  was  performing 
well  prior  to  the  outbreak  of  COVID-19  and 
has shown resilience to the pandemic. It now 
faces  labour  shortages.   The  employment  rate 
is  relatively  high,  at  79.0%,  with  a  comparatively 
low  gender  employment  gap  of  6.9%  (10.8%  in 
the  EU  in  2021).  The  long-term  unemployment 
rate  remained  relatively  low  throughout  the  crisis 
(1.0% in 2021), well below the EU average (2.4%). 
Wholesale  and  retail  trade,  accommodation  and 
food  service  activities  were  the  areas  most 
affected  by  the  COVID-19  crisis.  However,  the 
government’s  wage 
scheme 
prevented  a  surge 
in  unemployment.  Labour 
market  shortages  are  at  the  highest  level  since 
2008,  with 
increasing  recruitment  challenges 
observed  across  most  industries  and  regions  and 
an  unsuccessful 
rate  of  33% 
recruitment 
(December 2021). EU Cohesion Policy funding will 
support  measures  addressing  skills  needs  for  fair 
digital  and  green  transitions,  with  funding  under 
the REACT-EU instrument (Recovery Assistance for 
Cohesion  and  the  Territories  of  the  EU)  further 
as 
supporting 
entrepreneurs  and 
these 
challenges is also key to contribute to reaching the 
2030 EU headline target on employment. 

innovation.  Tackling 

these  measures, 

compensation 

as  well 

Update of 29 April 2022. Members States are classified on 
the Social Scoreboard according to a statistical methodology 
agreed with the EMCO and SPC Committees. It looks jointly at 
levels and changes of the indicators in comparison with the 
respective EU averages and classifies Member States in seven 
categories. For methodological details, please consult the 
Joint Employment Report 2022. Due to changes in the 
definition of the individuals' level of digital skills in 2021, 
exceptionally only levels are used in the assessment of this 
indicator; NEET: neither in employment nor in education and 
training; GDHI: gross disposable household income. 
The housing cost overburden rate is the percentage of the 
population living in households where the total housing costs 
('net' of housing allowances) represent more than 40 % of 
disposable income ('net' of housing allowances). 
Source: Eurostat, Social Scoreboard 

The  declining  adult  learning  participation 
rate poses challenges to Denmark, especially 
in view of the green and digital transitions. A 
decrease  was  recorded  in  recent  years  in  adult 
participation  in  learning  over  the  past  four  weeks 
(from 28% in 2016 to 22.4% in 2021), though the 
rate  remains  more  than  twice  the  EU  average.  At 
the  same  time,  the  share  of  early  leavers  from 
education  and  training  has  decreased,  although 
remaining  above  the  2015  low.  The  difference 
between  native-born  and  foreign-born  children  is 
relatively  small  (1.4  pps).  Denmark  has  relatively 
(VET) 
low  vocational  education  and  training 

44 

9.869.08.46.94.079.05.11.0116.916.813.452.418.114.167.71.7Critical situationTo watchWeak but improvingGood but to monitorOn averageEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24) (2021)Youth NEET(% of total population aged 15-29) (2021)Gender employment gap (percentage points) (2021)Income quintile ratio (S80/S20) (2020)Individuals' level of digital skills (% of population 16-74) (2021)Dynamic labour markets and fair working conditionsSocial protection and inclusionAt risk of poverty or social exclusion for children (in %) (2020)Disability employment gap (ratio) (2020)Better than averageAt risk of poverty or social exclusion (in %) (2020)Employment rate(% population aged 20-64) (2021)Unemployment rate(% population aged 15-74) (2021)Long term unemployment(% population aged 15-74) (2021)GDHI per capita growth (2008=100) (2020)Best performersImpact of social transfers (other than pensions) on poverty reduction (% reduction of AROP) (2020)Children aged less than 3 years in formal childcare (% of under 3-years-olds) (2020)Self-reported unmet need for medical care (% of population 16+) (2020)Housing cost overburden (% of population) (2020) 
 
 
 
 
  
 
 
 
implemented 

participation 
rates,  and  attracting  students 
remains  a  key  challenge.  It  has  taken  several 
policy measures in this domain, including a marked 
increase  in  public  expenditure  on  primary  schools 
and  additional  funding  for  upskilling  measures  to 
in  2020-22.  The  share  of 
be 
individuals with basic or above basic digital skills is 
high,  at  69%  in  2021.  There  is  nonetheless  a 
relatively  low  share  of  women  in  digital  jobs,  as 
the  Women  in  Digital  Scoreboard  (2020)  shows, 
with  only  20.4%  of  ICT  specialists  being  women. 
Further  strengthening  the  participation  in  adult 
learning  will  allow  Denmark  to  contribute  to 
reaching the 2030 EU headline target on skills.  

Although  the  share  of  people  at  risk  of 
poverty  or  social  exclusion  has  decreased  in 
recent  years,  there  is  potential  for  further 
improvement.  At  16.8%  in  2020,  the  rate  of 
people  at  risk  of  poverty  or  social  exclusion  is 
relatively  low  compared  to  the  EU  average  of 
21.9%,  although  certain  groups,  and  in  particular 
young  people,  migrants  and  persons  with 
disabilities,  face  barriers  to  accessing  the  labour 
market  and  a  higher  risk  of  poverty.  Through  the 
Fund for European Aid to the Most Deprived (FEAD) 
and the expected European Social Fund Plus ESF+ 
programmes,  Denmark  utilises  EU  funding  to 
support  the most  deprived,  focusing  on  measures 
supporting  the  homeless  and  those  at  risk  of 
homelessness.  While  the housing  cost  overburden 
(at  14.1% 
remains  above 
compared to 7.9% in the EU 2020), it is evolving in 
the right direction. 

the  EU  average 

45 

 
 
 
ANNEX 13: EDUCATION AND SKILLS 
ANNEX 13: EDUCATION AND SKILLS 

This  Annex  outlines  the  main  challenges  for 
Denmark’s  education  and  training  system  in 
light of the EU-level targets of the European 
Education  Area  Strategic  Framework  and 
other  contextual  indicators,  based  on  the 
analysis  from  the  2021  Education  and 
Training  Monitor.  Denmark’s  education  and 
training system performs well but still has certain 
equity  challenges  that  could  worsen  due  to  the 
pandemic.  Denmark  outperforms  the  EU  average 
and  EU-level  targets  in  terms  of  participation  in 
the early childhood education, in basic skills, early 
leavers  from  education  and  training,  and  tertiary 
education. 

