COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Denmark Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Denmark
Date: 2023-05-24
Institutions: European Commission, Secretariat-General
Subjects: Denmark, circular economy, economic recovery, economic reform, energy policy, fiscal policy, property tax, stability pact, stability programme, waste management

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 24.5.2023  SWD(2023) 604 final  COMMISSION STAFF WORKING DOCUMENT 2023 Country Report - Denmark Accompanying the document Recommendation for a COUNCIL RECOMMENDATION on the 2023 National Reform Programme of Denmark {COM(2023) 604 final}  
 
 
 
 
 
 
 
 
 
 
 
ECONOMIC AND EMPLOYMENT SNAPSHOT 

Economic resilience in the face of 
new challenges  

The  Danish  economy  has  experienced  a 
prolonged  period  of  robust  growth,  only 
interrupted  by  significant  fluctuations  in 
activity  during  the  COVID-19  pandemic. 
Denmark’s  per  capita  GDP  (in  purchasing 
power  standard/PPS)  was  133%  of  the  EU 
average  in  2021,  the  third  highest  in  the  EU. 
Between  2013  and  2019,  economic  growth 
averaged  2.1%,  which  was  above  the  EU 
average growth rate of 1.8%, and significantly 
higher  than  the  slow  pace  of  recovery  after 
the  global  financial  crisis  in  2008.  Regional 
disparities have increased slightly between the 
capital region and the rest of the country, but 
remain moderate overall. 

Graph 1.1: Real GDP 

Source: Eurostat 

to 

the 

Denmark’s  economy  has  proved  broadly 
resilient 
pandemic-related 
challenges.  The  sharp  economic  downturn 
caused  by  the  pandemic  in  2020  was  less 
pronounced  than  in  the  EU  overall  and  was 
soon  followed  by  a  strong  rebound.  This  was 

helped  by  extensive  economic 
support 
measures  to  mitigate  the  effects  of  the 
pandemic and a relatively quick lifting of most 
pandemic-related  restrictions.  Denmark’s  GDP 
already surpassed pre-pandemic levels in Q2-
2021 (see Graph 1.1). The strong rebound has 
been  sustained,  with  real  GDP  expanding  by 
4.9%  in  2021  and  3.8%  in  2022,  despite  the 
economic shocks caused by the Russian war of 
aggression against Ukraine. Strong net exports, 
resilient 
positive 
stockbuilding were the main drivers of growth 
in 2022, while  domestic demand faltered due 
to  inflationary  pressures  eroding  households’ 
purchasing  power  and 
lowering  private 
consumption.  Denmark  recorded  a  current 
account surplus of 13.1% of GDP in 2022. This 
is  by  far  the  largest  surplus  in  the  EU,  and  a 
large  increase  compared  to  the  already  high 
(see  Annex  20).  The 
level 
pre-pandemic 
largely  due  to  a 
in  2022  was 
increase 
temporary spike in sea freight rates. 

investments 

and 

Economic  growth 
is  expected  to  be 
subdued  in  2023  before  improving  in 
2024. Headwinds to domestic demand are set 
to persist in 2023 given high — albeit slowing 
—  inflation,  while  exports  are  being  affected 
by the global economic slowdown. At the same 
time,  activity  and  capacity  utilisation  continue 
to 
supporting 
investment. Real  GDP  growth  is  expected  to 
decrease  to  0.3%  in  2023,  before    picking  up 
pace again in 2024 to a growth rate of 1.5% . 

levels, 

high 

run 

at 

The removal of COVID-19 restrictions has 
boosted  employment.  While  employment 
growth  has  levelled  off  since  Q3-2022,  total 
employment  reached  a  new  high  of  almost  3 
million  people.  Employment  rates  surged  over 
the  same  period,  from  77.8%  in  2020  to 
79.1% in 2021 and to 80.2% in Q3-2022. The 
labour  force  participation  rate  also  grew 
rapidly,  from  79.6%  in  Q3-2021  to  80.6%  a 
year later, driven mainly by a surge in female 
labour  market  participation.  Despite  much 

2 

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labour  market  participation, 

the 
higher 
unemployment  rate  has  fallen  to  very  low 
levels. In March 2023, the unemployment rate 
was  4.6%,  up  from  4.0%  a  year  earlier  and 
down from 6.4% in March 2021. Denmark has 
managed  to  substantially  improve  the  labour 
market 
integration  of  young  people  and 
persons  with  disabilities,  while  unemployment 
remains high among foreign-born residents. 

further 

lagged 
increases  and  possible 
adjustments of prices to higher costs, inflation 
is  expected  to  fall  only  gradually  in  2023  to 
4.3%.  Collective  wage  bargaining  rounds  in 
2023  point  to  higher  wage  growth  than  in 
previous  years,  helping  restore  real  wage 
levels  while  also  prolonging 
inflationary 
pressures. 

The  tight  labour  market  situation  is 
beginning  to  ease.  The  low  unemployment 
rate  reflects  a  very  tight  labour  market, 
making 
it  difficult  for  businesses  to  fill 
vacancies.  However,  in  recent  months  the 
slowdown  in  output  and  employment  growth 
has  started  to  ease  pressures  in  the  labour 
market.  The  number  of  vacant  positions  has 
started  to  fall  and  unemployment  appears  to 
have  stabilised  at  a 
the 
Commission’s 2023 Spring Economic Forecast, 
the unemployment rate is expected to increase 
slightly to 5.0% in 2023 . 

level. 

low 

In 

to  a 

favourable 

Denmark’s productivity is high and rising 
business 
thanks 
environment, 
in  R&D  and 
investment 
sectoral  reallocations.  Labour  productivity 
(GDP  per  hours  worked,  PPS)  is  140%  of  the 
EU  average,  and  has  been  growing  at  around 
1.4% each year for the past 10 years (1). Over 
half  of  the  estimated  increase  in  total  factor 
productivity (2)  between  2000  and  2018 
resulted  from  resources  shifting  to  more 
productive  businesses/sectors (3).  Denmark 
also  benefits  from  a  comparatively  high  level 
of  R&D  expenditure  and  share  of  R&D 
personnel in total employment. 

increased. 

Inflation  remains  very  high  in  Denmark, 
as  in  most  of  the  EU.  Since  early  2021, 
consumer  price  inflation  has  been  rising  as 
economic activity rebounded and pressures on 
global  supply  chains 
Inflation 
increased sharply following the Russian war of 
agression against Ukraine from 1.9% in 2021 
to  8.5%  in  2022, the  highest  rate  of  inflation 
recorded  in  Denmark  since  the  early  1980s. 
Rising  energy,  food  and  commodity  prices 
were the main drivers behind the initial  surge 
in  inflation.  These  pressures  have  become 
broader-based  due  to  higher  production  costs 
and  higher  import  prices,  as  also  reflected  in 
the considerable rise in core inflation.   

Following  successive  declines  in  headline 
inflation  since  October  2022,  price 
pressures  appear  to  be  receding.  The 
recent  decline  has  been  driven  mainly  by 
falling energy inflation, which reflects the drop 
in  wholesale  energy  prices  as  well  as  a 
temporarily  lower  electricity  levy  in  the  first 
half  of  2023.  In  turn,  core  inflation  remains 
high  at  7.2%  in  March  2023.  Price  pressures 
are  expected  to  continue  easing  given  the 
weaker  economic  outlook,  global  supply  chain 
pressures  easing  and  energy  prices  levelling 
off.  However,  with  broader-based  price 

Increasing  competition  and  broadening 
the  innovation  base  may  offer  further 
productivity  gains.  Strong  competition  can 
drive productivity gains as it encourages firms 
to use labour and capital more efficiently, for 
example  by  adopting  best  workflow  practices 
and new technologies. The Danish Productivity 
Board’s 2022 annual report suggests domestic 
competitive  pressures  weakened  in  2000-
2018,  as  signalled  by  higher  markups.  While 
the  innovation  environment  remains  healthy, 
business R&D intensity (4) has been decreasing 
and is concentrated in large companies. Start-
ups and small and innovative companies face 
some difficulties in scaling up (see Annex 11). 

(1)  The Danish National Productivity Board, Productivity 

2022.   

(2)  A measure of productivity accounting for effects in total 
output not caused by traditionally measured inputs of 
labour and capital. 

(3)  The Danish National Productivity Board, Productivity 

2022.  

(4)  Glossary:R & D intensity - Statistics Explained 

(europa.eu) 

3 

 
                                                 
Box 1.1:  Energy policy response in Denmark 

Denmark  has  adopted  several  support  measures  to  cushion  the  impact  of  energy  price 
inflation on households and businesses. The Commission’s 2023 Spring Forecast projects the 
country’s gross budgetary costs to amount to 0.2 % of GDP in 2023 (5).  

The main measure, a temporary lowering of the electricity levy, is ineffective as it reduces the 
price  incentive  and  is  not  targeted  enough  to  help  the  most  vulnerable.  This  measure  took 
effect from 1 January 2023 and expires on 30 June 2023. 

In addition, Denmark has introduced a range of social benefits that target older people, people 
not  in  work  or  training,  students  and  other  low-income  groups.  The  measures  maintain  the 
price signals and are clearly targeted. A targeted and means-based lump sum payment in the 
form  of  a  ‘heat  cheque’  was  also  introduced (6),  as  well  as  a  scheme  to  freeze  energy 
expenses  for gas,  electricity  and  district  heating  when  the  prices  exceeds  a  certain  price 
cap. (7).  

Denmark  applies  the  EU  solidarity  contribution  in  application  of  Council  Regulation  (EU) 
2022/1854 (8).  The  legislation  carrying  through  the  solidarity  contribution  is  expected  to  be 
adopted and enter into force in May 2023. It will be applicable in 2023 only.  

Furthermore,  Denmark  applies  the  compulsory  revenue  cap  of  EUR  180  per  megawatt  hour 
electricity. The first reading in the Parliament of the draft laws regarding both legislations took 
place on 30 March 2023. The new Government, which took office in December 2022 expects 
the  legislation  for  the  revenue  cap  to  be  adopted  late  April  and  enter  into  force  in  the 
beginning of May 2023. In accordance with the Council Regulation (9), it will be applicable for 
the period 1 December 2022 to 30 June 2023.   

On security of supply, the launch of the Baltic Pipe in September 2022, which connects the gas 
systems  of  Denmark,  Norway  and  Poland,  was  key  to  compensating  for  the  halted  Russian 
imports and the temporarily closed production of the Tyra Field (set to gradually reopen at the 
end  of  2023/early  2024).  In  addition,  Denmark  launched  a  comprehensive  energy  savings 
campaign (10)  and  adopted  the  reform  paper  ‘Denmark  can  do  more  II’  to  accelerate  the 
phasing out of individual gas and oil heating systems, and increase the production of biogas 
and electricity. 

(5)  For 2022, gross budgetary costs of measures amounted 

to 0.1% of GDP. 

(6)  The heat check (varmecheck.dk) 

(7)  Indefrysning af energiudgifter (borger.dk) 

(8)  The application of a mandatory temporary solidarity 

contribution at a rate of at least 33% to the 
extraordinary and unexpected profits of businesses 
active in the crude petroleum, natural gas, coal and 
refinery sectors. It is calculated on taxable profits, as 
determined under national tax rules in the fiscal year 
starting in 2022 and/or in 2023, which are above a 
20% increase of the average yearly taxable profits in 
2018-2021. 

(9)  EUR-Lex - 32022R1854 - EN - EUR-Lex (europa.eu) 

(10)  State of energy supply | Dea (ens.dk)  

public 

spending  may 

Government  plans  to  raise  the  efficiency 
support 
of 
productivity  growth.  Planned  measures 
include  a  shortening  of  certain  higher 
education 
master 
programmes,  and  improving  efficiency  in  the 
public 
including  healthcare  and 
hospitals. The latter could be key to improving 
public services in the face of labour shortages 
and an ageing population. 

courses, 

mainly 

sector, 

Denmark  scores  very  well  on  the  UN 
Sustainable  Development  Goals  (SDGs), 
in 
although  some  challenges  remain 
improving  productivity  and  life  on  land. 
The  country  ranks  among  the  top  5  global 

4 

 
                                                 
 
performers  overall  and  excels  in  most  of  the 
areas of environmental sustainability, fairness 
and macroeconomic stability. However, on the 
productivity  dimension,  early  leavers  from 
education and training and the share of adults 
participating 
significant 
challenges. Denmark also scores below the EU 
average on life on land (see Annex 1). 

training  are 

in 

While  Denmark  performs  very  well  on 
most 
indicators  for  employment  and 
health-related  policies  in  the  European 
Pillar  of  Social  Rights,  there  is  a  lack  of 
affordable  housing  in  some  areas.  While 
its  early  leaving  rate  from  education  and 
training  is  near  the  EU  average,  it  bucks  the 
downward  trend  seen  in  other  EU  Member 
States  with  a  stable  share  of  9.8%.  Denmark 
is the only Member State classed as being in a 
‘critical situation’ in terms of the housing cost 
overburden  rate:  for  15.5%  of  households, 
housing  costs  represent  more  than  40%  of 
their disposable income, almost double the EU 
average of 8.3% (see Annex 14). The burden is 
particularly high for single people (41.0%) and 
for  tenants  paying  rent  at  market  prices 
(30.3%),  while  it is  also  high  for  people  living 
in  cities  (21.9%)  and  for  non-EU  citizens 
(21.9%).  House  prices  are  starting  to  decline 
but  remain  high.  House  prices 
increased 
rapidly  between  the  second  half  of  2020  and 
the first half of 2022 due to high demand for 
housing  and  higher  prices 
for  building 
materials.  The  house  price  index  for  single-
family homes rose by 18.2% from Q1-2020 to 
Q2-2022. The increase was particularly strong 
in  the  capital  region,  where  prices  rose  by 
27%. In Q3-2022, house prices declined in all 
Danish  regions,  by  3.3%  quarter  on  quarter, 
mainly  reflecting  successive  rises  in  interest 
rates.  The  Danish  Central  Bank  expects  house 
prices  to  decline  by  9.4%  overall  in  2023 (11). 
Following  rapid  increases  in  2020  and  2021, 
residential  construction  activity  began  to  cool 
towards  the  end  of  2022  as  the  significant 
increases  in  interest  rates  and  building  costs 
it  more  expensive  to  finance  the 
made 
construction of new buildings.  

and 

Private sector indebtedness remains very 
high,  but  deleveraging  resumed  in  2021. 
Both  household  and  non-financial  corporate 
debt-to-GDP  ratios  are  high  and  above  both 
fundamentals-based 
prudential 
benchmarks (12). However, the household debt-
to-GDP ratio continued to decline in 2021 and 
in  the  first  half  of  2022,  as  net  credit  flows 
remained  moderate  and  economic  growth 
resumed,  while  the  non-financial  corporate 
debt-to-GDP  ratio  stabilised  in  2021  after 
significant  increases  in  previous  years.  The 
Danish banking sector is stable overall and has 
weathered  the  uncertainties  of  the  past  few 
years  relatively  well,  but  some  vulnerabilities 
mainly 
linked  to  profitability  remain  (see 
Annex 18). 

Sound public finances  

Denmark  benefits  from  sound  public 
finances  overall.  The  general  government 
budget  balance  has  been  in  surplus  in  recent 
years,  while  the  gross  debt  ratio  has  been 
falling.  The  general  government  surplus 
reached 3.3% of GDP in 2022, but is forecast 
to  decline  in  2023  and  2024,  mainly  due  to 
weaker  growth  and  employment  outlook. 
Nevertheless,  the  general  government  budget 
balance  is  expected  to  remain  solidly  in 
positive territory.  

Denmark  is  considered  to  be  at  low  risk 
as regards the longer-term sustainability 
of  public  debt  (see  Annex  21).  Its  general 
government  gross  debt  ratio  was  30.1%  of 
GDP in 2022 and has been declining in recent 
years,  punctuated  only  by  a  pronounced 
increase  due 
pandemic 
measures. Even in relatively adverse scenarios, 
the gross debt ratio is expected to keep falling 
(see Annex 21). Financial market confidence in 
Denmark’s public finances is high, as reflected 
in its AAA sovereign credit rating.  

emergency 

to 

Denmark’s  sound  fiscal  position  allowed 
for  sizeable  emergency  packages  during 
the pandemic. These measures helped shield 

(11)  Danmarks Nationalbank, Outlook for the Danish 

(12)  European Commission, Alert Mechanism Report 2023, 

Economy, March 2023. 

COM(2022) 781 final, November 2022.   

5 

 
                                                 
                                                 
businesses  and  workers  from  the  worst 
effects. The measures came at a sizeable cost, 
totalling  around  4.0%  of  GDP.  The  rapid 
resumption 
and 
renewed 
employment 
strengthening of public finances.  

of 
economic 
then  supported  a 

growth 

Denmark’s  comfortable  fiscal  position  is 
linked to the longer-term economic policy 
mix  based  on  stability.  The  fiscal  policy 
stance  rests  on  the  Budget  Law  requirement 
of  a  maximum  budget  deficit  of  1%  of 
fiscal-structural 
structural 
framework  has  helped  Denmark  keep  public 
finances under control. 

GDP. 

This 

In  2022,  Denmark  welcomed  a  sizeable 
number of people fleeing the Russian war 
of  aggression  in  Ukraine.  The  number  of 
refugees  (mainly  women  and  children)  from 
Ukraine  reached  around  35  700  permits  in 
early April 2023. More than 27 700 displaced 
persons from Ukraine living in Denmark by the 
end  of  January  2023,  corresponding  to  0.5% 
of  the  Danish  population.  The  number  was 
significantly 
lower  than  expected  at  the 
beginning  of  the  war,  and  in  December  2022 
around 3 600 displaced persons had returned 
to Ukraine. 40% of the displaced persons from 
Ukraine were employed by the end of January 
2023.  The  overall  budgetary  costs  linked  to 
people arriving from Ukraine are estimated at 
0.2% of GDP in 2023. 