Early school leaving is slightly more frequent 
in  Denmark  than  on  average  in  the  EU,  and 
there  is  an  urban-rural  divide.  At  9.8%,  early 
school leaving is slightly above the EU level target 
(9%),  and  pupils  drop  out  in  rural  areas  more 
frequently  than  in  cities.  In  addition,  there  is  a 
significant gender gap (3.5 pps) in favour of girls. 
Participation in early childhood education and care 
is one of the highest in the EU and reforms aim to 
improve quality of provision. 

Educational  outcomes  and  basic  skills  are 
good  overall,  but  young  people  with  migrant 
background  lag  behind.  Parents’  socioeconomic 
backgrounds  still  influence  educational  results  in 
Denmark.  PISA  results  show  that  15-year  old 
Danish  pupils  are  performing  well  overall  in 
reading, maths  and  science  (close to  the  15%  EU 
level  target  for  the  share  of  low-achievers,  and 
above  the  EU  average).  Nevertheless,  the  share 
among  disadvantaged  pupils  of  low-achievers  in 
reading  is  20  pps  higher  than  among  their 
advantaged  peers.  This  represents  a  significant 
gap,  but  is  still  below  the  EU  average  (26.9  pps). 
The  gap  between  the  performance  of  foreign  and 
native-born  pupils  is  large  at  25  pps,  and  there 
has been little improvement for second-generation 
migrants. The government is increasing funding for 
primary  and  lower  secondary  schools  (Folkeskole) 
systematically  until  2023  to  allow  municipalities 
to further improve the quality of education.  

Evidence (46)  shows  that  teacher  policies  face 
major challenges such as teacher shortages and a 

(46)  OECD Review of Policies to Improve the Effectiveness of 
Resource Use in Schools (2016), OECD Education Working 
Paper No. 235 (2020), OECD Teacher in Focus 2017/16, AE 
Analysis 18 procent af lærerne har ikke en læreruddannelse 
4/2021. 

46 

to 

initial 

teacher 

attracted 

lack of fully trained teachers. Fewer young people 
training 
are 
programmes,  and  many  drop  out  during  training. 
18%  of  teachers  in  primary  school  lack  adequate 
qualification  in  2021.  Teachers  are  obliged  to 
professional 
participate 
development.  Compared  with  their  peers  in  other 
countries they are generally less satisfied with the 
training available.  

continuous 

in 

Graph A13.1: Low achievement in reading by 
migrant background, PISA 2018 

(1) Comparable EU Member States have been selected 
Source: OECD (2019), PISA (2018) 

Tertiary  attainment  has  further  increased  in 
recent years and has surpassed the EU-level 
target.  Its  overall  recent  increase  is  in  line  with 
the  EU  trend.  Tertiary  attainment  increased  by 
about  a  quarter  for  native  born  and  0.4  pps  for 
EU-born  graduates.  The  share  of  EU-born 
graduates now surpasses that of Danish students 
by about 12 pps and the EU average by some 19 
pps.  The  high  attainment  rates  for  foreign-born 
students  hint  at  the  attractiveness  of  higher 
education  and  of  the  labour  market  in  Denmark, 
which can help reduce skills shortages. The recent 
Danish  initiative  to  decrease  the  number  of 
courses held in English at Danish universities could 
reverse this trend. 

051015202530354045IEEEDK%Figure 13.1. Low achievement in reading by migrant background, PISA 2018Pupils without a migrant backgroundNative-born pupils with parents born abroadPupils born abroad 
 
                                                 
  
 
Table A13.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

The 2018 EU average on PISA reading performance does not include ES; u = low reliability, : = not available; Data is not yet 
available for the remaining EU-level targets under the European Education Area strategic framework, covering underachievement 
in digital skills, exposure of vocational educational training graduates to work based learning and participation of adults in 
learning. 
Source: Eurostat (UOE, LFS); OECD (PISA) 

47 

96%98.0%91.9%97.7%201992.8%2019Reading< 15%15.0% 20.4%16.0%201822.5%2018Mathematics< 15%13.6% 22.2%14.6%201822.9%2018Science< 15%15.9% 21.1%18.7%201822.3%2018< 9 %8.1%11.0%9.8%9.7%Men9.9%12.5%11.6%11.4%Women6.2%9.4%8.1%7.9%Cities5.8%9.6%6.2% 8.7%Rural areas11.3%12.2%13.2%10.0%Native8.0%10.0%9.7%8.5%EU-born:u20.7%:u21.4%Non EU-born9.5%u23.4%13.9%u21.6%45%43.0%36.5%49.1%41.2%Men34.6%31.2%40.6%35.7%Women52.0%41.8%57.8%46.8%Cities57.9%46.2%61.8%51.4%Rural areas26.3%26.9%33.4%29.6%Native41.9%37.7%48.5%42.1%EU-born59.7%u32.7%60.1%40.7%Non EU-born44.6%u27.0%48.8%34.7%33.2% 38.3%32.7%201938.9%201920152021IndicatorTargetDenmarkEU27DenmarkEU27Participation in early childhood education (age 3+)Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)TotalBy genderBy degree of urbanisationBy country of birthTertiary educational attainment (age 25-34)TotalBy genderBy degree of urbanisationBy country of birthShare of school teachers (ISCED 1-3) who are 50 years or over 
 
  
 
financing  (83.3%  in  2019).  Public  expenditure  on 
health  is  projected  to  increase  by  0.9  percentage 
points  (pp)  of  GDP  by  2070,  the  same  as  for  the 
EU as a whole (see Graph A14.2). 