6 

 
 
THE RECOVERY AND RESILIENCE PLAN IS UNDERWAY 

Denmark’s  recovery  and  resilience  plan 
(RRP) aims to address the key challenges 
related to the green and digital transition 
and  strengthen  the  resilience  of  the 
healthcare sector. It consists of 10 reforms 
and 42 investments that are supported by EUR 
1.43  billion  in  grants,  representing  0.46%  of 
GDP (see Annex 3).   

implementation 

of  Denmark’s 
The 
recovery  and  resilience  plan 
is  well 
underway.  Denmark  submitted  one  payment 
request,  corresponding  to  25  milestones  and 
targets in the plan  and  resulting  in  an  overall 
disbursement  of  EUR  301  million.  Beyond  the 
first  payment  request,  the  implementation  of 
the  plan  is  on  track,  which  will  result  in  the 
submission  of  the  second  payment  scheduled 
by the end of 2023. The preparation of a new 
REPowerEU chapter is underway with a view to 
submitting in May 2023.  

following  more  detailed 

The 
review  of 
measures being implemented under the RRP in 
no way implies formal Commission approval or 
rejection of any payment requests. 

Implementation of the Danish RRP 
is underway 

Denmark has successfully implemented a 
broad  range  of  measures  that  support 
the green and digital transition and make 
the  Danish  economy  and  society  more 
resilient. The Commission has disbursed EUR 
301  million  for  the  fulfilment  of  milestones 
and  targets  related  to  the  first  payment 
request.  The  first  payment  request  included 
the 
investments  and 
reforms  related  to  digitalising  the  healthcare 
system,  making  agriculture  more  climate-
friendly, 
in 
households and the public sector, creating the 

improving  energy  efficiency 

implementation  of 

framework  for  comprehensive  green 
tax 
reform,  sustainable  mobility  and  investing  in 
green  R&D,  such  as  carbon  capture  and 
storage.  

is 

fossil 

Denmark’s 

opportunity 

to 
an 
REPowerEU 
accelerate  the  green  transition  and 
diversify 
fuel 
dependency  and  its  supply  sources,  in 
particular  through  reforms  that  could 
unlock  the  potential  of  renewables.  For 
this  instrument,  Denmark  benefits  from  a 
grant of EUR 131 million, on top of which the 
country  decided  to  transfer  EUR  66  million 
from  the  Brexit  Adjustment  Reserve  into  its 
REPowerEU chapter. 

Denmark’s  second  payment  request  will 
help  cement  the  plan’s 
impact.  This 
payment  request  is  the  largest  in  financial 
terms.  It  will  ensure  further  digitalisation  of 
the healthcare sector and will help rehabilitate 
industrial  sites  and  contaminated  land.  The 
scrappage scheme for diesel cars is having an 
impact,  with  36 000  diesel  cars  expected  to 
have  been  scrapped.  This  instalment  will  also 
kick-start  Denmark’s  flagship  digital  strategy 
through  the  adoption  of  legislation  and  the 
cybersecurity  strategy,  and  the  roll-out  of 
high-speed  connectivity  for  thousands  of 
households.  Lastly,  the  component  to  boost 
research in green solutions will see significant 
progress 
research 
partnerships in various areas, including carbon 
capture  and  storage,  green 
food 
production, plastic reduction, textile waste and 
the circular economy.  

to  advancing 

thanks 

fuels, 

Supporting the green transition 

implemented 
Many  measures  already 
contribute  to  the  decarbonisation  of  the 
Danish  economy.  This  is  critical  for  fulfilling 

7 

 
 
Denmark’s  ambitious  national  objectives  and 
reducing dependence on fossil fuels. As part of 
the  first  set  of  milestones  already  achieved, 
the  entry  into  force  of  many  elements  of  the 
green  tax  reform  is  a  crucial  step  towards 
decarbonisation.  This  reform  consists  of  four 
elements that support Danish businesses with 
the  green  transition.  Elements  that  have 
already  been  agreed  or  adopted  include  an 
investment  window  to  incentivise  businesses 
to  invest in  green  technologies  and  hardware, 
the accelerated depreciation of investments in 
fixed assets as well as higher emissions taxes 
on  industry.  In  the  second  payment  request, 
the Commission will assess the progress made 
in  implementing  these  measures  and  use  of 
the amended tax schemes. Furthermore, a set 
of  measures  to  promote  green  research  and 
development  have  been  set  in  motion,  which 
will  support  decarbonisation  of  the  Danish 
economy.  Areas  that  are  benefitting  from 
investments 
into  carbon 
include  research 
capture and storage and the use of CO2, green 
fuels  for  transport  and  industry,  and  climate- 
and  environmentally  friendly  agriculture  and 
food production. Several milestones in the first 
and  second  payment 
that  are 
relevant for the green transition of agriculture 
have  already  been  achieved.  Agriculture  is  an 
energy-  and  emissions-intensive  sector  that 
requires  further  decarbonisation  efforts.  The 
for 
government 
applications for several projects. These include 
biorefineries 
by-
products  into  biofuels  and  the  re-wetting  of 
carbon-rich soils.  

agricultural 

completed 

converting 

requests 

calls 

has 

is  essential 

In  the  face  of  high  energy  prices  and 
insecurity  of  supply  in  Europe,  improving 
for 
energy  efficiency 
Denmark.  Under  the  first  payment  request, 
political  agreements  were  adopted  to  fund 
subsidy  schemes  for  replacing  oil  and  gas 
burners  and  improving  the  energy  efficiency 
and  green  heating  of  public  and  private 
buildings  and  in  the  industrial  sector.  The 
Commission  will  assess  the  implementation 
and  success  of  these  schemes  in  subsequent 
payment requests. 

plan 

Denmark’s 
measures 
mobility.  These  measures  aim  to 

several 
sustainable 
lower 

promote 

includes 

to 

in 

the 

including 

road 
greenhouse  gas  emissions 
transport  sector  by  2.1  megatonnes  in  2030. 
The  first  payment  request  encompasses  a 
total  of  five  milestones  related  to  these 
the  amendment  of 
measures, 
legislation to allow for lower registration taxes 
for  electric  vehicles,  political  agreement  on  a 
test  scheme  for  road  pricing,  analysis  to 
optimise heavy haulage and an agreement for 
a subsidy scheme for green ferries. Upcoming 
investments  will 
incentivise  the  transition 
towards green modes of transport, including a 
cars, 
cash  grant 
investments  in  bike  lanes  and  electric  bike 
charging stations and car sharing. 

scrapping  diesel 

for 

Circular economy and waste management 
policies  remain  an  important  challenge, 
which 
is  partially  supported  by  the 
Danish  plan.  The  first  payment  request 
includes  the  selection  of  a  roadmap  to 
research  and  develop  solutions  in  order  to 
reduce and reuse plastics and textile waste in 
all steps of the value chain. Under the second 
payment  request,  it  is  expected  that  private-
public  research  partnerships  will  be  selected 
and receive funding.  

Accelerating the digital transition 

Investments  in  the  digital  transition  are 
ongoing  and  include  a  flagship  digital 
the  first  set  of 
strategy.  As  part  of 
milestones  already  achieved,  Denmark  has 
introduced  a  depreciation  scheme  under  the 
green  tax  reform  that  encourages  digital 
investments.  It  allows  companies  to  claim  a 
tax deduction for undertaking investments that 
can  help  accelerate  their  digital  transition. 
Denmark  has  also 
implemented  digital 
solutions  in  the  health  sector.  Starting  from 
the  second  payment 
request,  substantial 
reforms  are  expected  from  the  new  digital 
strategy.  It  aims  to  improve  the  digitalisation 
of  public  administration  (for  instance  through 
artificial  intelligence)  and  prepare  the  society 
for  new  challenges  with  the  new  and  more 
ambitious  cybersecurity  strategy  adopted  in 
2021.  The  Danish  government  unveiled  its 
digital strategy in May 2022. In addition, ultra-
fast  internet  broadband  coverage  is  being 

8 

 
rolled  out  in  rural  areas  that  were  previously 
not covered. 

solutions for patients will be implemented and 
a  report  on  the  effects  of  COVID-19  vaccines 
will be published. 

A more resilient and digitalised 
healthcare system 

Measures  aimed  at  strengthening  the 
resilience  of  the  healthcare  system  were 
implemented in 2021 and 2022 and seem 
on  track  for  the  forthcoming  payment 
requests.  The  COVID-19  pandemic  revealed 
the  need  to  ensure  stocks  of  critical  medical 
products, provide fast and reliable reporting of 
health  events  and  more  investments  in  the 
digitalisation of the health sector. As assessed 
in  the  first  payment  request,  Denmark  has 
monitored  and  ensured  adequate  stocks  of 
critical  medicines  in  the  secondary  healthcare 
sector  to  anticipate  medicine  needs  and 
ensure the right levels of storage capacity for 
critical  medicines.  Digital  solutions  have  been 
put in place, including the expansion of online 
consultations  for  heath  anxiety  triggered  by 
COVID-19,  and  further  development  of  the 
Kontakt Læge app. The aim is to increase the 
use of telemedicine and patient involvement in 
the  healthcare  system.  Furthermore, Denmark 
has  implemented  an  IT  system  for  reporting 
side  effects  of  COVID-19  vaccines  and  other 
medicines,  available  to  all  general  practice 
clinics  in  the  country.  As  part  of  the  second 
and  third  payment  requests,  further  digital 

Box 2: 

Key deliverables under the RRP in 2023-2024 

  Publish a study on the effects and side effects of COVID-19 vaccines 

  Complete a feasibility study on carbon capture and storage 

  Agree on the next steps within the green tax reform in line with the conclusions of the report 

produced by the expert group for a uniform CO2 tax regulation 

  The law on green tax reform, including higher emissions taxes on industry, will be adopted by 

the Danish Parliament and 36 000 diesel cars scrapped thanks to the cash grant. 

  At  least  50%  of  the  measures  in  the  digital  strategy  will  be  implemented  in  relevant 

regulatory and legislative acts 

  At  least  550  small  and  medium-sized  enterprises  (SMEs)  will  receive  funding  for  digital 

projects 

  500 firms will have used the tax deductions for R&D 

9 

 
 
 
 
 
FURTHER PRIORITIES AHEAD 

Beyond  the  challenges  addressed  by  the 
RRP, Denmark faces additional challenges 
not sufficiently covered in the plan. These 
concern  in  particular  accelerating  the  green 
transition, reducing dependence on fossil fuels 
(47%  of  electricity  production  came  from 
combustible  fuels  in  2021),  improving  the 
electrification  of  transport,  creating  a  more 
circular  economy  and 
improving  waste 
labour 
management  policies,  addressing 
supply  shortages  and  skills  mismatches,  as 
well  as  improving  the  functioning  of  the 
housing  market.  Addressing  these  challenges 
will  also  help  make  further  progress 
in 
achieving  the  SDGs  where  Denmark  currently 
shows  room  for  further  improvement,  namely 
SDG 13 (Climate action), SDG 12 (Responsible 
consumption  and  production),  SDG  11 
(Sustainable  cities  and  communities  and  SDG 
4 (Quality of education). 

Paving the way for an increasingly 
green economy  

Denmark  has  committed  to  ambitious 
decarbonisation  objectives,  but  risks  not 
achieving  them.  Its  climate  policy  aims  to 
reduce  greenhouse  gas  emissions  by  70%  by 
2030  compared  to  1990  and  achieve  climate 
neutrality  by  2045  at  the  latest,  including  a 
commitment to phasing out coal completely by 
2028. However, the assessment by the Danish 
Council  on  Climate  Change  indicates  risks  in 
achieving  these  targets  in  relation  to  carbon 
capture,  utilisation  and  storage,  emissions 
from agriculture, and the pace of expansion of 
renewable energy capacity.  

Denmark  is  a  front  runner  in  the  uptake 
of  renewable  energy  (44%  of  the  energy 
mix in 2021) and clean tech, in particular 
wind  production.  The  country  is  a  global 
leader  in  integrating  wind  power  into  the 

on 

and 

performs  well 

electricity grid. It is also a leading player in the 
large-scale  (including  solar)  district  heating 
market 
eco-
innovation (13)  and  share  of  green  patents (14). 
It  aims  to  quadruple  its  electricity  production 
from solar and onshore wind turbines by 2030 
compared to 2021 levels (15). Today, 2.3 GW of 
offshore  wind  capacity  is  installed  in  the 
Danish  seas,  with  another  350  MW  achieved 
by the end of 2023 and 1 GW at the latest by 
2027.  Furthermore,  a  total  of  6  GW  of  new 
offshore  wind  farms  and  3  GW  of  offshore 
wind  from  energy  island (16)  Bornholm  are  in 
the pipeline for 2030.  

to 

intend 

initiatives 

Faster  commissioning  of  projects  and 
simplified  permitting  rules  are  essential 
to  achieve  national  ambitions 
for 
offshore  and  onshore  wind  capacity. 
Several 
streamline 
permitting procedures and shorten delays. The 
expansion  of  offshore  wind,  the  ‘open-door’ 
permitting scheme is currently being reviewed. 
On  offshore  wind  farms,  a  service  check  and 
evaluation  to  remove  unnecessary  legislative 
barriers and shorten approval time, in line with 
applicable legislation, have been put in motion. 
A  ‘renewable  travel  team’  was  also  set  up  to 
in 
deliver  key  renewable  energy  projects 
municipalities (see Annexes 7 and 12). In order 
to  increase  the  speed  of  the  green  transition 
and  to  become  independent  from  Russian 
furthermore 
fossil 
established  a  national  energy  crisis  staff 
(NEKST)  that  must  ensure  faster  action  on 
acute green challenges. 

fuel,  Denmark 

has 

(13)  Eco-innovation Index, Eco-Innovation (europa.eu) 

(14)  Overall Strategic Analysis of Clean Energy Technology in 

the European Union, JRC (2022). 

(15)  Faktaark – Firedobling af VE på land (2022). 

(16)  Energy islands serve as hubs that gather electricity from 
the surrounding offshore wind farms and distribute it to 
the electricity grid in Denmark as well as directly to 
other countries 

10 

 
 
                                                 
but 

location 

interconnection 

including 
Better  energy  connectivity, 
energy  islands  in  the  Baltic  Sea  and 
North  Sea,  will  facilitate  cross-country 
energy 
require 
sufficient  grid  expansion  planning  at 
transmission  and  distribution 
level. 
Renewable  energy,  particularly  wind,  provides 
the  bulk  of  electricity  generation  (81%)  in 
Denmark (see Annex 6). The plan to construct 
two  energy  islands  (an  artificial  one  in  the 
North  Sea  and  one  in  Bornholm)  illustrates 
that  Denmark’s  geographical 
is 
particularly  promising  for  energy  linkages  to 
other  countries.  The  signature  of 
two 
important  declarations 
(Esbjerg 
offshore  wind  in  May  and  Marienborg  in 
August) as well as Ostend in 2023 strengthens 
the  expected  role  of  Denmark  as  an  exporter 
of  electricity. 
respect,  preparing 
this 
integrated  system  planning  for  future  grid 
expansion  would  be  needed  to  respond  to 
flexibility  needs  both  at 
demand  and 
transmission  and  distribution 
levels.  This 
planning  could  also  include  backbones  and 
storage  for  hydrogen  and  CO2  in  view  of 
Denmark’s  growing  ambitions  on  Power-to-
X (17)  and  carbon  capture,  utilisation  and 
storage. 

in  2022 

In 

roll-out 

sources 

that 
and 

Boosting  energy  efficiency  measures  in 
insulation 
buildings 
combine 
of 
the 
measures 
decarbonised  heating 
could 
further  reduce  dependency  on  fossil 
fuels.  Scaling  up  energy  efficiency  measures 
to reduce dependence on fossil fuels in public 
buildings could be further supported by easing 
budget  limitations  on  municipalities  for  green 
to  support 
projects.  Additional  measures 
energy  efficiency  in  private  buildings  would 
help reduce high energy costs in Denmark. The 
country  had  the  second  highest  household 
energy bills in the EU in 2022, which increased 
by  49%  between  2019  and  2022  due  to 
higher  energy  prices  (from  EUR  3 350/year  to 
EUR 5 500/year).  

for 

energy 

industrial  activities  offer 
Domestic 
potential 
efficiency 
improvements,  especially  by  exploiting 
surplus  heat  in  district  heating.  In  recent 
years,  Denmark  has  introduced  a  new  set  of 
rules 
improving  conditions  for  channeling 
surplus  heat  from  high-temperature industrial 
processes  into the district  heating  grid (18).  By 
the  1st  of  January  2021,  the  levy  electricity-
based  surplus  heat  from  selected  premises 
(e.g.  data  centers,  supermarkets)  was  lifted, 
and a price cap on surplus heat supporting the 
use  of  surplus  heat  entered  into  force  by  the 
1st  of  January  2022.  Domestic  industrial 
sectors  are  already  suppliers  of  surplus  heat 
to  the  district  heating  grid,  but  the  use  of 
surplus  heating  can  be  increased  further  by 
exploiting  the  potential  of  energy-intensive 
processes such as Power-to-X.  

Denmark  could  accelerate  its  transition 
to  zero-  and  low-emission  mobility.  While 
the  construction  of  public charging  stations  is 
speeding  up  in  Danish  cities  and  along  the 
state  road  network,  charging  infrastructure 
remains  a  challenge  for  car  owners  living  in 
dense  urban  areas,  especially  in  Copenhagen, 
lacking  availability  of  publicly 
due  to  a 
accessible 
Charging 
points. 
charging 
infrastructure  is  also  not  sufficient  for  heavy 
duty  vehicles,  where  incentives  until  2025 
remain  lower  than  for  light  vehicles.  From 
2025,  a  new  kilometre  based  and  CO2-
differentiated  road  toll  will  be  imposed  for 
lorries  that  will  provide  higher  incentives 
(EU) 
within 
2022/362. In addition, companies permit their 
employees  to  use  company  cars  running  on 
fossil  fuel.  To  incentivize  the  uptake  of  zero- 
and  low-emission  vehicles,  a  reform  from 
2021  included  in  the  Danish  RRP  introduced 
lower  registration  taxes  on  zero  and  low 
emission vehicles. 

framework  of  directive 

the 

Some  decarbonisation  challenges  remain 
for  Denmark  to  reach 
its  ambitious 
climate  goals,  especially  on  agriculture. 
Significant  decarbonisation  challenges  also 
face in Denmark’s agricultural sector. In 2021, 

(17)  Conversion, storage and reconversion of the surplus of 
electric power from renewable sources, X standing for 
the type of energy (e.g. hydrogen, fuel cells) into which 
the electricity surplus is being converted. 

(18)  Agreement on Increased Use of Surplus Heat 2019, 

Climate Agreement for Energy and Industry 2020 and 
Follow-up Agreement with reference to Climate 
Agreement on Surplus Heat 2021 

11 

 
                                                 
                                                 
largest  source  of 
the 
the  sector  was 
Denmark’s  greenhouse  gas  emissions  under 
the  EU  Effort  Sharing  Regulation  (38.4%), 
more  than  twice  the  EU  average.  The  Danish 
government  plans  to  introduce  a  carbon  tax 
applying  to  the  agricultural  sector  after  the 
“Expert  Group  for  a  Green  tax  reform”  will 
have published its findings. As regards carbon 
removals,  the  country  will  focus  on  measures 
for  rewetting  of  organic  soils  (peatland)  and 
the  government  intends  planting  250,000 
hectares of new forest. 

the 

boost 

further 

REPowerEU provides a unique opportunity 
to  scale  up  and  support  green  measures 
to 
country’s 
decarbonisation  objectives.  Focusing  on 
measures  to  speed  up  the  expansion  of 
renewable energy wind capacity, especially on 
grid  expansion  planning,  could  greatly  benefit 
the  country’s  clear  commitment  to  renewable 
energy sources. Upscaling measures aiming at 
phasing out fossil fuel at domestic level in the 
current  RRP  could  help  Denmark  achieve  its 
national  2030  targets.  Furthermore,  there  is 
potential  for  (i)  supporting  the  acquisition  of 
green  skills in  the  workforce;  and (ii)  reducing 
the country’s fossil fuel footprint with pioneer 
bio carbon-capture technologies.  

Strengthening the circular 
economy to mirror the green 
energy transition 

in 

(municipal) 

Denmark  continues  to  underperform  in 
certain  aspects  of  the  circular  economy, 
especially 
waste 
generation,  recycling  rates  and  food 
waste.  Municipal  waste  generation 
in 
Denmark has been stable but fluctuating since 
2014.  In  2021  preliminary  data  shows  786 
kg/year/inhabitant. This remains the highest in 
the  EU  (EU  average  530  kg/year/inhabitant) 
although the coverage of municipal waste can 
include  different  waste  streams  in  different 
countries  complicating  direct  cross-national 
comparisons.  This  suggests  that  Denmark’s 
economic  growth  is  not  yet  decoupled  from 
waste 
revised  waste 
management  plan  and  waste  prevention 

generation. 

Its 

programme  of  July  2021  also  need  to  be 
implemented  effectively  (see  Annex  9).  On 
recycling,  the  country’s  performance  is  below 
the  European  average.  The  recycling  rate  in 
2019  and  2020  has  recently  been  revised 
significantly 
the 
methodological  changes  used  to  measure 
recycling  rate  of  municipal  waste,  which 
complicates  the  identification  of  a  clear trend 
in  Denmark’s  recycling  rates.  Denmark  ranks 
second  worst 
in  the  EU  on  food  waste 
indicators, with more than 221 kg/capita/year.  

downwards 

due 

to 

Graph 3.1: Treatment of municipal waste 

Source: Eurostat 

in 

investment 
Denmark  has  considerable 
needs 
recycling  municipal  and 
packaging waste. According to a Commission 
study (19),  to  meet  the  recycling  targets  for 
municipal  waste  and  packaging  waste, 
Denmark  would  need  to  invest  an  additional 
EUR 41.5 million per year between 2021-2027 
in waste collection, recycling and reprocessing, 
biowaste 
sorting 
treatment  and  waste 
facilities.  New  policy  instruments,  including 
sharpening  economic  incentives,  could  make 
recycling  more 
prevention, 
economically  attractive.  Policy  efforts  in  this 
area  are  ongoing 
the 
implementation  of  the  Agreement  on  climate 
plan  for  a  green  waste  sector  and  circular 
(2020),  which  amongst  other 
economy 
rolling  out  nationwide 
initiatives  entails 

including 

through 

reuse 

and 

(19)  European Commission, 2019, Study on investment 
needs in the waste sector and on the financing of 
municipal waste management in Member States, p. 61. 

12 

010020030040050060070080090020172018201920202021Incineration w/o energy recoveryLandfill/disposalComposting/digestionMaterial recyclingEnergy recovery (incineration etc)Total waste treatedEU total wasteKg/capita 
  
                                                 
collection  requirements  for  municipal  waste 
and  structural  changes  to  the  roles  of  the 
municipal and private sectors in the treatment 
of waste. 

in 

circular  economy.  Of 

Investing  more 
environmental 
protection  and  reducing  environmentally 
harmful  subsidies  could  further  promote 
the  16 
the 
environmentally 
in 
harmful 
Denmark,  6  relate  to  transport  (fossil  fuels) 
and 10 to agriculture (20). Denmark has not yet 
delivered a final framework of priority actions 
for  investments  in  Natura  2000  sites  (see 
Annex 6).  

subsidies 

HBS 

According 

for green skills is increasing further (see Annex 
8). 
Economics 
to 
methodology (21),  8.6%  of  job  postings  at  the 
beginning  of  2022  included  requirements  for 
green  skills,  with  the  highest  demand  in 
construction,  where  the  share  was  18%.  In 
2022, 
labour  shortages  were  reported  in 
Denmark  for  60  occupations  that  required 
specific  skills  or  knowledge  for  the  green 
transition,  including  environmental  engineers, 
environmental  protection  professionals  and 
building 
job 
advertisements  in  clean  energy  deployment 
sectors more than  doubled  between Q4-2021 
and Q4-2022 (+112%), well above the already 
high increase in the EU (+49%; see Annex 7). 

architects (22). 

Online 

Training the labour force, including 
for the green and digital 
transitions 

industry, 

Labour  shortages  continue  to  be  a 
significant concern for Danish businesses, 
particularly  SMEs.  The  biggest 
labour 
shortages  are 
construction, 
in 
healthcare  and  the  services  sector.  Although 
labour  shortages  are  easing  in  industry,  the 
gap  remains  challenging.  Having  crossed  the 
40%  threshold  in  Q2-2022,  the  share  of 
employers  that  identified  labour  shortages  as 
the  main  factor  in  limiting  production  in  the 
industrial  sector  decreased  to  21.2%  in  Q4-
2022 (compared to the EU average of 25.9%). 
In the services sector, 39.0% of firms reported 
labour  shortages  in  Q4-2022.  Meanwhile,  the 
healthcare sector is facing a growing need for 
labour  (see  Annex  14).  While  the  number  of 
vacancies  decreased  in  Q3-2022  and  Q4-
2022,  it  is  still  at  a  significantly  higher  level 
than before the pandemic.  

The  green  transition  has  created  further 
demand for green skills in the context of 
labour  shortages  and  skills  mismatches. 
The  number  of  jobs  in  the  environmental 
goods  and  services  sector  grew  by  over 
79 000 between 2015-2020, and the demand 

(20)  European Commission, 2023, Mapping objectives in the 
field of environmental taxation and budgetary reform: 
Environmentally harmful subsidies (EHS). 

transition. 

Upskilling  and  reskilling  workers  for  the 
green  transition  is  essential  to  ensure  a 
In  energy-intensive 
smooth 
industries,  the  number  of  workers  taking  part 
in education and training declined from 24.6% 
in 2015 to 15.6% in 2021. However, it is still 
well  above  the  EU  average  (8.9%).  32%  of 
individuals  believe  they  do  not  have  the 
necessary  skills  to  contribute  to  the  green 
transition (EU: 38%; see Annex 8). Against the 
backdrop  of  the  June  2022  green  tax  reform 
agreement, Danish  political  parties  decided  to 
allocate  DKK  100  million  in  2025  and  2026 
for  training  and  upskilling  in  support  of  the 
green transition. Funds will  target the training 
of educators, investments in green equipment 
and 
learning 
pathways.  These  measures  follow  previous 
initiatives  to  support  green  training  and 
reskilling, which run until 2025.  

the  development  of  green 

(21)  HBS Economics, 2022, Newly developed method for 

calculating the demand for green skills. 

(22)  Data on shortages is based on the 2023 European 

Labour Authority EURES Report on labour shortages and 
surpluses 2022. National authorities report through a 
questionnaire, based on administrative data and other 
sources submitted by the EURES National Coordination 
Offices (definitions of shortages differ, therefore data is 
not comparable across countries and covers a wide 
range of sectors). Skills and knowledge requirements 
are based on the European Skills Competences and 
Occupations (ESCO) taxonomy on skills for the green 
transition (for occupations at ISCO 4-digit level, of 
which there are 436 in total). Examples are identified 
based on their ESCO ‘greenness’ score and relevant 
sectors. 

13 

 
                                                 
                                                 
literacy,  the  shortage  of 

Even though Denmark has a high level of 
digital 
ICT 
specialists  is  a  pressing  concern  for  the 
digital transition. The share of firms that try 
to recruit ICT specialists and report difficulties 
in  filling  these  vacancies  is  high,  at  62%  of 
firms with over 10 employees, increasing from 
58% in 2020. The applicants’ lack of relevant 
qualifications  from  education  or  training  was 
the  factor  most  often  reported  as  a  difficulty 
in  filling  the  vacancies  (57%  of  firms;  see 
Annex 10). 

The  digitalisation  strategy  of  May  2022 
aims  to  improve  and  strengthen  the 
digital  skills  of  individuals,  businesses 
and the public sector. The strategy seeks to 
improve  the  digital  skills  of  individuals  by 
increasing the use of digital tools and courses 
with  relevant  digital  content,  from  primary 
education 
to  higher  education,  and  by 
developing  the  competences  of  teachers  and 
educators.  There  is  also  a  digital  equipment 
fund  for  vocational  education.  The  digital 
strategy is a key component of the Danish RRP 
to tackle skills gaps in the digital sector.  

education without needing an upper secondary 
education first (23). 

Making the housing market more 
resilient 

Affordable housing remains an important 
challenge for many households. Key issues 
include  high  prices 
for  owner-occupied 
housing, a highly regulated rental  market and 
long  waiting  times  for  social  housing  in  the 
main  urban  areas.  The  percentage  of 
households  who  report  that  housing  costs 
pose  a  burden  increased  by  8  percentage 
points between 2021 and 2022, reaching 44% 
of  households  –  its  highest  level  since  the 
start  or  the  survey  in  2004 (24).  While  this 
higher  burden  is  reported  across  all  income 
quintiles,  the  lower  income  categories  are 
more  affected.  The  need  for  affordable 
housing  is  especially  acute  for  households  in 
densely  populated  areas  like  the  Copenhagen 
region. 

training 

admission 

The  government  aims  to  increase  the 
focus  on  young  people  not  in  education, 
(NEET),  and 
employment,  or  training 
support 
vocational 
to 
(VET).  These 
education  and 
measures  are  seen  as  vital  to  addressing  the 
acute 
in  Denmark. 
shortages 
labour 
is  highest  among  people 
Unemployment 
without  a  formal  education  and  among  those 
with very little or no training. For young people 
aged 15-24, the NEET share was relatively low 
(8.8%)  in  Q4-2022.  The  admission  to  some 
VET  programmes  and  their  graduates  do  not 
follow  the  demand  in  some  sectors  of  the 
labour  market.  Policies  that  help  VET  provide 
young  people  in  the  NEET  category  with 
relevant skills are of crucial importance for the 
twin  transition  and  to  ease  labour  shortages. 
The  new  government  plan  includes  ambitions 
to  strengthen  VET,  investing  in  vocational 
schools  with  a  focus  on  labour  market  needs, 
including  in  relation  to  the  green  transition. 
Moreover,  the  government  aims  to  improve 
opportunities  for  further  education  for  those 
who  choose  VET,  such  as  accessing  higher 

to 

increase 

the  supply  of 
Policies 
affordable  housing  units  are  required  to 
address  the  needs  of  households.  A 
political  agreement  was  reached  in  2021  to 
further increase the construction of affordable 
rental housing, primarily social housing, with a 
total  budget  of  EUR  1.35  billion  for  2022-
2035.  The  agreement  allocated  EUR  0.67 
billion  for  2022-2031,  while  the  remaining 
EUR  0.68  billion  will  be  allocated  at  a  later 
stage.  As  a  result  of  the  political  agreement, 
several  support  schemes  to  promote  the 
construction  of  affordable  rental  homes  were 
operational  by  early  autumn  2022.  As  the 
schemes have only been in effect for a limited 
time,  the  number  of  applications  for  most 
schemes  has  so  far  been  modest.  However, 
national  authorities  expect  applications  to 
start increasing in 2023. High inflation in 2022 
and  2023  has  a  negative  impact  on  the 
expected  number  of  affordable  rental  homes 
that  can  be  supported  by  the  initiative  as 

(23)  https://www.stm.dk/statsministeriet/publikationer/ 

regeringsgrundlag-2022/ 

(24)  Statistics Denmark, Housing Burden. 

14 

 
                                                 
the 

former 

political 

agreement 

grants  are  indexed  in  line  with  inflation  for 
most  support  schemes,  while 
total 
appropriated  budget  was  fixed  at  current 
prices. Following the November 2022 election, 
there  is  no  longer  a  political  majority  behind 
the 
on 
strengthening  the  construction  of  affordable 
rental  homes.  However,  the  support  schemes 
already  put  in  place  are  unaffected.  The 
Danish government has announced that it will 
present  a  comprehensive  housing  policy 
proposal  aimed  at  a  housing  market  with  a 
mixed  supply  of  owner-occupied  housing, 
social  housing,  cooperative  housing  and 
private letting. 

A new property tax system, including new 
housing  valuations,  would  improve  the 
resilience  and  fairness  of  the  housing 
market. The new system is expected to come 
into effect on 1 January 2024. It aims to end 
the  long-standing  cap  on  recurrent  property 
taxes  and  is  expected  to  lead  to  a  fairer  and 
more  transparent  system.  The  new  system 
could  lead  to  higher  property  taxes  in  the 
largest  urban  areas,  while  the  opposite  could 
hold  for  less  densely  populated  areas.  This 
would  help  level  out  the  substantial  price 
differences  between  small  towns  and  large 
cities,  especially  Copenhagen  and  Aarhus. 
Additional  delays 
this 
normalisation  of  the  property  tax  system, 
including  the  fairer  and  more  equal  taxation 
effect. 

jeopardise 

could 

Danish  households  have  the  highest 
mortgage debt levels in the EU in relation 
to  GDP.  This  is  due  to  several  factors, 
including a unique mortgage financing system 
that  provides  low  interest  rates,  significant 
pension  savings,  taxation  policies,  as  well  as 
certain  idiosyncratic  features  of  the  Danish 
mortgage  market.  Mortgage  owners  can 
benefit 
deferred 
amortisation  mortgage  loans,  expands  their 
borrowing  capacity  and  ability 
to  plan 
consumption over lifetime. In addition, the tax 
system  allows  for  one  of  the  highest  tax 
deductions for mortgage interest payments in 
the  EU, 
financing  of 
residential  property.  However,  variable-rate 
mortgages as well as interest-only or deferred 
amortisation  mortgages  constitute  potential 

incentivising  debt 

interest-only, 

from 

risks  to  some  highly  indebted  households’ 
financial  position.  Overall,  Danish  households 
are already the most indebted in the EU, which 
would  call  for  faster  amortisation,  but  they 
also  hold  high  assets.  Some  homeowners  risk 
significantly  higher  debt  service  costs 
if 
interest  rates  rise.  The  availability  of  interest 
only  loans  could  lead  to  excessive  risk  taking 
by  some  highly  indebted  borrowers,  although 
credit  assessment  by  mortgage  institutions  is 
to  be  based  on  ability  to  afford  a  fixed  rate 
mortgage with amortization. As higher interest 
rates  tend  to  be  linked  to  falling  property 
prices, the risks could reinforce each other. 

to 

refinance 

households 

Households are increasingly vulnerable to 
interest  rate  hikes  and  house  price 
declines. In 2022, the demand for mortgages 
continued  to  rise,  albeit  at  a  more  moderate 
pace. The increase was partly due to decisions 
existing 
by 
mortgages.  A  growing  share  of  households 
have  refinanced  their  fixed-rate  mortgages 
and  opted  for  variable-rate  mortgages,  of 
which  an 
increasing  proportion  are  with 
deferred  amortisation  (see  Graph  3.1).  This 
frequently  resulted  in  a  reduction  in  their 
overall  debt.  A  significant  portion  of  new 
lending  taken  out  at  a  variable  interest  rate 
with deferred amortisation has a high loan-to-
value  ratio  above  60% (25).  Nonetheless, most 
refinancers  remain  robust  even  in  severe 
scenarios.  Although  there  are  currently  no 
clear  signs  of  rising  mortgage  defaults  and 
credit institutions’  impairment  rates (decrease 
or  write-off  of  mortgage  loans)  remain  low 
(see  Annex  18),  the  Danish  Systemic  Risk 
Council  observed  in  September  2022 (26)  that 
homeowners  with  variable-rate  mortgages 
with  deferred  amortisation  are  particularly 
vulnerable  to  their  mortgage  payments  rising 
significantly  in  the  event  of  rising  interest 
rates.  Strengthening  the  resilience  of  heavily 
indebted  highly  mortgaged  homeowners  who 
opt  for  variable  interest  rates  and  deferred 

(25)  The Danish Systemic Risk Council reported in September 
2022 that of the new lending in the first half of 2022, 
37% of homeowners’ mortgage debt taken out at a 
variable interest rate with deferred amortisation has a 
loan-to-value ratio above 60%. 

(26)  In June 2021, the Danish Systemic Risk Council already 
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 then government. 

15 

 
                                                 
amortisation  to  withstand  declines  in  house 
prices  or  higher  interest  rates  would  help 
address the risks.  