Denmark  has  more  doctors  and  nurses  per 
capita than the EU average. However, Denmark 
faces  shortages  in  General  Practitioners  (GPs), 
particularly  in  rural  and  remote  areas.  Several 
government initiatives  were  taken  to  increase  the 
supply of GPs and nurses, both before and during 
the  pandemic.  In  line  with  policies  aimed  at 
shifting  care  to  outpatient  settings,  hospital 
capacity  has  declined  steadily  over  the  past  two 
decades. Still, surge capacity during the pandemic 
was  sufficient  (at  the  cost  of  suspending  non-
urgent care and elective surgery). 

Through  its  Recovery  and  Resilience  Plan  (RRP), 
Denmark plans to invest EUR 33 million (2% of the 
total RRP) to boost digitalisation in the healthcare 
system, 
of 
telemedicine.  The  Danish  plan  will  also  help 
underpin  a  management  system  for  stocks  of 
critical medical supplies and study the effects and 
side effects of COVID-19 vaccines. 

through 

further 

rollout 

the 

ANNEX 14: HEALTH AND HEALTH SYSTEMS 
ANNEX 14: HEALTH AND HEALTH SYSTEMS 

Especially  relevant  in  light  of  the  ongoing 
COVID-19 pandemic, resilient healthcare is a 
prerequisite  for  a  sustainable  economy  and 
society.  This  Annex  provides  a  snapshot  of  the 
healthcare sector in Denmark. 

Life  expectancy  has  increased  more  rapidly 
than  the  EU  average  since  2010  and 
continued  to  grow  slightly  in  2020  despite 
the  COVID-19  pandemic  (see  Graph  A14.1). 
Only one other EU Member State (Cyprus)  did not 
signal  a  drop  in  life  expectancy  in  2020.  As  of 
17 April 2022, Denmark reported 0.86 cumulative 
COVID-19  deaths  per  1  000  inhabitants  and  478 
confirmed  cumulative  COVID-19  cases  per  1000 
inhabitants.  Mortality  rates  from  treatable  causes 
are  well  below  the  EU  average,  while  cancer 
mortality  –  although  falling  in  recent  years  - 
remains high. 

Graph A14.1: Life expectancy at birth, years 

Source: Eurostat database 

Graph A14.2: Projected increase in public 
expenditure on health care over 2019-2070 
(reference scenario) 

Source: European Commission/EPC (2021) 

Health  spending  relative  to  GDP  was  similar 
to the EU average in 2019.  Health spending in 
real terms, however, grew on average at a rate of 
2%  per  year  between  2015  and  2019  –  slightly 
slower  than  the  EU  average.  Denmark  has 
universal  health  coverage  with  mainly  public 

48 

80.980.981.380.480.981.181.081.581.620162017201820192020EUDenmark6.66.70.90.968EUDenmark% of GDP20192070increase 
 
   
 
   
 
Table A14.1: Key health indicators 

Doctors' density data refer to practising doctors in all countries except FI, EL, PT (licensed to practice) and SK (professionally 
active). Nurses' density data refer to practising nurses in all countries (imputation from year 2014 for FI) except IE, FR, PT, SK 
(professionally active) and EL (nurses working in hospitals only). More information: https://ec.europa.eu/health/state-health-
eu/country-health-profiles_en  
Source: Eurostat Database; except: * Eurostat Database and OECD, ** ECDC. 

49 

20162017201820192020EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)76.073.273.066.692.1 (2017)Cancer mortality per 100 000 population293.6284.7279.8282.5252.5 (2017)Current expenditure on health, % GDP 10.110.010.110.09.9 (2019)Public share of health expenditure, % of current health expenditure84.184.083.983.379.5 (2018)Spending on prevention, % of current health expenditure 2.62.52.42.52.8 (2018)Acute care beds per 100 000 population252.5253.6254.0249.0387.4 (2019)Doctors per 1 000 population *4.04.14.23.8 (2018)Nurses per 1 000 population *9.910.010.18.2 (2018)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day **15.214.313.613.412.514.5 (2020) 
 
   
 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 
ANNEX 15: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

Graph A15.2: Evolution of labour productivity 
across Danish regions 

Real GVA in EUR (2015 prices) by employment in thousands 
of persons. 
Source: European Commission 

There  are  disparities  in  innovative  capacity 
across the regions. The capital region stands out 
in terms of R&D expenditure, and has the highest 
share of highly-educated people aged between 30 
and  34.    Only  one  other  Danish  region,  Central 
Jutland, is above the EU average of 2.2% for R&D 
expenditure. The Capital region and Central Jutland 
are  also  innovation  leaders  in  the  European 
Research and Innovation Scoreboard. On the other 
hand,  Zealand  and  North  Jutland  are  the  two 
regions with the lowest R&D expenditure, whereas 
Zealand and South Denmark have the least highly 
educated people. 

When it comes to the impacts of the COVID-
19  pandemic,  slight  increases  in  unemployment 
rates  took place  in  all  regions  between  2019  and 
2020,  but  with  no  major  regional  differences. 
However,  there  was  an  almost  15%  increase  in 
working from home in the Capital region compared 
to 5-8% on other regions. 

Overall, CO2 fossil fuel emissions per person 
in  Denmark  are  below  the  EU  average. 
However, Denmark has set very ambitious national 
targets for the CO2 emissions, which will affect all 
Danish regions (see Graph A15.3). 

is  an 

The  regional  dimension 
important 
factor  when  assessing  economic  and  social 
developments  in  Member  States.  Taking  into 
account  this  dimension  enables  a  well-calibrated 
and targeted policy response that fosters cohesion 
and  ensures  sustainable  and  resilient  economic 
development across all regions. Regional economic 
disparities  in  Denmark  increased  in  2000-19.  The 
is  the  engine  of  the  Danish 
Capital  region 
economy.  Three  other  regions,  South  Denmark, 
Central Jutland and North Jutland follow with GDP 
above  the  EU  average.  Only  Zealand  is  below  the 
EU  average  in  GDP  terms  and  is  defined  as  a 
transition region for cohesion policy funding. While 
the  Capital  region  accounted  for  over  40.6%  of 
national  GDP  in  2019  and  has  a  lead  in  GDP 
growth, North Jutland has the slowest GDP growth 
rate  per  head  (0.9%),  below  the  EU  average 
(1.39%) (see Graph A15.1). 

Graph A15.1: GDP per head (2010) and GDP growth 
(2010-2019) 

Bubble sizes correspond to population size. 
Source: European Commission 

The  general  labour  market  conditions  show 
hardly any differences between regions. Only 
in high-tech and knowledge intensive sectors does 
the  Capital  region 
largely  outperforms  other 
regions.  Labour  productivity  was  above  the  EU 
average  for  all  regions,  but  the  gap  between  the 
capital  and  the  rest  of  the  country  increased 
during this period (see Graph A15.2). 

50 

0.50.70.91.11.31.51.71.92.12.37090110130150170Annual real GDP per head growth 2010-2019GDP (PPS) per head in 2010 (EU = 100)Capital regionOther NUTS2 regions 
 
  
 
 
Table A15.1: Denmark, selected indicators at regional level 

Source: Eurostat 

Graph A15.3: CO2 emissions from fossil fuels per 
person in Danish regions (2018) 

Graph A15.4: Territories most affected by the 
climate transition in Denmark 

Source: European Commission 

Source: European Commission 

two 

Although the green transition affects the whole of 
regions  are  considered  most 
Denmark, 
impacted  (see  Graph  A15.4).  South  Denmark,  and 
more  precisely  South  Jutland,  has  a  high 
concentration of the country’s oil and gas industry, 
which  is  to  be  phased  out  by  2050.  South 
Denmark  is  also  the  only  Danish  region  with 
greenhouse  gas  emissions  above  EU  average. 
North  Jutland,  the  region with  the  second-highest 
greenhouse  gas  emission  intensity  in  Denmark, 
has  the  largest  single  industrial  greenhouse  gas 
emitter  in  Denmark,  the  Portland  cement  factory. 
Both  regions  are  below  the  national  average  in 
most  economic  and  labour  market  comparisons, 
mainly due to the high profile of the capital region 
as a frontrunner. 

51 

NUTS 2 RegionGDP per head (PPS)Productivity (GVA (PPS) per person employed)GDP per head growthPopulation with high educational attainmentR&D expenditureR&D expenditure in the business enterprise sectorEmployment in high-technology sectorsEmployment in knowledge-intensive servicesCO2 emissions from fossil fuels  per headEU27=100, 2019EU27=100, 2018Avg % change on preceding year, 2010-2019% of population aged 30-34, 2017-2019% of GDP, 2017% of GDP, 2017% of total employment, 2020% of total employment, 2020tCO2 equivalent, 2018European Union1001001.3939.42.191.54.540.017.2Danmark1301131.4748.82.981.95.749.24Hovedstaden1671272.0063.24.763.310.058.043.8Sjælland891011.3933.41.410.84.446.576.5Syddanmark1161051.2638.61.751.12.243.1111.2Midtjylland1201041.4246.22.461.54.445.474.4Nordjylland1091000.9940.31.600.63.044.357.1 
 
 
 
 
 
  
 
MACROECONOMIC STABILITY 
MACROECONOMIC STABILITY 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 
ANNEX 16: KEY FINANCIAL SECTOR DEVELOPMENTS 

recommendations  to  reduce  the  risks  in  the 
system and better prepare the financial system for 
shocks.  Accordingly,  the  Countercyclical  Capital 
Buffer  (CCyB)  was  raised  to  1%  as  of  September 
2022.  It  has  been  decided  that  it  will  increase  up 
to 2.5% as of March 2023. However, the Council’s 
recommendation  on  limiting  access  to  interest-
only  loans  for  highly  indebted  borrowers,  capping 
the  loan-to-value  ratio  at  60%,  was  not  followed 
by  the  government,  who  considered  at  this  stage 
Danish households are in strong financial position 
and it is sufficient for now to increase monitoring 
of the residential real estate market. 

(AML) 

framework, 

Denmark has taken action to address money-
risks  and  approved  several 
laundering 
its  anti-money 
measures  to  strengthen 
laundering 
such  as 
transposing  the  4th  and  5th  AML  Directives. 
The  Financial  Supervisory  Authority  and  the 
Financial Intelligence Unit have been strengthened 
by  increasing  their  budget  and  adding  staff. 
Procedures  applying  the  risk-based  approach, 
adequate training and qualifications for new staff 
and  better  cooperation  between  relevant  Danish 
and  international  AML  authorities  are  currently 
being implemented. However, no evidence has yet 
been provided of the effectiveness of the recently 
adopted legislative and reforms. 