Graph 3.2: Increase in variable-rate mortgage 
loans with deferred amortisation 

(1) Growth contribution to annual growth in total 
mortgage lending at nominal value. 
Source: Nationalbank 

16 

-8-6-4-20246810Q1-2017Q3-2017Q1-2018Q3-2018Q1-2019Q3-2019Q1-2020Q3-2020Q1-2021Q3-2021Q1-2022Q3-2022Variable rate without amortisationVariable rate with amortisationFixed rate without amortisationFixed rate with amortisationTotal%, y-o-y 
  
 
 
KEY FINDINGS 

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

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

  accelerating 

the  green 

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

  accelerating  the  digital  transition  following 
the  adoption  of  the  new  digital  strategy, 
modernising  public  administration,  helping 
SMEs 
in  digital  technology  and 
extending rural broadband coverage;  

invest 

  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 
research on COVID-19 vaccines.  

the 

should 

continue 

Denmark 
steady 
implementation  of  its  recovery  and  resilience 
plan  and  swiftly  finalise  the  REPowerEU 
chapter  with  a  view  to  rapidly  starting  its 
implementation. 

  reducing its dependence on fossil fuels and 
further  decarbonising  the  economy  by 
accelerating  the  deployment  of  renewable 
energies  and  building  a 
supportive 
environment  to  increase  investments  in 
clean  tech  manufacturing,  by  streamlining 
and  accelerating  permitting  procedures, 
upgrading 
and 
increasing 
distribution 
neighbouring 
interconnections 
countries,  improving  energy  efficiency  to 
reduce 
and 
accelerating the electrification of transport;  

networks, 
with 

consumption, 

transmission 

energy 

energy 

  making  further  progress  on  the  circular 
economy  and  waste  management, 
in 
particular  on  the  prevention,  recycling  and 
lower  incineration  of  (municipal)  waste,  by 
adopting measures to curb greenhouse gas 
emissions  from  agriculture  (the  largest 
source  of  Denmark’s  greenhouse  gas 
emissions  under  the  EU  Effort  Sharing 
Regulation); 

  addressing  labour  shortages,  investing  in 
re-  and  upskilling  the  labour  force  and 
vocational 
increasing 
education  and 
to 
promote the green and digital transition; 

participation 

including 

training, 

in 

  introducing  the  delayed  new  property  tax 
system  to  ensure  fairer  property  taxation 
and  mitigate  house  price 
increases, 
addressing shortages in affordable housing 
in  urban  areas  through  new  construction 
and  increasing  the  financial  resilience  of 
indebted  borrowers  by  further 
heavily 
limiting  their  reliance  on  variable  interest 
rates and deferred amortisation mortgages. 

17 

 
 
 
 
 
 
 
 
ANNEXES 

 
 
 
 
LIST OF ANNEXES 

Cross-cutting indicators 

A1.  Sustainable Development Goals 

A2.  Progress in the implementation of country-specific recommendations 

A3.  Recovery and resilience plan - overview 

A4.  Other EU instruments for recovery and growth 

A5.  Resilience 

Environmental sustainability 

A6.  European Green Deal 

A7.  Energy security and affordability 

A8.  Fair transition to climate neutrality 

Productivity 

A9.  Resource productivity, efficiency and circularity 

A10.  Digital transformation 

A11.  Innovation 

A12.  Industry and single market 

A13.  Public administration 

Fairness 

A14.  Employment, skills and social policy challenges in light of the European Pillar of Social Rights 

A15.  Education and training 

A16.  Health and health systems 

A17.  Economic and social performance at regional level 

Macroeconomic stability 

A18.  Key financial sector developments 

A19.  Taxation 

A20.  Table with economic and financial indicators 

A21.  Debt sustainability analysis 

LIST OF TABLES 

A2.1. 
A3.1. 

Summary table on 2019-2022 CSRs 
Key elements of Denmark’s RRP 

21 

24 

24 

26 

29 

31 

33 

34 

34 

39 

44 

47 

47 

50 

52 

54 

58 

60 

60 

63 

65 

67 

69 

69 

71 

73 

74 

27 
29 

 
 
 
A5.1. 
Resilience indices summarising the situation across RDB dimensions and areas 
A6.1. 
Indicators tracking progress on the European Green Deal from a macroeconomic perspective 
A7.1. 
Key Energy Indicators 
A8.1. 
Key indicators for a fair transition in Denmark 
A9.1. 
Overall and systemic indicators on circularity 
A10.1.  Key Digital Decade targets monitored by DESI indicators 
A11.1.  Key innovation indicators 
A12.1. 
Industry and the Single Market 
A13.1.  Public administration indicators 
A14.1.  Social Scoreboard for Denmark 
A14.2.  Situation of Denmark on 2030 employment, skills and poverty reduction targets 
A15.1.  EU-level targets and other contextual indicators under the European Education Area strategic framework 
A16.1.  Key health indicators 
A17.1.  Selected indicators at regional level - Denmark 
A18.1.  Financial soundness indicators 
A19.1.  Taxation indicators 
A20.1.  Key economic and financial indicators 
A21.1.  Debt sustainability analysis - Denmark 
A21.2.  Heat map of fiscal sustainability risks - Denmark 

LIST OF GRAPHS 

Progress towards the SDGs in Denmark in the last 5 years 
Denmark's progress on the 2019-2022 CSRs (2023 European Semester) 
Disbursement per pillar 
Total grants disbursed under the RRF 
Fulfilment status of milestones and targets 
Cohesion policy funds 2021-2027 in Denmark: budget by fund 
Synergies between Cohesion policy funds and RRF six pillars in Denmark 
Cohesion policy funds contribution to the SDGs in 2014-2020 and 2021-2027 in Denmark 
Thematic – Greenhouse gas emissions from the effort sharing sectors in Mt CO2eq, 2005-2021 
Energy mix (top) and Electricity mix (bottom), 2021 
Thematic – environmental investment needs and current investment, p.a. 2014-2020 
Underground gas storage levels in Denmark 
Share of gas consumption per sector, 2021 
Denmark´s retail energy prices for industry (top) and households (bottom) 
Venture capital investments in climate tech start-ups and scale-ups - Denmark 
Fair transition challenges in Denmark 
Distributional impacts of energy prices due to rising energy expenditure (2021-2023) 
Trend in material use 
Treatment of municipal waste 

A1.1. 
A2.1. 
A3.2. 
A3.1. 
A3.3. 
A4.1. 
A4.2. 
A4.3. 
A6.1. 
A6.2. 
A6.3. 
A7.1. 
A7.2. 
A7.3. 
A7.4. 
A8.1. 
A8.2. 
A9.1. 
A9.2. 
A11.1.  Business enterprise expenditure on R&D (BERD) as % of GDP 
A12.1.  Total factor productivity 
A12.2.  Labour productivity by sector 
A12.3.  Business environment and productivity drivers 
A13.1.  Denmark. Public administration. Share of women and men in senior positions. 
A13.2.  a) Regulatory impact assessment and b) Stakeholder engagement 
A15.1.  Early leavers from education and training (18-24) in 2016 and 2022 (%) 
A16.1.  Life expectancy at birth, years 
A16.2.  Projected increase in public expenditure on healthcare over 2019-2070 
A17.1.  GDP per capita (2010) and GDP per capita growth (2011-2020) 
A17.2.  Evolution of labour productivity in the Danish regions 
A17.3.  Unemployment in Danish regions in 2019-2021 
A19.1.  Tax revenues from different tax types as % of total taxation 
A19.2.  Tax wedge for single and second earners as a % of total labour costs, 2022 

22 

33 
34 
39 
44 
47 
49 
52 
53 
58 
59 
61 
62 
64 
66 
68 
70 
72 
74 
75 

25 
26 
29 
29 
30 
31 
31 
32 
34 
35 
36 
39 
40 
40 
41 
44 
45 
46 
46 
51 
53 
53 
54 
57 
58 
62 
64 
64 
66 
66 
66 
71 
71 

 
 
 
LIST OF MAPS 

A17.1.  Regional Competitiveness Index - Denmark 
A17.2.  Greenhouse gas emissions per capita in Danish regions in 2021 

67 
67 

23 

 
 
 
 
CROSS-CUTTING INDICATORS 
ANNEX 1: SUSTAINABLE DEVELOPMENT GOALS 

This  Annex  assesses  Denmark’s  progress  on 
the  Sustainable  Development  Goals  (SDGs) 
along  the  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,  fight 
inequalities  and  tackle  climate  change  and  the 
environmental crisis, 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  on  the  SDGs.  The  graph 
below  is  based  on  the  EU  SDG  indicator  set 
developed  to monitor progress  on  the  SDGs  in  an 
EU context. 

related 

Denmark  performs  well  on  most  of  the  SDG 
environmental 
indicators 
sustainability  (SDGs  2,  6,  7,  9,  11,  12),  but 
still  needs  to  catch  up  with  the  EU  average 
on  others  (SDGs  13,  14,  15).  It  increased  the 

to 

share  of  renewable  energy  in  gross  final  energy 
consumption  (SDG  7)  from  31.7%  in  2016  to 
34.7%  in  2021,  which  is  well  above  the  EU 
average  (21.8%  in  2021).  Net  greenhouse  gas 
emissions (SDG 13) decreased from 9.7 tonnes per 
capita  in  2016  to  7.8  tonnes  per  capita  in  2021, 
moving  closer  to  the  EU  average  (7.4  tonnes  per 
capita).  However,  net  greenhouse  gas  emissions 
from  land  use  and  forestry  (SDG  13)  increased 
significantly from 43.9 tonnes CO2 eq. per km² to 
74.4  tonnes  in  2021,  much  higher  that  the  EU 
average (-50.1 tonnes CO2 eq. per km²). On waste 
generation and management (SDG 12), the circular 
material  use  rate  decreased  from  8.0%  to  7.8% 
between  2016  and  2021  and  is  below  the  EU 
average  (11.7%  in  2021).  The  recycling  rate  of 
municipal  waste  (SDG  11)  is  also  much  lower 
(34.3%  in  2021)  than  the  EU  average  (48.5%  in 
2021).  The  material  footprint  (SDG  12)  increased 
from  21.3  tonnes  per  inhabitant  to  24  tonnes 
between  2016  and  2021,  and  is  significantly 
higher than the EU average (13.7 tonnes in 2021). 
In terms of SDG 14 (Life below water), Denmark is 

Graph A1.1: Progress towards the SDGs in Denmark in the last 5 years 

For detailed datasets on the various SDGs, see the annual Eurostat report ‘Sustainable development in the European Union’; for 
details on extensive country-specific data on the short-term progress of Member States: Key findings – Sustainable development 
indicators – Eurostat (europa.eu). The status of each SDG in a country is the aggregation of all indicators for the specific goal 
compared to the EU average. A high status does not mean that a country is close to reaching a specific SDG, but signals that it is 
doing better than the EU on average. The progress score is an absolute measure based on the indicator trends over the past 5 
years. The calculation does not take into account any target values as most EU policy targets are only valid for the aggregate EU 
level. Depending on data availability for each goal, not all 17 SDGs are shown for each country. 
Source: Eurostat, latest update of early April 2023, except for the EU Labour Force Survey (LFS) indicators released on 27 April 
2023. Data mainly refer to 2016-2021 or 2017-2022. 

24 

 
 
 
 
 
 
Denmark  performs  well  on  SDG  indicators 
related  to  macroeconomic  stability  (SDGs  8, 
16, 17). The country performs very well on peace 
and justice indicators, with a high level of trust in 
its  institutions  (SDG  16).  The  percentage  of  the 
Danish population with confidence in the European 
Parliament increased from 60% in 2017 to 64% in 
2022  (EU  average  50%  in  2022).  Denmark  also 
performs  above  the  EU  average  on  indicators 
related  to  SDG  8  (Decent  work  and  economic 
growth).  Real  GDP  per  capita  (EUR  50 010  in 
2021)  is well above the EU  average (EUR 27 880 
in 2021). General government gross debt (SDG 17) 
fell from 37.2% of GDP in 2016 to 36.6% in 2021 
(EU average 87.9% in 2021). 

As the SDGs form an overarching framework, any 
links  to  relevant  SDGs  are  either  explained  or 
depicted with icons in the other Annexes. 

not  only  performing  below  the  EU  average  on 
several  indicators  but  is  also  moving  away  from 
the SDGs. The share of terrestrial protected areas 
(SDG 15) in Denmark is significantly below the EU 
average  (14.9%  compared  to  26.0%  in  2021). 
Measures  included  in  Denmark’s  recovery  and 
resilience  plan  (RRP)  support  its  green  transition 
and  decarbonisation  by  ensuring  the  efficient 
production  and  use  of  energy,  promoting 
sustainable  transport  and  focusing  on  green 
research and innovation. 

Denmark  performs  well  on  SDG  indicators 
related to fairness (SDGs 3, 5, 7, 8, 10) but is 
moving away from the SDGs on others (SDGs 
1, 4). The country performs above the EU average 
on  most  indicators  related  to  poverty,  gender 
equality,  inclusive  growth  and  inequality  (SDGs  1, 
5, 8, 10). In particular, the number of seats held by 
women  in  national  parliaments  and  governments 
increased  from  37.4%  in 2017  to  42.5% in  2022 
(EU  average  32.5%  in  2022).  The  EU  and  non-EU 
citizens’ gap for early leavers from education and 
training also decreased from 8.6 percentage points 
in  2017  to  6.6  percentage  points  in  2021  (EU 
average:  17.6  percentage  points 
in  2021). 
However,  the  share  of  people  at  risk  of  income 
poverty  after  social 
(SDG  1)  has 
increased  from  11.9%  in 2016  to  12.3% in  2021 
and  several  quality  education  (SDG  4)  indicators 
are moving away from the SDG targets. 

transfers 

Denmark  performs  well  on  most  SDGs  on 
productivity  (SDGs 8, 9), but is moving away 
from  the  SDG  on  quality  education  (SDG  4). 
The  share  of  households  with  a  high-speed 
internet connection (SDG 9) increased significantly 
between  2016  and  2021  (from  58.1%  to  94.9%) 
and is well above the EU average (70.2% in 2021). 
Denmark’s  gross  domestic  expenditure  on  R&D 
decreased  from  3.09%  of  GDP  in  2016  to  2.81% 
in  2021,  but  still  remains  above  the  EU  average 
(2.26%  of  GDP  in  2021).  On  SDG  4  (Quality 
education),  Denmark  performs  above  the  EU 
average  on  most  indicators,  but  several  have 
shown  negative  trends.  This 
in 
particular  for  early  leavers  from  education  and 
training (up from 7.5% in 2017 to 9.8% in 2021) 
and  the  share  of  adult  participation  in  learning 
(down from 28% in 2016 to 22.3% in 2021). The 
RRP 
the 
remaining digitalisation challenges, in particular by 
promoting  additional  measures  across 
the 
economy and society. 

includes  measures 

is  the  case 

to  help 

tackle 

25 

 
 
ANNEX 2: PROGRESS IN THE IMPLEMENTATION OF COUNTRY-SPECIFIC 
RECOMMENDATIONS 

Graph A2.1: Denmark's progress on the 2019-2022 
CSRs (2023 European Semester) 

Source: European Commission 

The Commission has assessed the 2019-2022 
country-specific  recommendations  (CSRs) (27) 
addressed  to  Denmark  as  part  of  the 
European  Semester.  These  recommendations 
concern  a  wide  range  of  policy  areas  that  are 
related to  12  of  the  17  Sustainable Development 
Goals  (see  Annexes  1  and  3). The  assessment 
considers  the  policy  action  taken  by  Denmark  to 
date (28) and the commitments in its recovery and 
resilience  plan  (RRP) (29).  At  this  stage  of  RRP 
implementation,  89%  of  the  CSRs  focusing  on 
structural  issues  from  2019-2022  have  recorded 
at  least  ‘some  progress’,  while  11%  recorded 
‘limited  progress’  (see  Graph  A2.1).  As  the  RRP  is 
implemented  further,  considerable  progress  in 
addressing structural CSRs is expected in the years 
to come. 

(27)  2022 CSRs: EUR-Lex - 32022H0901(04) - EN - EUR-Lex 

(europa.eu) 

      2021 CSRs: EUR-Lex - 32021H0729(04) - EN - EUR-Lex 

(europa.eu) 
2020 CSRs: EUR-Lex - 32020H0826(04) - EN - EUR-Lex 
(europa.eu) 
2019 CSRs: EUR-Lex - 32019H0905(04) - EN - EUR-Lex 
(europa.eu) 

(28)  Including policy action reported in the national reform 

programme and in Recovery and Resilience Facility (RRF) 
reporting (twice a year reporting on progress in implementing 
milestones and targets and resulting from the payment 
requests assessment). 