This  Annex  provides  an  overview  of  key 
developments  in  Denmark’s  financial  sector. 
The  banking  sector’s  solvency  has  remained quite 
solid  during  the  pandemic.  Danish  banks’  capital 
adequacy ratio was not affected by the pandemic 
and  continued  to  exceed  the  EU  average  in  Q3 
2021 (22.9% vs 19.3%). The stress test conducted 
by  Danmarks  Nationalbank  shows  that  while 
Danish  banks  have  sufficient  capital  to  withstand 
a severe recession scenario, some of the systemic 
banks  are  close  to  their  buffer  requirements.  At 
the  same  time,  the  non-performing  loan  ratio 
remained  unchanged  for  the  last  three  years.  As 
regards  profitability,  the  annualised  return-on-
equity recovered  to 8.1% in Q3 2021 (vs 7.1% in 
the  EU),  which  could  be  explained  by  the  low 
impairment  charges.  Due  to  high  staff  costs,  the 
efficiency  of  the  banks  declined  in  2020,  but 
recovered  in  2021  following  increased  focus  on 
cost cutting (cost-to-income of 63.3% in 2020 vs 
57.7% 
in  Q3  2021).  Credit  to  non-financial 
corporations  increased  towards  the  end  of  2021, 
driven  mainly  by  the  end  of  government  liquidity 
support  schemes,  while  demand  for  mortgages 
continued  to  rise,  although  at  a  more  moderate 
pace than house prices. 

policy  measures. 

The  residential  real  estate  market  exhibits 
risks  that  could  be  addressed  by  further 
macroprudential 
The 
European  Systemic  Risk  Board  (2022) (47)  has 
identified  a  number  of  key  vulnerabilities:  high 
house  price  growth,  signs  of  house  price 
overvaluation,  high  household  indebtedness,  large 
(and  increasing)  share  of  loans  with  deferred 
amortisation  of  outstanding 
loans,  significant 
interconnectedness  with 
the  Nordic  banking 
system. House prices have risen steadily in the last 
two  years  and  their  overvaluation  was  estimated 
on average at 16% in 2020. House price increases 
have  slowed  significantly  since  mid-2021  and 
remained 
overall  mortgage 
moderate.  However,  lending  to  highly  indebted 
homeowners  as  well  as 
loans 
represented  increasing  shares  of  new  mortgages. 
In  addition,  some  homeowners  have  a  significant 
In  2021  the 
interest  rate  risk. 
exposure  to 
several 
Council 
Systemic 

lending  growth 

interest-only 

issued 

Risk 

(47)  ESRB, Vulnerabilities in the residential real estate sectors of 

the EEA countries, February 2022, 
https://www.esrb.europa.eu/news/pr/date/2022/html/esrb.pr2
20211~9393d5e991.en.html. 

52 

 
 
 
                                                 
 
 
Table A16.1: Financial soundness indicators 

(1) Last data: Q3 2021 
Source: ECB, Eurostat, Refinitiv 

53 

20172018201920202021Total assets of the banking sector (% of GDP)363.0349.4383.4401.0378.5Share (total assets) of the five largest bank (%)65.764.566.267.1-Share (total assets) of domestic credit institutions (%)193.093.092.993.493.1Financial soundness indicators:1- non-performing loans (% of total loans)2.52.31.91.91.9- capital adequacy ratio (%)22.121.622.423.222.9- return on equity (%)10.88.08.74.58.1NFC credit growth (year-on-year % change)-----HH credit growth (year-on-year % change)-----Cost-to-income ratio (%)151.257.761.063.357.6Loan-to-deposit ratio (%)1228.7240.7248.9215.8212.6Central bank liquidity as % of liabilities0.10.10.00.1-Private sector debt (% of GDP)216.7215.3221.0220.9-Long-term interest rate spread versus Bund (basis points)15.95.86.815.031.3Market funding ratio (%)44.842.441.440.2-Green bond issuance (bn EUR)1.80.810.91.66.8 
 
  
 
ANNEX 17: TAXATION 
ANNEX 17: TAXATION 

This  Annex  provides  an 
indicator-based 
overview of Denmark’s tax system. It includes 
information  on  the  tax  structure,  i.e.  the  types  of 
tax that Denmark derives most revenue from, the 
tax  burden  for  workers,  and  the  progressivity  and 
redistributive  effect  of  the  tax  system.  It  also 
tax  collection  and 
provides 
compliance and on risks of aggressive tax planning 
activity. 

information  on 

Denmark’s  tax  revenues  are  high  in  relation 
to GDP, but the tax structure is balanced and 
relatively  growth-friendly.  Denmark  is  a  high-
tax country with the highest tax-to-GDP ratio of all 
Member  States  for  2020.  Although  Denmark’s 
labour  tax  revenues  as  a  percentage  of  GDP  in 
2020  were  among  the  highest  in  the  EU,  this  is 
because  of  the  country’s  high  tax  revenues  as  a 
share  of  GDP  overall,  while  the  share  of  labour 
taxes in total taxation is below the EU  aggregate. 
Similarly,  revenues  from  consumption  taxes  and 
environmental  taxes  as  a  share  of  GDP  were 
among the highest in the EU, but this was in part 
due  to  the  high  overall  taxation.  Yet  consumption 
and  environmental  tax  revenues  were  also  above 
the  EU  aggregate  as  a  share  of  total  taxation, 
indicating Denmark’s growth-friendly tax structure. 
Recurrent taxes on property, which are also highly 
conducive  to  economic  growth,  are  strongly  used: 
revenues  from  recurrent  property  taxes  were 
among  the  highest  in  the  EU  both  as  a  share  of 
GDP and as a share of total  taxation in 2020. On 

Table A17.1: Taxation indicators on taxation 

the other hand, the Danish tax system also allows 
one  of  the  highest  tax  deductions  for  mortgage 
interest  payments  in  the  EU,  which  incentivises 
debt  financing  of  residential  property.  The  new 
property  tax  system,  which  would  ensure  fairer 
taxation  of  housing,  as  endorsed  by  Parliament 
back in 2017, is still not in place.   