(29)  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 carried out outside of the 
RRP at the time of assessment. Measures laid down in the 
Annex of the adopted Council Implementing Decision on 
approving the assessment of the RRP, which are not yet 
adopted or implemented but considered 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 

No progress0%Limited progress11%Some progress48%Substantial progress22%Full implementation19% 
 
 
 
                                                 
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A2.1: Summary table on 2019-2022 CSRs 

(Continued on the next page) 

27 

DenmarkAssessment in May 2023*RRP coverage of CSRs until 2026**Relevant SDGs2019 CSR 1Some progressFocus investment-related economic policy on education and skills,Some progressSDG 4researchandinnovationtobroadentheinnovationbasetoincludemorecompanies, Some progressRelevant measures being implemented as of 2021, planned as of 2022SDG 9and on sustainable transport to tackle road congestion.Some progressRelevant measures being implemented as of 2021 and 2022, planned as of 2024SDG 112019 CSR 2Some progressEnsure effective supervision and the enforcement of the anti-money laundering frameworkSome progressSDG 8, 162020 CSR 1Substantial progressTakeallnecessarymeasures,inlinewiththegeneralescapeclauseoftheStabilityandGrowthPact,toeffectivelyaddresstheCOVID-19pandemic,sustaintheeconomyandsupporttheensuingrecovery.Wheneconomicconditionsallow,pursuefiscalpoliciesaimedatachievingprudentmedium-termfiscalpositionsandensuringdebtsustainability, while enhancing investment. Not relevant anymoreNot applicableSDG 8, 16Enhancetheresilienceofthehealthsystem,includingbyensuringsufficientcriticalmedicalproductsandaddressingtheshortageofhealth workers. Substantial progressRelevant measures being implemented as of 2021SDG 32020 CSR 2Substantial progressFront-load mature public investment projects andSubstantial progressRelevant measures being implemented as of 2021, planned as of 2022SDG 8, 16promote private investment to foster the economic recovery. Substantial progressRelevant measures being implemented as of 2021, planned as of 2022, 2023SDG 8, 9Focus investment on the green and digital transition, in particular on clean and efficient production and use of energy,Some progressRelevant measures being implemented as of 2021, planned as of 2025SDG 7, 9, 13sustainable transport Substantial progressRelevant measures being implemented as of 2021, planned as of 2022, 2024SDG 11as well as research and innovation. Substantial progressRelevant measures being implemented as of 2021, planned as of 2025SDG 9Supportanintegratedinnovationstrategywithabroaderinvestmentbase. Some progressRelevant measures being implemented as of 2021, planned as of 2022SDG 92020 CSR 3Some progressImprove the effectiveness of anti-money laundering supervision and effectively enforce the anti-money laundering framework. Some progressSDG 8, 162021 CSR 1Substantial progressIn2022,maintainasupportivefiscalstance,includingtheimpulseprovidedbytheRecoveryandResilienceFacility,andpreservenationally financed investment.Some progressNot applicableSDG 8, 16Wheneconomicconditionsallow,pursueafiscalpolicyaimedatachievingprudentmedium-termfiscalpositionsandensuringfiscalsustainability in the medium term. Full implementationNot applicableSDG 8, 16At the same time, enhance investment to boost growth potential.Payparticularattentiontothecompositionofpublicfinances,bothontherevenueandexpendituresidesofthebudget,andtothequalityofbudgetarymeasures,toensureasustainableandinclusiverecovery.Prioritisesustainableandgrowth-enhancinginvestment,notablysupporting the green and digital transition. Full implementationNot applicableSDG 8, 16Giveprioritytofiscalstructuralreformsthatwillhelpprovidefinancingforpublicpolicyprioritiesandcontributetothelong-termsustainabilityofpublicfinances,includingbystrengtheningthecoverage,adequacy,and sustainability of health and social protection systems for all.Full implementationNot applicableSDG 8, 16 
 
 
  
 
Table (continued) 

Note:  
* See footnote  (28).  
** RRP measures included in this table contribute to the implementation of CSRs. Nevertheless, additional measures outside the 
RRP are necessary to fully implement CSRs and address their underlying challenges. Measures indicated as 'being implemented' 
are only those included in the RRF payment requests submitted and positively assessed by the European Commission.  
Source: European Commission 

28 

2022 CSR 1Some progressIn2023,ensureprudentfiscalpolicy,inparticularbylimitingthegrowthofnationallyfinancedprimarycurrentexpenditurebelowmedium-termpotentialoutputgrowth,takingintoaccountcontinuedtemporaryandtargetedsupporttohouseholdsandfirmsmostvulnerabletoenergypricehikesandtopeoplefleeingUkraine.Standreadytoadjustcurrentspending to the evolving situation.Some progressNot applicableSDG 8, 16Expandpublicinvestmentforthegreenanddigitaltransitions,andforenergysecuritytakingintoaccounttheREPowerEUinitiative,includingbymakinguseoftheRecoveryandResilienceFacilityandotherUnionfunds.Full ImplementationNot applicableSDG 8, 16Fortheperiodbeyond2023,pursueafiscalpolicyaimedatachievingprudent medium-term fiscal positions.Full ImplementationNot applicableSDG 8, 16Implementthenewpropertytaxsysteminordertorestorethelinkbetween market prices and taxes and ensure fairer taxation.Some progressSDG 8, 10, 12Stimulateinvestmentinconstructionofaffordablehousingtoalleviatethe most pressing needs.Some progressSDG 8Increase the financial resilience of highly indebted borrowers.Limited progressSDG 82022 CSR 2Proceedwiththeimplementationofitsrecoveryandresilienceplan,inlinewiththemilestonesandtargetsincludedintheCouncilImplementing Decision of 13 July 2021.SwiftlyfinalisethenegotiationswiththeCommissionofthe2021-2027cohesion policy programmes and proceed with their implementation.2022 CSR 3Limited progressStrengthencirculareconomyandwastemanagementpoliciesincludingbypromotingwastepreventionandreuse,increasingrecycling,andgraduallyshiftingawayfromincinerationofmunicipalwastetogreenersources of heat generation.Limited progressRelevant measures being implemented as of 2021SDG 6, 12, 152022 CSR 4Some progressReduceoverallrelianceonfossilfuels.FurtherdiversifyenergysupplyandLimited progressRelevant measures being implemented as of 2021SDG 7, 9, 13helpdecarbonisetheeconomybyacceleratingthedeploymentofrenewables,includingbyintroducingreformstosimplifyandexpediteadministrative and permitting procedures,Some progressSDG 7, 8, 9, 13upgradingenergytransmissionnetworks,increasinginterconnectionswith neighbouring countriesSubstantial progressSDG 7, 9, 13and improving energy efficiency.Some progressRelevant measures being implemented as of 2021, planned as of 2025SDG 7RRP implementation is monitored by assessing RRP payment requests and analysing reports published twice a year on the achievement of the milestones and targets. These are to be reflected in the country reports. progress on the cohesion policy programming documents is monitored under the EU cohesion policy. 
 
 
 
 
 
  
 
ANNEX 3: RECOVERY AND RESILIENCE PLAN - OVERVIEW 

of  the  milestones  and  targets  to  be  reached  by 
as 
subsequently 
Denmark 
satisfactorily fulfilled by the Commission.  

assessed 

and 

Graph A3.1: Total grants disbursed under the RRF 

Note: This graph displays the amount of grants disbursed so 
far under the RRF. Grants are non-repayable financial 
contributions. The total amount of grants given to each 
Member State is determined by an allocation key and the 
total estimated cost of the respective RRP. 
Source: RRF Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

EUR 503 million has so far been disbursed to 
Denmark  under  the  RRF.  The  Commission 
disbursed  EUR 202  million  to  Denmark  in  pre-
financing  on  2  September  2021,  equivalent  to 
13%  of  the  financial  allocation.  Denmark’s  first 
payment  request  was  positively  assessed  by  the 
Commission, taking into account the opinion of the 
Economic and Financial Committee, leading to EUR  
301  million  being  disbursed  in  financial  support 
(net  of  pre-financing)  on  27 April  2023.  The 
related 23 milestones and 2 targets cover reforms 
and investments in decarbonisation of agriculture, 
digitalisation  of  healthcare,  green  tax  reform, 
industry,  vehicle  taxation, 
emission  taxes  on 
research, 
sustainable  mobility,  as  well  as 
development, and innovation. 

The  Recovery  and  Resilience  Facility  (RRF)  is 
the centrepiece of the EU’s efforts to help it 
recover  from  the  COVID-19  pandemic,  speed 
up  the  twin  transition  and  strengthen 
resilience against future shocks. The RRF also 
contributes  to  implementation  of  the  SDGs  and 
helps 
Specific 
to 
Recommendations 
Annex 2).  Denmark 
submitted  its  current  recovery  and  resilience  plan 
(RRP) on 30 April 2021. The Commission’s positive 
assessment  on  17 June 2021  and  Council’s 
approval  on  13 July 2021  paved  the  way  for 
disbursing EUR 1.55 billion in grants under the RRF 
over the 2021-2026 period.   

address 

Country 

(see 

the 

Since  the  entry 
into  force  of  the  RRF 
Regulation  and  the  assessment  of  the 
national  recovery  and  resilience  plans, 
geopolitical  and  economic  developments 
have caused major disruptions across the EU. 
In  order  to  effectively  address  these  disruptions, 
the  (adjusted)  RRF  Regulation  allows  Member 
States to amend their recovery and resilience plan 
for  a  variety  of  reasons.  In  line  with  article  11(2) 
of the RRF, the maximum financial contribution for 
Denmark was moreover updated on 30 June 2022 
to  an  amount  of  EUR  1.43  billion  in  grants.  No 
revision  was  submitted  at  the  time  of  publication 
of this country report yet. 

Table A3.1: Key elements of Denmark’s RRP 

Source: Recovery and Resilience Scoreboard 

Denmark’s progress in implementing  its plan 
is  published  in  the  Recovery  and  Resilience 
Scoreboard (30).  The  Scoreboard  also  gives  an 
overview  of  the  progress  made  in  implementing 
the RRF as a whole, in a transparent manner. The 
graphs in this Annex show the current state of play 

(30)  https://ec.europa.eu/economy_finance/recovery-and-

resilience-scoreboard/country_overview.html 

29 

Scope Initial planCID adoption date 13 July 2021Total allocation EUR 1 551 million in grants (0.5% of 2021 GDP)Investments and reforms 29 investments and 5 reforms Total number of milestones and targets77€ 0,50 bn 
 
 
      
 
                                                 
          
 
Graph A3.2: Disbursement per pillar 

Note: Each disbursement reflects progress in the implementation of the RRF, across the six policy pillars. This graph displays how 
disbursements under the RRF (excluding pre-financing) relate to the pillars. The amounts were calculated by linking the milestones 
and targets covered by a given disbursement to the pillar tagging (primary and secondary) of their respective measures.  
Source: Recovery and Resilience Scoreboard https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

Graph A3.3: Fulfilment status of milestones and 
targets 

Note: This graph displays the share of satisfactorily fulfilled 
milestones and targets. A milestone or target is satisfactorily 
fulfilled once a Member State has provided evidence to the 
Commission that it has reached the milestone or target and 
the Commission has assessed it positively in an implementing 
decision.  
Source: Recovery and Resilience Scoreboard 
https://ec.europa.eu/economy_finance/recovery-and-resilience-
scoreboard/country_overview.html 

30 

Satisfactorily fulfilledNot fulfilled0 mn20 mn40 mn60 mn80 mn100 mn120 mnGreen transitionDigitaltransformationSmart,sustainable andinclusive growthSocial andterritorialcohesionHealth, andeconomic, socialand institutionalresiliencePolicies for thenext generation 
     
 
     
ANNEX 4: OTHER EU INSTRUMENTS FOR RECOVERY AND GROWTH 

The  EU  budget  of  over  EUR  1.2  trillion  for 
2021-2027  is  geared  towards  implementing 
the  EU’s  main  priorities.  Cohesion  policy 
investment amounts to EUR 392 billion across the 
EU and represents almost a third of the overall EU 
budget, including around EUR 48 billion invested in 
line with REPowerEU objectives.  

Social  Fund  Plus  (ESF+),  Denmark  allocates  EUR 
111 million to education and skills. Benefits of this 
funding  will  include:  (i)  strengthening  green  and 
digital  skills  by  supporting  up-  and  reskilling;  (ii) 
adapting  vocational  education  and  training  (VET) 
and  higher  education  to  labour  market  demand; 
and (iii) supporting self-employment, with a focus 
on vulnerable groups. 

Graph A4.1: Cohesion policy funds 2021-2027 in 
Denmark: budget by fund 

(1) million EUR in current prices, % of total (total amount 
including EU and national co-financing) 
Source: European Commission, Cohesion Open Data 

In  2021-2027,  in  Denmark,  cohesion  policy 
funds (31)  will  invest  EUR  314  million  in  the 
green  transition  and  EUR  69  million  in  the 
digital  transformation  as  part  of  the 
country’s total allocation of EUR 953 million. 
In  particular,  the  European  Regional  Development 
Fund  (ERDF)  will  boost  the  competitiveness  of 
more  than  8 000  Danish  enterprises  by  helping 
them  to  innovate  and  develop  new  technologies 
for  the  green  transition  of  the  entire  Danish 
society.  Providing  access  to  the  necessary  digital 
tools  will  play  an  important  role.  Companies  plan 
to  reduce their  annual  CO2  emissions  by  290 000 
tonnes and to transform over 40 000 tonnes/year 
of  waste  into  raw  material.  Focus  will  also  be 
given  to  ensuring  that  enterprises  have  access  to 
the  right  skills  to  enable  them  to  meet  their 
objectives.  The  Just  Transition  Fund  (JTF)  will 
finance further technological developments for the 
economic 
transition. 
diversification of the carbon intensive value chain 
in  the  areas  most  affected  and  promote  the  up- 
and 
reskilling  of  workers  necessary  for  a 
transition.  This  support  will  help 
successful 
Denmark  fulfil  its  commitment  to  reduce  its  GHG 
emissions  by  70%  by  2030.  Under  the  European 

It  will 

support 

the 

(31)  European Regional Development Fund (ERDF), European 
Social Fund+ (ESF+), Just Transition Fund (JTF), excluding 
Interreg programmes. The total amount includes national 
and EU contributions. Data source:  Cohesion Open Data.  

31 

Of  the  investments  mentioned  above,  EUR 
104  million  was  dedicated  to  REPowerEU 
under 
budget,  which 
contributed to improving energy efficiency. 

2014-2020 

the 

Graph A4.2: Synergies between Cohesion policy 
funds and RRF six pillars in Denmark 

(1) million EUR in current prices; (total amount including EU 
and national co-financing)  
Source: European Commission  

In  2014-2020,  cohesion  policy  funds  made 
EUR  629  million  available to  Denmark (32), 
with  an  absorption  of  63% (33).  Including  national 
financing,  the total  investment  amounts  to  EUR  1 
billion - around 0.1% of GDP for 2014-2020.  

flexibility 

Denmark  continues  to benefit  from  cohesion 
policy 
support  economic 
to 
recovery,  step  up  convergence  and  provide 
vital support to regions following the COVID-
19  pandemic.  The  Recovery  Assistance  for 
Cohesion and the Territories of Europe instrument 
(REACT-EU) (34)  under  NextGenerationEU  provides 
EUR  210.5  million  on  top  of  the  2014-2020 
cohesion  policy  allocation for  Denmark.  REACT-EU 
aims  to  help  almost  4 000  SMEs  adapt  and 

(32)  Cohesion policy funds include the ERDF, ESF and the Youth 
Employment Initiative (YEI). ETC programmes are excluded 
here. According to the ‘N+3 rule’, the funds committed for 
2014-2020 must be spent by 2023. REACT-EU is included in 
all figures. Total amount includes national and EU 
contributions. Data source: Cohesion Open Data. 

(33)  2014-2020 Cohesion policy EU payments by MS is updated 

daily on Cohesion Open Data.   

(34)  REACT-EU allocation on Cohesion Open Data. 

55356%26326%17818%ERDFESF+JTF16936544631469220190160050100150200250300350400450500Green transitionDigital transformationSmart, sustainable andinclusive growthSocial and territorialcohesionPolicies for the nextgenerationEU CP 2014-2020 (million EUR)EU CP 2021-2027 (million EUR) 
 
  
                                                 
  
                                                 
 
 
maintain  jobs  while  building  the  bridge  for  their 
future  green  transition  through  development  of 
new,  green  technologies.  In  addition,  EUR  275 
million  was  provisionally  allocated  to  Denmark 
under  the  Brexit  Adjustment  Reserve  (BAR).  With 
SAFE  (Supporting  Affordable  Energy),  the  2014-
2020 cohesion policy funds may also be mobilised 
by  Denmark  to  support  vulnerable  households, 
jobs  and  companies  particularly  affected  by  high 
energy prices.  

In both 2014-2020 and 2021-2027, cohesion 
policy  funds  have  contributed  substantially 
to 
the  Sustainable  Development  Goals 
(SDGs).  In  2021-2027,  these  funds  support  8  of 
the  17  SDGs,  notably  SDG  9  ‘Industry,  innovation 
‘Quality 
and 
and 
education’ (35).  

infrastructure’ 

SDG  4 

Graph A4.3: Cohesion policy funds contribution to 
the SDGs in 2014-2020 and 2021-2027 in 
Denmark 

(1) 5 largest contributions to SDGs in million (EUR) current 
prices 
Source: European Commission  

made  EUR  208  million  available  to  Denmark  in 
2014-2020  and  the  European  Maritime,  Fisheries 
and Aquaculture Fund allocates EUR 201 billion in 
2021-2027.  

Denmark  also  benefits  from  other  EU 
programmes,  notably  the  Connecting  Europe 
Facility,  which  under  CEF  2  (2021-2027)  has  so 
far  allocated  EU  funding  of  EUR  462.6  million  to 
17  specific  projects  on  strategic 
transport 
networks.  Similarly,  Horizon  Europe  has  so  far 
allocated nearly EUR 360 million to Danish R&I on 
top  of  the  EUR  1.8  billion  earmarked  under  the 
previous  programme  (Horizon  2020).  The  Public 
Sector  Loan  Facility  set  up  under  the  Just 
Transition  Mechanism  makes  EUR  6.75  million  of 
grant  support  from  the  Commission  available  for 
projects located in Denmark for 2021-2027, which 
will  be  combined  with  EIB  loans  to  support 
investments  by  public  sector  entities 
just 
transition regions.  

in 

Instrument 
designing 

The  Technical  Support 
(TSI) 
supports  Denmark 
in 
and 
reforms, 
implementing  growth-enhancing 
including  those  set  out  in  its  recovery  and 
resilience  plan  (RRP).  Denmark  has  received 
significant  support  since  2020.  Examples (36) 
include  support  to  develop  resilient,  innovative, 
and  human-centric  digital  government  services 
and  to  digitalise  the  monitoring  of  the  East 
Atlantic Flyway. 

Other  EU  funds  make  significant  support 
available to Denmark. The common agricultural 
policy  (CAP)  made  available  EUR  8.6  billion  in 
2014-2022  and  will  keep  supporting Denmark 
with  EUR  4.8  billion  in  2023-2027.  The  two  CAP 
Funds  (European  Agricultural  Guarantee  Fund  and 
European 
Rural 
Development),  contribute  to  the  European  Green 
Deal while ensuring long-term food security. They 
promote  social,  environmental  and  economic 
sustainability  and  innovation  in  agriculture  and 
rural  areas, 
in  coordination  with  other  EU 
Funds. The  European  Maritime  and  Fisheries  Fund 

Agricultural 

Fund 

for 

(35)  Other EU funds contribute to the implementation of the 
SDGs, in 2014-2022 this includes both the European 
Agricultural Fund for Rural Development (EARDF) and the 
European Maritime and Fisheries Fund (EMFF).  

(36)  Country factsheets on reform support are available here. 