Denmark’s  labour  tax  burden  is  relatively 
low across the income distribution. The labour 
tax wedge for Denmark in 2020 was substantially 
lower  than  the  EU  average  at  various  income 
levels, i.e. for single persons at the average wage 
(100%) as well as at 50%, 67% and 167% of the 
average wage. Second earners at a wage level of 
67%  of  the  average  wage,  whose  spouse  earns 
the  average  wage,  also  face  a  tax  wedge  slightly 
below  the  EU  average,  but  the  difference  in  their 
tax  wedge  compared  to  single  persons  at  the 
same wage level is above the EU average. On the 
other hand, in 2020 the tax-benefit system helped 
reduce  inequality  (as  measured  by  the  GINI 
coefficient)  by  substantially  more  than  the  EU 
average.  

Denmark 
is  doing  moderately  well  on 
digitalisation  of  the  tax  administration, 
which can help reduce tax arrears as well as 
cut  compliance  costs.  From  2018  to  2019 
outstanding tax arrears have increased slightly by 
0.4  pp.  to  8.4%  of  total  revenue.  This 
is 
significantly  below  the  EU27  average  of  31.8%, 
though  that  average  is  inflated  by  very  large 
values  in  a  few  Member  States.  The  VAT  gap  (an 

(1) Forward-looking effective tax rate (OECD).  
(*) EU-27 simple average as there is no aggregated EU-27 value. 
Source: European Commission, OECD 

54 

2010201820192020202120102018201920202021Total taxes (including compulsory actual social contributions) (% of GDP)45.044.446.846.837.940.139.940.1Labour taxes (as % of GDP)22.722.923.124.120.020.720.721.5Consumption taxes (as % of GDP)14.614.113.613.810.811.111.110.8Capital taxes (as % of GDP)7.77.410.18.97.18.28.17.9Total property taxes (as % of GDP)2.52.52.72.61.92.22.22.3Recurrent taxes on immovable property (as % of GDP)2.02.02.02.01.11.21.21.2Environmental taxes as % of GDP4.03.63.33.22.42.42.42.2Tax wedge at 50% of Average Wage (Single person) (*)31.230.230.430.230.533.932.432.031.531.9Tax wedge at 100% of Average Wage (Single person) (*)35.935.435.535.335.441.040.240.139.939.7Corporate Income Tax - Effective Average Tax rates (1) (*)20.320.320.319.819.519.3Difference in GINI coefficient before and after taxes and cash social transfers (pensions excluded from social transfers)12.211.311.411.28.47.97.48.3Outstanding tax arrears: Total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.08.431.931.8VAT Gap (% of VTTL)7.98.611.210.5Dividends, Interests and Royalties (paid and received) as a share of GDP (%)6.16.26.510.710.5FDI flows through SPEs (Special Purpose Entities), % of total FDI flows (in and out)16.26.75.547.846.236.7DenmarkEU-27Tax structureProgressivity & fairnessTax administration & complianceFinancial Activity Risk 
 
 
 
 
  
 
Graph A17.1: Tax wedge indicators 

The tax wedge measures the difference between the total labour cost of employing a worker and the worker’s net earnings: sum 
of personal income taxes and employee and employer social security contributions, net of family allowances, expressed as a 
percentage of total labour costs (the sum of the gross wage and social security contributions paid by the employer).  
(1) The second earner average tax wedge measures how much extra personal income tax (PIT) plus employee and employer social 
security contributions (SSCs) the family will have to pay as a result of the second earner entering employment, as a proportion of 
the second earner’s gross earnings plus the employer SSCs due on the second earner’s income. For a more detailed discussion see 
OECD (2016), Taxing Wages 2016, OECD Publishing, Paris. http://dx.doi.org/10.1787/tax_wages-2016-en 
(*) EU-27 simple average, as no aggregated EU-27 value 
Source: European Commission 

indicator of the effectiveness of VAT enforcement 
and compliance) has remained relatively stable in 
Denmark  at  8.6%,  below  the  EU-wide  gap  of 
10.5%. It is positive that the new IT system PSRM 
doubled  debt  collection  from  DKK 1.6  billion  in 
2020 to DKK 3.7 billion in 2021. (48) 

(48)  https://www.gaeldst.dk/nyheder/nyt-system-inddriver-

dobbelt-saa-meget-af-danskernes-gaeld-til-det-offentlige/  

55 

30.532.735.441.138.5At 50% of Average Wage (Singleperson)At 67% of Average Wage (Singleperson)At 100% of Average Wage (Singleperson)At 167% of Average Wage (Singleperson)For second earner at 67% of AverageWage (Two earner couple, 1st earner100% of AW) (1)Tax wedge 2021 (%)DKEU-27 (*) 
                                                 
  
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 
ANNEX 18: KEY ECONOMIC AND FINANCIAL INDICATORS 

Table A18.1: Key economic and financial indicators 

(1) NIIP excluding direct investment and portfolio equity shares. 
(2) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches.  
Source: Eurostat and ECB as of 2022-05-02, where available; European Commission for forecast figures (Spring forecast 2022) 

56 

2004-072008-122013-1820192020202120222023Real GDP (y-o-y)2.5-0.42.22.1-2.14.72.61.8Potential growth (y-o-y)1.51.01.71.91.82.42.32.1Private consumption (y-o-y)3.3-0.31.91.2-1.34.22.32.1Public consumption (y-o-y)1.61.60.81.5-1.73.71.40.6Gross fixed capital formation (y-o-y)5.8-3.64.60.15.15.62.72.3Exports of goods and services (y-o-y)6.21.03.45.0-7.07.85.44.5Imports of goods and services (y-o-y) 9.50.53.83.0-4.18.25.04.6Contribution to GDP growth:Domestic demand (y-o-y)3.2-0.52.01.00.14.12.01.7Inventories (y-o-y)0.3-0.20.1-0.2-0.10.30.10.0Net exports (y-o-y)-1.00.30.01.4-2.00.30.50.2Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.2-0.10.20.30.30.80.70.5Capital accumulation (y-o-y)0.80.30.50.70.80.90.90.9Total factor productivity (y-o-y)0.60.90.90.90.70.60.60.6Output gap3.3-2.3-1.9-0.3-4.1-2.0-1.6-1.9Unemployment rate4.56.76.35.05.65.14.84.7GDP deflator (y-o-y)2.42.20.80.72.62.43.32.3Harmonised index of consumer prices (HICP, y-o-y)1.52.40.50.70.31.95.12.7Nominal compensation per employee (y-o-y)3.42.61.61.92.33.23.62.9Labour productivity (real, hours worked, y-o-y)1.50.71.51.40.80.40.20.4Unit labour costs (ULC, whole economy, y-o-y)2.32.00.61.23.81.12.82.2Real unit labour costs (y-o-y)0.0-0.2-0.20.41.1-1.2-0.5-0.1Real effective exchange rate (ULC, y-o-y)1.4-0.70.1-2.2....Real effective exchange rate (HICP, y-o-y)-0.2-0.70.2-1.71.5-1.0..Net savings rate of households (net saving as percentage of net disposable income)-2.7-0.13.43.65.84.9..Private credit flow, consolidated (% of GDP)17.55.31.610.74.88.8..Private sector debt, consolidated (% of GDP)192.3224.0216.0221.0220.9212.0..of which household debt, consolidated (% of GDP)116.5136.5122.3110.1111.6104.5..of which non-financial corporate debt, consolidated (% of GDP)74.886.893.4110.8109.2107.4..Gross non-performing debt (% of total debt instruments and total loans and advances) (2).2.93.51.72.0...Corporations, net lending (+) or net borrowing (-) (% of GDP)3.67.86.74.87.36.17.27.7Corporations, gross operating surplus (% of GDP)22.722.324.324.424.925.626.226.5Households, net lending (+) or net borrowing (-) (% of GDP)-4.8-1.01.00.01.0-0.1-0.2-0.4Deflated house price index (y-o-y)11.1-6.04.21.64.6...Residential investment (% of GDP)6.24.34.25.05.55.6..Current account balance (% of GDP), balance of payments3.05.28.08.88.18.37.87.7Trade balance (% of GDP), balance of payments4.25.56.77.46.56.7..Terms of trade of goods and services (y-o-y)0.40.60.3-0.12.2-0.2-1.50.0Capital account balance (% of GDP)0.10.1-0.10.00.00.1..Net international investment position (% of GDP)-0.814.547.277.568.875.6..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (1)-25.6-18.511.228.930.031.6..IIP liabilities excluding non-defaultable instruments (% of GDP) (1)139.7163.7163.0163.8184.7165.2..Export performance vs. advanced countries (% change over 5 years)3.2-1.5-6.71.112.0...Export market share, goods and services (y-o-y)-1.6-3.80.33.46.3-1.90.70.2Net FDI flows (% of GDP)1.82.11.52.92.14.6..General government balance (% of GDP)4.3-1.60.24.1-0.22.30.90.6Structural budget balance (% of GDP)..0.34.32.33.51.92.2General government gross debt (% of GDP)35.141.439.233.642.136.734.933.9forecast 
 
 
 
 
  
 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 
ANNEX 19: DEBT SUSTAINABILITY ANALYSIS 

level.  In  the  ‘lower  SPB’  scenario,  the  SPB  is 
permanently  weaker  than  in  the  baseline.  The 
‘adverse interest-growth rate’ scenario assumes a 
less  favourable  snowball  effect  than 
in  the 
baseline.  In  the  ‘financial  stress’  scenario,  the 
country  temporarily  faces  higher  market  interest 
rates in 2022.  

Graph 2 shows the outcome of the stochastic 
projections.  These  projections  show  the  impact 
on  debt  of  2  000  different  shocks  affecting  the 
government’s 
economic 
growth,  interest  rates  and  exchange  rates.  The 
cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

budgetary 

position, 

Table  2  shows  the  S1  and  S2  fiscal 
sustainability 
indicators  and  their  main 
drivers.  S1  measures  the  consolidation  effort 
needed to bring debt to 60% of GDP in 15 years. 
S2  measures  the  consolidation  effort  required  to 
stabilise  debt  over  an  infinite  horizon.  The  initial 
budgetary position measures the effort required to 
cover  future  interest  payments,  the  ageing  costs 
component  accounts  for  the  need  to  absorb  the 

This  annex  assesses  fiscal  sustainability 
risks  for  Denmark  over  the  short,  medium 
and  long  term.  It  follows  the  same  multi-
the  2021  Fiscal 
dimensional  approach  as 
Sustainability  Report, updated  on the basis  of the 
Commission 2022 spring forecast. 

Table  1  presents 
the  baseline  debt 
projections.  It  shows  the  projected  government 
debt  and  its  breakdown  into  the  primary  balance, 
the  snowball  effect  (the  combined  impact  of 
interest payments and nominal GDP growth on the 
debt  dynamics)  and  the  stock-flow  adjustment. 
These projections assume that no new fiscal policy 
measures  are  taken  after  2023,  and  include  the 
expected  positive  impact  of  investments  under 
Next Generation EU. 