32 

2212658578327211171149250100200300400500600700SDG 9 Industry,innovation,infrastructureSDG 4 QualityeducationSDG 8 Decent workand economicgrowthSDG 12Responsibleconsumption andproductionSDG 1 No povertyEU CP 2014-2020 (millions EUR)EU CP 2021-2027 (millions EUR) 
  
                                                 
 
                                                 
‘inequalities  and  social 

economic and the digital dimensions, medium-high 
capacities  in  the  green  dimension  and  medium 
capacities  in  the  geopolitical  dimension.  Denmark 
shows stronger capacities than the EU average in 
all areas of the digital dimension, as well as in the 
impact  of  the 
areas 
transitions’,  ‘health,  education  and  work’,  ‘climate 
change  mitigation  and  adaptation’,  ‘ecosystems, 
biodiversity,  sustainable  agriculture’  and  ‘value 
chains  and  trade’.  However,  its  capacities  in  the 
areas ‘sustainable use of resources’, ‘raw material 
and energy supply’ and ‘security and demography’ 
are below the EU level. 

Table A5.1: Resilience indices summarising the 
situation across RDB dimensions and areas 

(1) Data are for 2021, and EU-27 refers to the value for the 
EU as a whole. Data underlying EU-27 vulnerabilities in the 
area ‘value chains and trade’ are not available as they 
comprise partner concentration measures that are not 
comparable with Member States’ level values. 
Source: JRC Resilience Dashboards - European Commission 

ANNEX 5: RESILIENCE 

This  Annex  illustrates  Denmark’s  relative 
resilience capacities and vulnerabilities using 
the  Commission’s 
resilience  dashboards 
(RDB) (37).  Comprising  a  set  of  124  quantitative 
indicators,  the  RDB  provide  broad  indications  of 
Member  States’  ability  to  make  progress  across 
four interrelated dimensions: social and economic, 
green, digital, and geopolitical. The indicators show 
vulnerabilities (38)  and  capacities (39)  that  can 
become  increasingly  relevant,  both  to  navigate 
ongoing  transitions  and  to  cope  with  potential 
future shocks. To this end, the RDB help to identify 
areas  that  need  further  efforts  to  build  stronger 
and  more  resilient  economies  and  societies.  They 
in  Table  A5.1  as  synthetic 
are  summarised 
resilience 
illustrate  the  overall 
relative  situation  for  each  of  the  four  dimensions 
and  their  underlying  areas  for  Denmark  and  the 
EU-27 (40). 

indices,  which 

According  to  the  set  of  resilience  indicators 
under the RDB, Denmark generally displays a 
lower  level  of  vulnerabilities  than  the  EU 
average.  Denmark  shows  low  vulnerabilities  in 
the social and economic and the digital dimensions 
of  the  RDB,  medium-low  vulnerabilities  in  the 
green dimension and medium vulnerabilities in the 
geopolitical  dimension.  Compared  to  the  EU 
average,  Denmark’s  vulnerabilities  are  of  similar 
level or lower in all areas of the four dimensions. 
Specifically,  it  exhibits  lower  vulnerabilities  in  all 
areas  of  the  social  and  economic  and  the  digital 
dimensions,  but  also  in  the  areas  related  to 
‘climate  change  mitigation  and  adaptation’, 
‘financial  globalisation’,  and 
‘security  and 
demography’.  

in 

Compared to the EU average, Denmark shows 
an overall similar yet somewhat higher level 
of capacities across all RDB indicators. It has 
in  the  social  and 
high  resilience  capacities 

(37)  For details see https://ec.europa.eu/info/strategy/strategic-
planning/strategic-foresight/2020-strategic-foresight-
report/resilience-dashboards_en; see also 2020 Strategic 
Foresight Report (COM(2020) 493). 

(38)  Vulnerabilities describe features that can exacerbate the 

negative impact of crises and transitions, or obstacles that 
may hinder the achievement of long-term strategic goals. 

(39)  Capacities refer to enablers or abilities to cope with crises 
and structural changes and to manage the transitions.  

(40)  This Annex is linked to Annex 1 on SDGs, Annex 6 on the 
green deal, Annex 8 on the fair transition to climate 
neutrality, Annex 9 on resource productivity, efficiency and 
circularity, Annex 10 on the digital transition and Annex 14 
on the European pillar of social rights. 

33 

DKEU-27DKEU-27Vulnerabilities IndexHighMedium-highMediumMedium-lowLowNot availableCapacities IndexHighMedium-highMediumMedium-lowLowNot availableDimension/AreaVulnerabilitiesCapacitiesSocial and economicHealth, education and workInequalities and social impact of the transitionsGreenEconomic & financial stability and sustainabilitySustainable use of resourcesClimate change mitigation & adaptationDigitalEcosystems, biodiversity, sustainable agricultureDigital for industryDigital for personal spaceCybersecurityDigital for public spaceRaw material and energy supplyGeopoliticalValue chains and tradeFinancial globalisationSecurity and demography 
 
                                                 
 
  
 
 
 
ENVIRONMENTAL SUSTAINABILITY 
ANNEX 6: EUROPEAN GREEN DEAL 

green 

transition 

requires 
Denmark’s 
continued  action  on 
several  aspects, 
including  renewable  energy  and  energy 
efficiency, sustainable transport, and climate 
adaptation. 
Implementation  of  the  European 
Green  Deal  is  underway  in  Denmark;  this  Annex 
provides a snapshot of the key areas involved (41).  

Denmark has not yet defined all the climate 
policy  measures  it  needs  to  reach  its  2030 
target  for  the  effort  sharing 
climate 
sectors (42).  Data 
for  2021  on  Denmark’s 
greenhouse  gas  emissions  in  these  sectors  are 
expected to show the country generated less than 
its annual emission allocations (43). Current policies 
in  Denmark  are  projected 
these 
emissions by 37% relative to 2005 levels in 2030, 
not  a  sufficient  reduction  to  reach  the  effort 
sharing  target  even  before  the  target  was  raised 
to  meet  the  EU’s  55%  objective, 
let  alone 
Denmark’s  new  target  to  reduce  emissions  by 
50% (44). 
its  recovery  and  resilience  plan, 
Denmark  has  allocated  59 %  of  its  Recovery  and 
Resilience  Facility  grants  to  key  reforms  and 

reduce 

to 

In 

(41)  The overview in this Annex is complemented by the 

information provided in Annex 7 on energy security and 
affordability, Annex 8 on the fair transition to climate 
neutrality and environmental sustainability, Annex 9 on 
resource productivity, efficiency and circularity, Annex 11 on 
innovation, and Annex 19 on taxation. 

(42)  Member States’ greenhouse gas emission targets for 2030 
(‘effort sharing targets’) were increased by Regulation (EU) 
2023/857 (the Effort Sharing Regulation) amending 
Regulation (EU) 2018/842, aligning the action in the 
concerned sectors with the objective to reach EU-level, 
economy-wide greenhouse gas emission reductions of at 
least 55% relative to 1990 levels. The Regulation sets 
national targets for sectors outside the current EU Emissions 
Trading System, notably: buildings (heating and cooling), road 
transport, agriculture, waste, and small industry. Emissions 
covered by the EU ETS and the Effort Sharing Regulation are 
complemented by net removals in the land use sector, 
regulated by Regulation (EU) 2018/841 (the Land Use, Land 
Use Change and Forestry (LULUCF) Regulation) amended by 
Regulation (EU) 2023/839.  

(43)  Denmark’s annual emission allocations for 2021 were some 
31.7 Mt CO2eq, and its approximated 2021 emissions were 
29.4 Mt (see European Commission, Accelerating the 
transition to climate neutrality for Europe’s security and 
prosperity: EU Climate Action Progress Report 2022, 
SWD(2022)343). 

(44)  See the information on the distance to the 2030 climate 

policy target in Table A6.1. Existing and additional measures 
as of 15 March 2022.  

investments  to  attain  climate  objectives (45).  To 
meet  Denmark’s  own  economy-wide  greenhouse 
gas  emission  reduction  target  to  cut  by  -70%  by 
2030, achieve climate neutrality by 2045 and cut 
carbon  emissions  by  110%  by  2050  (relative  to 
1990  levels),  it  will  be  necessary  to  step  up 
reforms  and  investments  significantly  across  the 
economy. 

Graph A6.1: Thematic – Greenhouse gas emissions 
from the effort sharing sectors in Mt CO2eq, 
2005-2021 

Source: European Environmental Agency. 

Denmark is not on track to meet its 2030 net 
carbon  removals  target  for  its  land  use 
sector.  In  2021,  the  sector  generated  4.95  %  of 
Denmark’s  greenhouse  gas  emissions.  This  is 
driven by its relatively  small forest area and high 
emissions  from  agricultural  soil.  Net  emissions 
from  land  use  increased  slightly  between  2016 
and  2021.  Denmark’s  2030  target  for  the  land 
use, land use change and forestry (LULUCF) sector 
is to decrease LULUCF emissions by 441 ktCO2eq 
compared  to  the  average  net  emissions  in  the 
years 2016, 2017 and 2018 (see Table A6.1) (46)). 
Preserving  the  carbon  stored  in  Denmark’s  soils 
and expanding its forest area will be key to meet 
the target. 

(45)  The green measures amount to EUR 923 million (59%) of 
the total plan. The two largest single green investments/ 
reforms are the investment window (EUR 163 million) of the 
green tax reform component and reprioritisation of the 
registration tax of vehicles and low electricity tax on charging 
vehicles (EUR 141 million), in the sustainable transport 
component. Together with the research programme on green 
solutions (EUR 94 million) and measures related to carbon 
rich soils (EUR 89 million), these four investments and 
reforms make up over half of all the green investments in 
the RRP. Energy efficiency measures will account for 
EUR 235 million. For REPowerEU, see Annex 7. 

(46)  This value is indicative and will be updated in 2025 (as 

mandated by Regulation (EU) 2023/839). 

34 

05101520253035404520052021Domestic transport (excl. aviation)Buildings (under ESR)AgricultureSmall industryWaste 
 
 
                                                 
       
                                                 
 
 
Graph A6.2: Energy mix (top) and Electricity mix 
(bottom), 2021 

80%  generated  by  renewables.  Wind power  alone 
generates  almost  50%  of  Denmark’s  electricity 
mix,  while  renewable  fuels  and  solar  generated 
27.3%  and  4%.  Fossil  fuels  provided  19%  of  the 
electricity  mix  –  mainly  solid  fossil  fuels  (13%) 
and natural gas (5%). 

the 

sources 

recovery 

in  gross 

Renewable  energy  plays  a  central  role  in 
decarbonising  Denmark’s  energy  system  and 
reducing dependence on fossil fuels. Denmark 
managed  to  meet  the  rising  energy  demand 
following 
of 
post-pandemic 
manufacturing  by  increasing  renewable  energy 
capacity. Denmark’s target, included in its NECP, to 
its  energy  from 
ensure  that  the  share  of 
renewable 
final  energy 
consumption will be 55% by 2030 was considered 
by  the  COM  2020  assessment  as  sufficiently 
ambitious. Denmark is invited to consider a further 
strengthening of its renewable energy target in the 
updated  NECP  if  it  wishes  to  make  an  even 
stronger  contribution  to  the  more  ambitious  EU 
climate  and  energy  targets  in  the  Fit  for  55 
Package and in the REPowerEU Plan. Denmark has 
made  renewable  energy  development  a  high 
priority, and the flagship programme ‘Denmark can 
do  more  II’  will  speed  up  permitting  process  for 
onshore 
energy 
installations  and  aims  to  quadruple  the  total 
volume  of  electricity  generated  by  solar  energy 
and  onshore  wind  by  2030.  As  part  of  ‘Denmark 
Can  Do  More  II’,  the  government  also  proposed 
action to install an additional 4 GW offshore wind 
by the end of 2030, which is part of the 6 GW of 
new  offshore  wind.  Alongside  domestic  action, 
Denmark  is  pursuing  a  multilateral  approach  to 
step  up  regional  cooperation  in  the  North  and 
Baltic Seas and pave the way for further offshore 
wind power expansion. Among other benefits, this 
is  expected  to  contribute  to  large-scale  onshore 
and offshore production of green hydrogen. 

renewable 

offshore 

and 

is 

Despite  the  increase  in  energy  consumption 
in  2021,  the  situation  on  energy  efficiency 
performance 
relatively 
in  Denmark 
positive. The country might be able to contribute 
more to the EU’s energy efficiency target for 2030 
than  planned  in  its  previous  national  energy  and 
climate  plan.  In  the  Commission’s  assessment  of 
2020  Denmark’s  NECP  targets  for  primary  and 
final  (PEC  and  FEC)  energy  consumption  were 
considered  of  very  low  ambition.  Based  on  the 
energy  consumption  trajectory  for  2018-2021, 
Denmark  is  expected  to  be  on  track  to  meet  its 
2030  target  for  PEC  and  for  FEC,  as  these  were 

35 

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 
Source:  

In  terms  of  its  energy  mix,  Denmark  is  a 
frontrunner  in  the  uptake  of  renewable 
energy (44% renewable share in energy mix), 
serving as an important source of inspiration 
at  European  level.  Although  Denmark  is  taking 
rapid  action  on  decarbonisation,  in  2021  fossil 
fuels still accounted for 56% of its energy mix. Of 
this,  oil  and  petroleum  products  made  up  39%, 
natural  gas  made  up  11%  and  coal  and  coal 
products  made  up  6%.  Since  2019,  Denmark’s 
2021  energy  mix  has  seen  an  increase  in  the 
share of solid fossil fuels – from 5% to 6% of the 
energy  mix  –  while  the  share  of  natural  gas 
decreased from 14 to 12%. The consumption of oil 
and petroleum products has also declined, down to 
37%  in  2021  from  44%  in  2019.  In  2021, 
Denmark regained its position as the country with 
the greenest electricity mix in the EU-27 with over 

13%5%1%81%Solid fossil fuels,peat and oil shaleGasOilRenewables6%12%37%46%Solid fossil fuels,peat and oil shaleGasOilRenewables 
  
in 

its  NECP (47).  Denmark’s  reported 
notified 
savings to fulfil the Energy Savings Obligation for 
2014-2020  under  Article 7  of 
the  Energy 
Efficiency  Directive  significantly  exceeded  the 
savings  target.  Under  the  recovery  and  resilience 
plan,  Denmark  intends  to  complete  the  rollout  of 
district  heating  by  2028  and  achieve  completely 
renewable  gas  heating  by  2030 (48)  as  well  as 
support  the  energy  performance  of  private-sector 
buildings and public-sector buildings, and to foster 
the efficiency of the industrial sector, with a focus 
on small and medium enterprises.  

Denmark’s  results  on  sustainable  mobility 
are  mixed.  It  is  among  the  EU  frontrunners  in 
terms of zero-emission passenger cars as a share 
of  new  registrations  and  as  a  share  of  its  fleet. 
However,  compared  to  many  other  EU  Member 
States, the electrification of the railway network is 
underdeveloped  as  a  result  of  the  long-term 
strategic de-prioritisation of rail infrastructure and 
rolling stock and subsequent underinvestment. The 
rail  infrastructure  manager  is  running  a  major 
programme  to  electrify  the  railways  over  the 
period 2014-2027. 

resources 
help  maintain 

and  managing  these  areas.  The  share  of  habitats 
in poor or bad status has increased, and Denmark 
has  not  yet  provided  a  final  framework  of 
investment  needs. 
prioritised  actions  showing 
Investing  sufficient 
in  sustainable 
recent 
agriculture  would 
improvements in ground and surface water quality. 
There  is  potential  for  Denmark  to  use  innovative 
fiscal  instruments  to  reduce  ammonia  emissions, 
such  as  systems  of  tradable  livestock  rights. 
Denmark was in non-compliance with its ammonia 
reduction commitment in 2020 and has received a 
Commission  warning  on  26  January  2023 (52). 
Denmark  also  has  the  potential  to  rely  more  on 
environmental  taxes  to  promote  waste  reduction 
and further internalise the costs of air pollution (53) 
(see Annex 19). 

Graph A6.3: Thematic – environmental investment 
needs and current investment, p.a. 2014-2020 

protection, 

environmental 

Denmark  would  benefit  from  investing  more 
in 
tackling 
pollution,  improving  waste  management  and 
promoting  circular  economy,  and  better 
protecting  biodiversity.  Between  2014  and 
2020,  the  environmental  investment  needs (49) 
were estimated to be at least EUR 3.9 billion, while 
investment was at about EUR 2.2 billion, leaving a 
gap of at least EUR 1.7 billion per year (see Graph 
A6.3) (50).  Denmark  has  a  small  EU  Natura  2000 
network,  which  covers  8.3%  of  its  land (51).  It  has 
not yet allocated sufficient resources to protecting 

(47)  After the conclusion of the negotiations for a recast EED, the 
ambition of both the EU and national targets as well as of 
the national measures for energy efficiency to meet these 
targets is expected to increase. 

(48)  Government of Denmark 2022 – Danmark kan mere II. 

(49)  Environmental objectives include pollution prevention and 

control, water management and industries, circular economy 
and waste, biodiversity and ecosystems (European 
Commission, 2022, Environmental Implementation Review, 
country report Denmark) 

(50)  When also accounting for needs estimated at EU level only 

(e.g. water protection, higher circularity, biodiversity strategy). 

(51)  In 2021, Denmark had 14.9% terrestrial protected areas 

Source: European Commission. 

Denmark’s climate adaptation plan is not up 
to the challenges of climate change. To tackle 
the impacts of climate change in all sectors of the 
economy,  notably  from  heavier  rainfall,  droughts, 
increased  storm 
intensity  and  storm  surges, 
speedy adoption and implementation of a revised 
climate adaptation plan is of the essence. 

Denmark  provides 
fuel  and  other 
fossil 
environmentally  harmful  subsidies  that  could  be 
considered  for  reform,  while  ensuring  food  and 

(52)  Environmental Implementation Review 2022 – country report 

Denmark, p. 18 

(Natura 2000 and nationally designated areas), against the 
EU average of 26.4% (European Environment Agency, 2023, 
Natura 2000 Barometer). 

(53)  European Commission, 2021, Green taxation and other 

economic instruments – Internalising environmental costs to 
make the polluter pay, Ensuring that polluters pay. 