Graph  1  shows  four  alternative  scenarios 
around  the  baseline, to  illustrate the  impact 
of changes in assumptions. The ‘historical SPB’ 
scenario  assumes  that  the  structural  primary 
balance (SPB) gradually returns to its past average 

Table A19.1: Debt sustainability analysis for Denmark 

Source: European Commission 

57 

Table 1. Baseline debt projections20192020202120222023202420252026202720282029203020312032Gross debt ratio (% of GDP)33.642.136.734.933.931.128.024.822.019.416.914.411.99.7Change in debt-0.48.5-5.4-1.8-1.0-2.8-3.1-3.2-2.8-2.6-2.5-2.5-2.4-2.2of whichPrimary deficit-4.8-0.4-2.9-1.5-1.1-1.9-2.2-2.5-2.3-2.2-2.1-2.1-2.1-2.0Snowball effect-0.20.4-2.3-1.5-0.9-1.0-0.9-0.7-0.5-0.4-0.5-0.4-0.3-0.3Stock-flow adjustment4.68.5-0.21.21.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)6.414.64.76.96.74.73.32.11.30.70.3-0.2-0.5-0.6S1S2Overall index (pps. of GDP)-5.9-0.8of whichInitial budgetary position-4.7-2.6Debt requirement-2.0Ageing costs0.81.8of whichPensions-0.3-1.5Health care0.20.7Long-term care1.03.0Others-0.1-0.4                                                                       Table 2. Breakdown of the S1 and S2 sustainability gap indicators010203040502019202120232025202720292031BaselineHistorical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioGraph 1. Deterministic debt projections (% of GDP)p10-p20p20-p40p40-p60p60-p80p80-p900102030405020192020202120222023202420252026Graph 2. Stochastic debt projections(% of GDP)MedianBaseline 
 
 
 
 
   
 
Table A19.2: Heatmap of fiscal sustainability risks for Denmark 

(1)  Debt level in 2032: green: below 60% of GDP, yellow: between 60% and 90%, red: above 90%. (2) The debt peak year 
indicates whether debt is projected to increase overall over the next decade. Green: debt peaks early; yellow: peak towards the 
middle of the projection period; red: late peak. (3) Fiscal consolidation space measures the share of past fiscal positions in the 
country that were more stringent than the one assumed in the baseline. Green: high value, i.e. the assumed fiscal position is 
plausible by historical standards and leaves room for corrective measures if needed; yellow: intermediate; red: low. (4) Probability 
of the debt ratio exceeding in 2026 its 2021 level: green: low probability, yellow: intermediate, red: high (also reflecting the initial 
debt level). (5) The difference between the 90th and 10th percentiles measures uncertainty, based on the debt distribution under 
2000 different shocks. Green, yellow and red cells indicate increasing uncertainty. 
Source:  European Commission (for further details on the Commission’s multi-dimensional approach, see the 2021 Fiscal 
Sustainability Report). 

change 

in  ageing-related 

projected 
public 
expenditure  such  as  pensions,  health  care  and 
long-term  care,  and 
requirement 
measures  the  additional  adjustment  needed  to 
reach the 60% of GDP debt target. 

the  debt 

Finally,  the  heat  map  presents  the  overall 
fiscal  sustainability  risk  classification  (Table 
A19.2).  The  short-term  risk  category  is  based  on 
the  S0  indicator,  an  early-detection  indicator  of 
fiscal  stress  in  the  upcoming  year.  The  medium-
term  risk  category  is  derived  from  the  debt 
sustainability  analysis  (DSA)  and  the  S1  indicator. 
The DSA assesses risks to sustainability based on 
several  criteria:  the  projected  debt  level  in  10 
years’  time,  the  debt  trajectory  (‘peak  year’),  the 
plausibility  of  fiscal  assumptions  and  room  for 
tighter  positions  if  needed  (‘fiscal  consolidation 
space’),  the  probability  of  debt  not  stabilising  in 
the  next  5  years  and  the  size  of  uncertainty.  The 
long-term  risk  category  is  based  on  the  S2 
indicator and the DSA. 

possible  shocks  to  fiscal,  macroeconomic  and 
financial  variables,  as  illustrated  by  alternative 
scenarios  and  stochastic  simulations,  all  pointing 
to  low  risks  (Graphs  1  and  2).  Moreover,  the 
sustainability  gap  indicator  S1  (at  -5.9  pps.  of 
GDP) signals that the country has significant room 
to  reduce  its  primary  surplus,  without  breaching 
the  60%  of  GDP  reference  target  (Table 2). 
Overall,  the  low  risk  reflects  the  current  surplus 
and  low  debt,  despite  the  projected  ageing  costs 
increase, primarily related to long-term care. 

Long-term  risks  to  fiscal  sustainability  are 
low.  Over  the  long  term,  both  the  sustainability 
gap indicator S2 (at -0.8 pps. of GDP) and the DSA 
point to low  risks.  The  S2  indicator  suggests  that, 
to  stabilise  debt  over  the  long  term,  the  current 
budgetary position would not need to improve and 
that  there  is  some  room  to  address  future 
budgetary  pressures  stemming  from  population 
ageing, in particular related to long-term care and 
health-care expenditure (Table 2). 

short-term 

Overall, 
fiscal 
sustainability are low. The Commission’s early-
detection indicator (S0) does not signal short-term 
fiscal risks (Table A19.2).  

risks 

to 

Medium-term  risks  to  fiscal  sustainability 
are  low.  Both  elements  of  the  Commission’s 
medium-term  analysis  lead  to  this  conclusion. 
First,  the  debt  sustainability  analysis  (DSA)  shows 
that  government  debt    is  projected  to  continue 
falling  significantly  from  around  35%  of  GDP  in 
2022  to  around  10%  of  GDP  in  2032  in  the 
baseline  (Table 1).  This  debt  path  is  robust  to 

58 

BaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWLOWDebt level (2032), % GDP1012151110Debt peak year20212021202120212021Fiscal consolidation space64%68%73%64%64%Probability of debt ratio exceeding in 2026 its 2021 level6%Difference between 90th and 10th percentiles (pps. GDP)19LOWLOWDeterministic scenariosStochastic projectionsLOWLOWLOWLOWShort termMedium termLong termOverall                               (S0)Overall     (S1+DSA)S1Debt sustainability analysis (DSA)S2Overall     (S2+DSA)Overall