36 

559505723971898071,1441,1734822630.0200.0400.0600.0800.01000.01200.01400.0Pollutionprevention andcontrolWater (industries,excl. protection)Circular economy(incl. waste)Biodiversity andecosystemsR&I&D and otherEUR million (at current prices)Current investmentTotal need 
                                                 
            
                                                 
energy  security  and  mitigating  social  effects. 
Denmark has reduced fossil fuel subsidies slightly 
since  2016.  Environmentally  harmful  subsidies 
have  been  identified,  via  an  initial  assessment,  in 
the agriculture, forestry and fishing, transportation 
and  storage,  services  and  manufacturing  sectors. 
Examples  of  such  subsidies  include  taxation  of 
privately used company cars, the energy tax relief 
for  companies  in  agriculture  and  forestry  for  gas 
oil,  the  reduced  energy  tax  rate  for  light  fuel  oil 
used in mobile machinery or the reimbursement of 
excise  duty  on  diesel  used  in  freight  and  other 
categories  of  passenger  transport (54).  Company 
cars  account  for  about  one  third  of  annual  new 
registrations (55).  A  reform  in  2021  brought  in  an 
environmental  surcharge  based  on  vehicles  CO2 
emissions.  A  mapping  of  all  environmentally 
harmful  subsidies  by  Denmark  would  help 
prioritise candidates for reform. 

(54)  Fossil fuel figures in EUR of 2021 from the 2022 State of 

the Energy Union report. Initial assessment of 
environmentally harmful subsidies done by the Commission 
in the 2022 toolbox for reforming environmentally harmful 
subsidies in Europe, using OECD definitions, and based on the 
following datasets: OECD Agriculture Policy Monitoring and 
Evaluations; OECD Policy Instruments for the Environment 
(PINE) Database; OECD Statistical Database for Fossil Fuels 
Support; IMF country-level energy subsidy estimates. Annex 4 
of the toolbox contains detailed examples of subsidies on 
the candidates for reform. 

(55)  European Commission, 2022, Mapping objectives in the field 

of environmental taxation and budgetary reform: 
Environmentally harmful subsidies (EHS). 

37 

 
                                                 
Table A6.1: Indicators tracking progress on the European Green Deal from a macroeconomic perspective 

Sources: (1) Historical and projected emissions, as well as Member States’ climate policy targets and 2005 base year emissions 
under the Effort Sharing Decision (for 2020) are measured in global warming potential (GWP) values from the 4th Assessment 
Report (AR4) of the Intergovernmental Panel on Climate Change (IPCC). Member States’ climate policy targets and 2005 base 
year emissions under the Effort Sharing Regulation (for 2030) are in GWP values from the 5th Assessment Report (AR5). The 
table above shows the base year emissions 2005 under the Effort Sharing Decision, using AR4 GWP values. Emissions for 2017-
2021 are expressed in percentage change from 2005 base year emissions, with AR4 GWP values. 2021 data are preliminary. The 
table shows the 2030 target under Regulation (EU) 2023/857 that aligns it with the EU’s 55% objective, in percentage change 
from 2005 base year emissions (AR5 GWP). Distance to target is the gap between Member States’ 2030 target (with AR5 GWP 
values) and projected emissions with existing measures (WEM) and with additional measures (WAM) (with AR4 GWP values), in 
percentage change from the 2005 base year emissions. Due to the difference in global warming potential values, the distance to 
target is only illustrative. The measures included reflect the state of play as of 2022.  
(2) Net removals are expressed in negative figures, net emissions in positive figures. Reported data are from the 2023 
greenhouse gas inventory submission. 2030 value of net greenhouse gas removals as in Regulation (EU) 2023/839 
amending Regulation (EU) 2018/841 (LULUCF Regulation) – Annex IIa, kilotons of CO2 equivalent, based on 2020 submissions. 
(3) Renewable energy and energy efficiency targets and national contributions are in line with the methodology established under 
Regulation (EU) 2018/1999 (Governance Regulation).  
(4) Percentage of total revenue from taxes and social contributions (excluding imputed social contributions). Revenue from the EU 
Emissions Trading System is included in environmental tax revenue.  
(5) Expenditure on gross fixed capital formation for the production of environmental protection services (abatement and 
prevention of pollution) covering government, industry, and specialised providers.  
(6) European Commission, Study on energy subsidies and other government interventions in the European Union, 2022 edition.  
(7) The climate protection gap refers to the share of non-insured economic losses caused by climate-related disasters. This 
indicator is based on modelling of the current risk from floods, wildfires and windstorms as well as earthquakes, and an 
estimation of the current insurance penetration rate. The indicator does not provide information on the split between the 
private/public costs of climate-related disasters. A score of 0 means no protection gap, while a score of 4 corresponds to a very 
high gap (EIOPA, 2022).  
(8) Sulphur oxides (SO2 equivalent), ammonia, particulates < 10 µm, nitrogen oxides in total economy (divided by GDP).  
(9) Battery electric vehicles (BEV) and fuel cell electric vehicles (FCEV). 

38 

2030200520172018201920202021target/valueWEMWAMGreenhouse gas emission reductions in effort sharing sectors (1)Mt CO2eq; %; pp40.08-18%-17%-20%-23%--50%-13-13Net carbon removals from LULUCF (2)kt CO2eq5,1441,8803,7852,9533,1022,4205338n/an/a200520172018201920202021Share of energy from renewable sources in gross final consumption of energy (3)%16%34%35%37%32%35%55%Energy efficiency: primary energy consumption (3)Mtoe19.417.417.416.815.316.242.7Energy efficiency: final energy consumption (3)Mtoe15.514.614.614.313.113.835.2201620172018201920202021201920202021Environmental taxes (% of GDP)% of GDP3.93.73.63.33.22.92.42.22.2Environmental taxes (% of total taxation) (4)% of taxation 8.68.08.27.06.86.05.95.65.5Government expenditure on environmental protection% of total exp.0.80.80.80.80.80.71.71.61.6Investment in environmental protection (5) % of GDP------0.40.40.4Fossil fuel subsidies (6)EUR2021bn0.60.60.50.50.4-53.050.0-Climate protection gap (7) score 1-40.01.01.5Net greenhouse gas emissions1990 = 10072.071.070.065.058.058.076.069.072.0Greenhouse gas emission intensity of the economykg/EUR'100.330.320.320.290.29-0.310.30-Energy intensity of the economykgoe/EUR'100.070.060.060.060.06-0.110.11-Final energy consumption (FEC)2015=100102.5103.0103.0101.192.597.5102.994.6101.1FEC in residential building sector2015=100103.2101.3100.298.996.5101.7101.3101.3106.8FEC in services building sector2015=100102.7105.0103.6100.695.1105.8100.194.3100.7Smog-precursor emission intensity (to GDP) (8)tonne/EUR'104.84.95.25.13.6-0.90.9-Years of life lost due to air pollution by PM2.5per 100.000 inh.324.4257.7404.9322.8193.2-581.6544.5-Years of life lost due to air pollution by NO2per 100.000 inh.44.232.535.522.87.3-309.6218.8-Nitrates in ground watermg NO3/litre------21.020.8-Land protected areas% of total14.816.3-14.814.814.926.226.426.4Marine protected areas% of total18.2--18.7-18.710.7-12.1Organic farming% of total utilised agricultural area7.88.69.811.111.511.68.59.1-201720182019202020212022202020212022Share of zero-emission vehicles (9)% in new registrations0.30.72.57.27.618.25.48.910.7Number of AC/DC recharging points (AFIR categorisation)---3653602911739188626330028432518Share of electrified railways%25.426.132.3-n/a34.156.6n/a56.6Hours of congestion per commuting driver per year24.625.225.825.7n/an/a28.7n/an/aMobility'Fit for 55'DistanceProgress to policy targetsNational contribution to 2030 EU targetDenmarkEUFiscal and financialindicatorsEnergyPollutionBiodiversityClimate 
 
      
 
ANNEX 7: ENERGY SECURITY AND AFFORDABILITY 

Before Russia invaded Ukraine, Denmark had 
no  exposure  to  direct  gas  imports  from 
Russia  but  was  exposed  through  exports  via 
Germany (56).  In  response  to  the  energy  crisis,  a 
reform package to accelerate the energy transition 
entitled  ‘Denmark  Can  Do  more  II’  was  agreed  at 
the  end  of  June  2022.  This  Annex (57)  sets  out 
actions  carried  out  by  Denmark  to  achieve  the 
the 
REPowerEU  objectives, 
implementation of its recovery and resilience plan, 
in  order 
improve  energy  security  and 
affordability  while  accelerating  the  clean  energy 
transition,  and  contributing  to  enhancing  the  EU’s 
competitiveness in the clean energy sector (58). 

including 

through 

to 

The  redevelopment  of  existing  gas  facilities 
will make  Denmark  self-sufficient  and  make 
it a net exporter. In 2021, Denmark produced a 
large  share  of  its  natural  gas  domestically  (1.5 
billion  cubic  metres  (bcm)  of  annual  3  bcm 
demand),  with  natural  gas  representing  22%  of 
the  energy  mix,  below  the  EU  average  of  24%. 
According  to  the  Danish  Energy  Agency,  Danish 
gas production is expected to exceed consumption 
from 2024 until around 2042, and Denmark plans 
to  be  a  net  exporter  after  the  reopening  of  Tyra 
(see below). 

through  Denmark 

 On  27  September  2022,  the  Baltic  Pipe  was 
opened,  providing  a  key  route  to  carry  gas  from 
Norway 
to  Poland  and 
neighbouring  countries.  Fully  operational  since  30 
November  2022,  it  will  enable  up  to  10  bcm  of 
gas  to  be  transported  annually  from  Norway  to 
Poland and 3 bcm of gas from Poland to Denmark. 
The  restarting  of  Tyra  –  Denmark’s  largest  gas 
production field – is expected to happen gradually 
in the Winter 2023-2024. A major contribution to 
Denmark’s  self-sufficiency  is  also  expected  from 
increasing  biomethane  production,  which  already 
covers 34% of domestic gas consumption.  

(56)  Ørsted contract with Gazprom unilaterally halted on 31 May 

2022 

(57) It is complemented by Annex 6 as the European Green Deal 
focuses on the clean energy transition, by Annex 8 on the 
actions taken to mitigate energy poverty and protect the 
most vulnerable ones, by Annex 9 as the transition to a 
circular economy will unlock significant energy and resource 
savings, further strengthening energy security and 
affordability, and by Annex 12 on industry and single market 
complementing ongoing efforts under the European Green 
Deal and REPowerEU. 

(58)  in line with the Green Deal Industrial Plan COM(2023) 62 
final, and the proposed Net-Zero Industry Act COM(2023) 
161 final 

and 

country’s 

if  necessary. 

The 
planned 
existing 
infrastructure  ensure  the  security  of  its  gas 
and  oil  supply,  but  alternative  short-term 
options  are  available 
In 
fulfilment of its gas storage obligations under EU 
law, it reached 99.27% by 1 November 2022, and 
ended  the  heating  season  with  a  gas  storage 
filling  at  72,4%  on  15  April  2023 (59). 
It 
operates (60)  with  a  combined  capacity  of  1  bcm, 
corresponding  to  approximately  40%  of  Danish 
consumption 
(2.89  bcm).  Denmark  has  no 
operational  liquefied  natural  gas  (LNG)  terminal, 
although  the  possibility  of  installing  a  temporary 
LNG  terminal  has  been  discussed  at  government 
level. Alternative short-term options to increase oil 
and  gas  production  from  the  North  Sea  are 
available. This includes opening the Xana gas field 
in  the  North  Sea  (5  years  before  gas  production 
can  start)  or  the  one  in  Svane.  However,  both 
options  come  with  technological  and  economic 
challenges. 

Graph A7.1: Underground gas storage levels in 
Denmark 

Source: JRC calculation based on AGSI+ Transparency 
Platform, 2022 (Last update 2 May 2023) 

improve  the  security  of 

To 
its  supply, 
Denmark has implemented demand reduction 
measures  and  improved  its  energy  savings. 
To mitigate the risk of curtailment of the national 
gas  supply  and  in  addition  to  ‘Denmark  Can  Do 
II’,  Denmark  has  put  in  place  several 
More 
emergency  measures.  To  improve  security  of 
supply,  it  has  also  focused  on  increasing  energy 

(59)  Regulation of the European Parliament and of the Council 
amending Regulations (EU) 2017/1938 and (EC) No 
715/2009 with regard to gas storage and Implementing 
Regulation (EU) 2022/2301 of 23 November 2022 setting 
the filling trajectory with intermediary targets for 2023 for 
each Member State with underground gas storage facilities 
on its territory and directly interconnected to its market area. 

(60)  Denmark has a gas storage facility at Lille Torup and another 

one at Stenlille managed by Gas Storage Denmark. 

39 

 
 
                                                 
 
                                                 
 
 
efficiency. By combining short-term measures with 
the  implementation  of  its  national  long-term 
renovation  strategy  Denmark  can  tap  into  its 
considerable  energy  efficiency  potential,  as  the 
building  sector  represents  a  substantial  share  – 
approximately  40%  –  of  its  overall  final  energy 
consumption.  As  part  of  these  efforts,  Danish 
authorities  are  also  actively  encouraging  waste 
heat  recovery  as  a  way  of  making  industry  more 
energy-efficient.  Over  the  period  August  2022  – 
March  2023,  25%  of  gas  consumption  has  been 
saved  in  Denmark  compared  to  the  previous  5-
years average. Denmark is carrying out a relatively 
low  number  of  checks  on  products  covered  by 
ecodesing  and  energy  labelling.  This  generates 
concerns  with  respect  to  the  level  playing  field 
among  economic  operators  and  uncertainty  as  to 
the  compliance  levels  of  the  concerned  products, 
and therefore missed energy and CO2 savings (61). 

Graph A7.2: Share of gas consumption per sector, 
2021 

Source: Eurostat 

The Danish electricity system is already very 
much  centred  on  renewable  energy,  with 
further  investments  in  flexible  solutions  are 
in  the  pipeline.  The  Danish  electricity  system 
relies  heavily  on  renewable  energy  (Annex  6), 
making  it  possible  for  Denmark  to  have  little 
recourse  to  fossil  fuels.  The  security  of  the 
country’s  electricity  supply  can  be 
further 
bolstered  by  the  positive  growth  trajectory  of 
biomethane  directly 
the  grid. 
Denmark  is  committed  to  phase  out  oil  and  gas-
based  electricity  and  aims  for  100%  renewable 
power  generation  by  2030.  As  part  of  these 
efforts, Denmark is shifting its attention to sector 
coupling  and  demand-side  flexibility,  including  by 

injected 

into 

(61)  The internet-supported information and communication 
system for the pan-European market surveillance 

40 

technologies  and  prioritising 

using  new 
the 
digitalisation  of  its  electricity  system.  Thanks  to 
the national measures it has put in place, Denmark 
is  a  smart  grid  hub.  Further  investments  in 
flexibility  solutions  can  enable  it  to  fully  harness 
the large-scale uptake of renewable energy in the 
electricity  system.  Secure  power  generation  also 
depends on the availability of hydropower imports 
from  Norway  and  Sweden,  to  which  Denmark  is 
the  synchronous  grid  of 
connected 
northern Europe. 

through 

Graph A7.3: Denmark´s retail energy prices for 
industry (top) and households (bottom) 

(1) On electricity, the band consumption is DC for households 
and ID for industry 
(2) On gas, the band consumption is D2 for households and I4 
for industry  
Source: Eurostat 

customers 

With  the  surge  in  gas  prices  across  the  EU 
peaking last summer, Denmark intervened to 
shelter 
from  unprecedented 
energy  costs.  In  2021,  it  experienced  a  steep 
increase  in  wholesale  gas  prices,  going  from  EUR 
19.67/kilowatt hours (KWh) to EUR 118.03/KWh, a 
hefty  500%  increase.  Throughout  2022,  prices 
settled  at  around  EUR  80/90/KWh  in  January, 
February  and  May,  as  in  the  rest  of  the  EU, 
progressively  reaching  all-time  highs,  notably  in 
August  when  the  fear  of  a  cold  winter  loomed 
large.  Although  their  impact  was  lessened  by 
government 
retail  gas  prices 
increased  steadily  between  2021  and  2022, 
increasing  from  EUR  31/KWh  in  January  2021  to 

intervention, 

20.9%35.5%0.6%13.0%28.2%1.7%EnergyIndustryTransportServices and public sectorHouseholdsAgriculture, forestry andfishery050100150200250300350400450€/MWhGas DenmarkGas EUElectricity DenmarkElectricity EU0100200300400500600700€/MWhGas DenmarkGas EUElectricity DenmarkElectricity EU 
      
                                                 
           
EUR  74.06/KWh  in  October  2021,  equivalent  to 
138% growth year-on-year. As Danish gas supply 
is used in both industry and households, the 2022 
surge  in  gas  prices  triggered  a  swift  state-led 
response  to  help  customers  cope  with  higher 
energy prices. 

Renewable  energy  plays  a  central  role  in 
energy security at national level in both gas 
and electricity supply. This makes Denmark one 
of the EU-27’s most energy-independent countries. 
The  ambitious  reform  package  ‘Denmark  Can  Do 
More  II’,  agreed  at  the  end  of  June  2022,  is 
testament  to  the  intention  of  fast-tracking  the 
energy transition in response to the much changed 
geopolitical context. In addition to its far-reaching 
ambitions  for  wind  and  green  gas  uptake  (Annex 
6),  ‘Denmark  Can  Do  More’  aims  to  simplify 
permit-granting,  by  framing  renewable  energy 
projects  as  being  of  overriding  public  interest (62), 
accelerating  calls  for  tenders  for  offshore  wind 
power, quadrupling solar and onshore wind energy 
by  2030,  and  facilitating  dialogue  between  the 
government  and  municipalities.  Lowering  the 
thresholds  for  renewable-based  investments  has 
opened up  new opportunities for both private and 
public  investors  and  enabled  Denmark  to  make 
good  on  its  commitment  to  contribute  to  building 
up  regional  wind  and  hydrogen  offshore  capacity, 
a commitment made in the context of the Esbjerg 
Offshore  Wind  Declaration, 
the  Marienborg 
Declaration  and  the  Dublin  North  Sea  Energy 
Cooperation Joint Statement of 2022. Against this 
backdrop, the Danish Energy Agency is leading the 
construction of two energy  islands  – one artificial 
one  in  the  North  Sea  and  one  off  the  coast  of 
Bornholm  in  the  Baltic  Sea  –  with  the  aim  of 
expanding  renewable  energy  supply  for  Danish 
and  foreign  electricity  systems  initially  by  a 
minimum  of  6  GW,  with  a  combined  long-term 
expansion  potential  of  13  GW (63).  In  addition, 
Denmark’s  goal  is  to  build  4  to  6  GW  of 
electrolysis capacity by 2030.  

Denmark  has  the  ambition  to  continue 
transforming  its  energy  system  to  achieve 
climate  neutrality  by  2045 
(and  -70% 
greenhouse  gases  by  2030).  The  transition  to 
requiring 
clean  energy 

is  mineral 

intensive, 

(62)  Council Regulation (EU) 2022/2577 of 22 December 2022 
laying down a framework to accelerate the deployment of 
renewable energy, OJ L 335, 29.12.2022, p. 36. 

(63)  Danish Energy Agency, webpage on Denmark's energy 

islands. 

41 

in  clean 

technology 

Denmark  to  secure  raw  materials  to  ramp  up  its 
efforts  to  roll  out  renewable  energy,  keep  a 
foothold 
research  and 
preserve  the  competitiveness  of  its  industry.  The 
green innovation champion performs strongly both 
in absolute number of patents and in the share of 
green  patents  in  the  overall  innovation  portfolio. 
Patents  per  million  habitants  in  Denmark  have 
increased  by  73%  between  2014  and  2019. 
Denmark  plans  to  become  a  hub  for  carbon 
capture  and  storage,  with  the  potential  of  storing 
up  to  22  billion  tons  of  CO2.  Denmark  plans  to 
become  a  European  hub  for  carbon  capture  and 
storage,  and  has  as  of  early  2023  awarded  the 
first  exploration  permits  to  projects  in  the  North 
Sea.  Ensuring  security  of  supply  of  critical  raw 
materials  is  also  crucial  for  creating  an  enabling 
investment environment to attract further venture 
capital 
in  climate  tech  start-ups, 
especially  following  the  slowdown  between  2019 
and  2021  in  investments  in  clean  industry  and 
carbon tech solutions. 

investment 

Graph A7.4: Venture capital investments in climate 
tech start-ups and scale-ups - Denmark 

(1)  Venture Capital investments include Venture Capital deals 
(all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a 
VC investment firm).  
Source: JRC elaboration based on PitchBook data (06/2022) 

Denmark,  a  global  leader  in  producing  wind-
based  electricity,  aims  to  remain  at  the 
forefront  of  the  development  of  clean  new 
energy  technologies.  Generally, 
it  has  a 
traditionally  strong  manufacturing  base  of  low-
carbon technologies and components, especially in 
the  wind  energy  sector,  where  it  continues  to  be 
the  global  leader  in  integrating  wind  power  into 
the  electricity  grid.  Despite  not  having  domestic 
producers  of  large  solar  collectors,  the  country  is 
the  leading  player  in  the  large-scale  solar  district 
heating market in the EU in terms of total installed 

8.5%51.4%17.0%1.5%5.2%5.5%22.8%32.1%3.2%67.3%11.3%74.3%0%10%20%30%40%50%60%70%80%90%100%201920202021[% per sector]Built EnvironmentIndustry & Carbon techFood & Land useEnergy - Generation & Grid techTransport & Mobility47.856.523.50.05.010.015.020.025.030.035.040.045.050.055.060.065.070.0[Investments VC Investments in climate tech firms[EUR mln] 
                                                 
     
capacity  and  system  size.  Favourable  policy  and 
market  conditions  have  led  to  booming  sales  of 
heat pumps, a trend that is likely to continue with 
the  implementation  of  the  REPowerEU  plan.  In 
2019, over 40% of Danish renewable energy jobs 
were  in  manufacturing  and  export  sales  were  an 
important  source  of  wind  jobs.  In  the  strong 
manufacturing  sector, 
labour  shortages  were 
significant  in  2021-2022:  more  than  60%  of 
businesses reported labour shortages at their peak 
in  Q3  2021.  However,  shortages  seemed  to  have 
eased  as  of  Q4  2022  dropping  below  the  EU 
average  level.  While  online  job  advertisements  in 
clean  energy  deployment  relevant  sector  have 
strongly increased  at  EU  level  between  Q4  2021-
Q4  2022  (49%),  in  Denmark  more  than  doubled 
(112%) 

42 

 
Table A7.1: Key Energy Indicators 

(1) The ranking of the main supliers is based on the latest available figures (for 2021) 
(2) FSRU included 
(3) Venture Capital investments include Venture Capital deals (all stages) and Private Equity Growth/Expansion deals (for 
companies that have previously been part of the portfolio of a VC investment firm). 
Source: Eurostat, Gas Infrastructure Europe (Storage and LNG Transparency Platform), JRC SETIS (2022), JRC elaboration based 
on PitchBook data (06/2022) 

43 

EU20182019202020212018201920202021Import Dependency [%] 23%39%45%33%58%61%57%56%of Solid fossil fuels 102%154%75%13%44%44%36%37%of Oil and petroleum products 18%45%55%31%95%97%97%92%of Natural Gas -38%-7%37%28%83%90%84%83%Dependency from Russian Fossil Fuels [%]of Hard Coal68%88%97%90%40%44%49%47%of Crude Oil7%6%12%16%30%27%26%25%of Natural Gas 0%0%0%0%40%40%38%41%20152016201720182019202020212022Gross Electricity Production (GWh)28941305383102330370295172872933049-Combustible Fuels14185169941547315500123871120115669-Nuclear0000000-Hydro18191815171716-Wind14133127821478013902161501633016054-Solar 60474475195396311811309-Geothermal 0000000-Other Sources0000000-Net Imports of Electricity (GWh)5912505745635224581168834869-   As a % of electricity available for final consumption 18.6%15.8%14.1%16.4%18.1%21.8%14.5%-Electricity Interconnection (%)50.6%49.7%49.0%51.0%45.8%42.7%20152016201720182019202020212022Gas Consumption (in bcm)3.23.23.13.02.82.83.02.7Gas Imports - by type (in bcm)0.70.70.50.41.12.72.5n.a.Gas imports - pipeline0.70.70.50.41.12.72.5n.a.Gas imports - LNG0.00.00.00.00.00.00.0n.a.Gas Imports - by main source supplier (in bcm) (1)Germany0.10.20.10.11.02.72.5n.a.Not specified0.00.00.00.00.00.00.0n.a.Norway0.50.50.40.30.10.00.0n.a.2019202020212022LNG TerminalsNumber of LNG Terminals (2)0000LNG Storage capacity (m3 LNG)0000Underground StorageNumber of storage facilities2222Operational Storage Capacity (bcm)1.11.10.912019202020212022 VC investments in climate tech start-ups and scale-ups (EUR Mln) (3)47.856.523.5n.a.as a % of total VC investments in Denmark6.9%6.5%1.1%n.a.Research & Innovation spending in Energy Union R&i priorites (2)Public R&I (EUR mln)94.2111.0169.2n.a.Public R&I (% GDP)0.031%0.036%0.050%n.a.Private R&I (EUR mln)1268.7n.a.n.a.n.a.Private R&I (% GDP)0.41%n.a.n.a.n.a.CLEAN ENERGYDIVERSIFICATION OF GAS SUPPLIESELECTRICITYDENMARKENERGY DEPENDENCE 
 
 
 
 
       
 
ANNEX 8: FAIR TRANSITION TO CLIMATE NEUTRALITY 

the 

successful 

This  Annex  monitors  Denmark’s  progress  in 
ensuring  a  fair  transition  towards  climate 
neutrality  and  environmental  sustainability, 
notably  for  workers  and  households 
in 
vulnerable situations. The number of jobs in the 
green economy is rising as Denmark aims to reach 
70%  greenhouse  gas  emission  (GHG)  reductions 
by  2030.  To  ensure  a  fair  green  transition  in  line 
with  the  Council  Recommendation  (  ),  and  to 
achieve 
implementation  of 
REPowerEU,  the  participation  of  the  workforce  in 
upskilling  and  reskilling    is  key  and  is  relatively 
high  in  Denmark  although  declining  in  recent 
years.  Under  the  country’s  recovery  and  resilience 
plan  (RRP),  a  green tax  reform  will  accelerate  the 
decarbonisation of the economy and is one of the 
plan’s  landmark  initiatives.  The  Cohesion  Policy 
Funds  contribute  further  to  creating  new  jobs, 
notably the European Social Fund Plus (ESF+) and 
Just Transition Fund (JTF) have particular focus on 
transition  and  circular 
skills  for 
economy. 

the  green 

Graph A8.1: Fair transition challenges in Denmark 

Source: Eurostat, EMPL-JRC GD-AMEDI/AMEDI+ projects and 
World Inequality Database (see Table A8.1). 

in  Denmark’s  sectors  most 
Employment 
affected  by  the  green  transition  remains 
stable,  and  the  green  economy  is  expanding. 
intensity  of 
The  greenhouse  gas  emissions 
Denmark’s  workforce  declined  from  27.5  to  21.5 
tonnes per worker between 2015 and 2021, but is 
still well above the EU average of 13.7 tonnes (see 
in 
Graph A8.1  and  Table A8.1).  Employment 
Denmark’s 
(EII) 
energy-intensive 
represented  a  stable  share  of  1.3  %  of  total 
employment  in  2021  (in  2020:  1.2%  vs  3.0%  in 
the EU). Employment in mining and quarrying has 
not  changed  since  2015  (around  4 000  workers) 
while  coal  and  lignite  mining  has  declined  in 
Denmark.  Total  jobs  in  the  environmental  goods 

industries 

job  vacancy 

and  services  sector  grew  by  8.3%  (to  79,340) 
during  2015-20  (EU:  +8.3%),  reaching  2.7%  of 
total  employment,  slightly  above  the  EU  average 
(2.2%).  The 
in 
construction, and stood at 3.2% (2022) vs. 4.0% in 
the  EU (64).  However,  the  Danish  Construction 
Federation  estimates  that  6 000  jobs  in  the 
construction  sector  remain  unfilled,  despite  the 
fact  that many companies have changed strategy 
towards the green transition. (65) 

increased 

rate 

industries, 

In  energy-intensive 

Upskilling  and  reskilling  in  declining  and 
transforming  sectors  is  high  but  decreasing 
significantly. Skills are key for creating new jobs 
in  the  green  economy,  smooth  labour  market 
transitions,  and  preserving  jobs  in  transforming 
the 
sectors. 
participation  of  workers  in  education  and  training 
has  slightly  increased  from  24.6%  in  2015  to 
25.0%  in  2022;  it  is  well  above  the  EU  average 
(10.4%). In Denmark, 32% of citizens believe they 
do  not  have  the  necessary  skills  to  contribute  to 
the  green  transition  (EU:  38%) (66).  Investment 
under the ESF+, together with national investment, 
funds  measures  such  as  those  targeting  up-  and 
reskilling  and 
learning.  Companies’ 
demand  for  skilled  labour  will  be  met  both  by 
raising the formal education level of the workforce 
higher 
(vocational 
education) and through targeted up- and reskilling 
of  unemployed  and  employed  people.  The  2022 
Green Tax reform allocated DKK 100 million yearly 
in  2025  and  2026  for  training  and  up-skilling  in 
support  of  and  to  ensure  the  green  transition. 
Around  15 000  people  are  expected  to  improve 
their  qualifications  linked  to  the  green  transition 
through  support  from  the  ESF+.  Furthermore,  the 
Just  Transition  Fund  (JTF)  also  supports  training 
and  up-  and  reskilling  of workers  in  regions  most 
affected by the transitions. 

education/training 

lifelong 

and 

In  recent  years,  before  the  spike  in  energy 
prices,  energy  poverty  indicators  improved 
slightly.  The  share  of  the  population  unable  to 
keep  their  homes  adequately  warm  decreased 
from 3.6% in 2015 to 2.8% in 2021 (below the EU 

(64)  Eurostat (JVS_A_RATE_R2)   

(65)  Virksomheder i fuld gang med grøn omstilling mangler 

10.000 medarbejdere - DI (danskindustri.dk) 

(66)  Special Eurobarometer 527. Fairness perceptions of the 

green transition (May – June 2022). 

44 

00.511.522.5GHG per workerEmployment EIIEducation &training EIIEnergy povertyTransportpoverty(proxy)CarboninequalityEU LatestDK Latest (vs EU Latest)DK 2015 (vs EU Latest) 
 
 
  
                                                 
 
Table A8.1: Key indicators for a fair transition in Denmark 

Source: Eurostat (env_ac_ainah_r2, nama_10_a64_e, ilc_mdes01), EU Labour Force Survey (break in time series in 2021), EMPL-
JRC GD-AMEDI/AMEDI+ projects and World Inequality Database (WID). 

average  of  6.9%  in  2021) (67).  In  particular,  8.9% 
of  the  population  at  risk  of  poverty  (AROP)  were 
affected  in  2021  (EU:  16.4%),  and  2.4%  of  lower 
middle-income  households  (in  deciles  4-5)  (EU: 
8.2%). Before the energy price hikes, an estimated 
28.4%  of  the  total  population  and  52.8%  of  the 
had 
AROP 
(expenditure-based) 
residential 
on 
electricity,  gas,  and  other  fuels (68)  above  10%  of 
their  household  budget  (above  the  estimated  EU 
average of 26.9% and 48.2% respectively). 

expenditure 

population 

budget 

shares 

The  increased  energy  prices  in  2021-2023 
negatively  affect  households’  budgets,  in 
particular  for  low-income  groups.  As  a  result 
of energy price changes during the August 2021 to 
January  2023  period  relative  to  the  18  months 
prior (cf. Annex 7), in the absence of policy support 
fraction  of 
responses, 
and  behavioural 
individuals living in households which spend more 
than  10%  of  their  budget  on  energy  would  have 
increased  by  17.5 pps  for  the  whole  population 
and  by  26.0 pps  among  the  (expenditure-based) 
AROP population, more than the EU-level increases 
(16.4 pps and 19.1 pps, respectively) (69).  

the 

Expenditure  shares  of  low  and  lower-middle 
income  groups  would  increase  the  most, 
which  is  most  pronounced  for  electricity,  as 
shown  in  Graph A8.2.  Among  the  (expenditure-
based)  AROP  population,  the  share  of  individuals 
living in households with budget shares for private 
transport  fuels (70)  above  6%  stood  at  25.8%  in 
January  2023  (vs.  37.9%  in  the  EU),  but  would 
have increased more than the EU average (6.5 pps 
vs  4.8  pps)  due  to  the  increase  in  transport  fuel 

(67)  Energy poverty is a multi-dimensional concept. The indicator 
used focuses on an outcome of energy poverty. Further 
indicators are available at the Energy Poverty Advisory Hub. 

(68)  Products defined according to the European Classification of 

Individual Consumption according to Purpose (ECOICOP):P045. 

(69)  EMPL-JRC GD-AMEDI/AMEDI+ ; see details in the related 

technical brief. 

(70)  CP0722; cf. footnote (21). 

prices.  Denmark's  recovery  and  resilience  plan 
(RRP)  allocated  EUR  923  million  towards  green 
measures by improving energy efficiency in private 
and  public  buildings  through  renovation  and  by 
supporting energy efficiency in small and medium-
sized firms. 

Graph A8.2: Distributional impacts of energy prices 
due to rising energy expenditure (2021-2023) 

Mean change of energy expenditure as a percentage (%) of 
total expenditure per income decile (D) due to observed price 
changes (August 2021 – January 2023 relative to the 18 
months prior), excl. policy support and behavioural responses. 
Source: EMPL-JRC GD-AMEDI/AMEDI+ projects, based on 
Household Budget Survey 2015 and Eurostat inflation data 
for CP0451 and CP0452. 

(49%  vs  54%).  As 

Access to public transport displays an urban-
rural divide. Citizens perceive public transport to 
be relatively available (54% vs 55% in the EU) and 
of  good  quality  (60%,  same  as  EU  average), 
less  affordable  than  the  EU 
though  slightly 
these 
average 
perceptions, rural areas in Denmark perform worse 
than urban areas and lie below the EU average for 
rural  areas (71).  The  average  carbon  footprint  of 
the top  10% of emitters among the population in 
Denmark  is  about  4.7  times  higher  than  that  of 
the bottom 50% (see Graph A8.1), i.e. slightly less 
pronounced than the EU average (5.0 times).  

regards 

(71)  35% vs 46% in EU for availability, 35% vs 48% in EU for 
affordability, 44% vs 56% in EU for quality. Special 
Eurobarometer 527. 

45 

0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%ElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasElectricityGasD1D2D3D4D5D6D7D8D9D10DK GasDK ElectricityEU GasEU ElectricityIndicatorDescriptionDK 2015DK LatestEU LatestGHG per workerGreenhouse gas emissions per worker - CO2 equivalent tonnes27.521.5 (2021)13.7 (2021)Employment EIIEmployment share in energy-intensive industries, including mining and quarrying (NACE B), chemicals (C20), minerals (C23), metals (C24), automotive (C29) - %1.31.3 (2020)3 (2020)Education & training EIIAdult participation in education and training (last 4 weeks) in energy-intensive industries - %24.625 (2022)10.4 (2022)Energy povertyShare of the total population living in a household unable to keep its home adequately warm - %3.62.8 (2021)6.9 (2021)Transport poverty (proxy)Estimated share of the AROP population that spends over 6% of expenditure on fuels for personal transport - %16.522.5 (2023)37.1 (2023)Carbon inequalityAverage emissions per capita of top 10% of emitters vs bottom 50% of emitters4.64.7 (2020)5 (2020) 
                                                 
   
                                                 
 
  
 
PRODUCTIVITY 
ANNEX 9: RESOURCE PRODUCTIVITY, EFFICIENCY AND CIRCULARITY 

Graph A9.1: Trend in material use 

Source: Eurostat 

Graph A9.2: Treatment of municipal waste 

The  circular  economy  transition  is  key  to 
climate  and 
delivering  on 
the  EU’s 
environmental  goals  and  provides 
large 
socio-economic  benefits. It  spurs  job  growth, 
innovation  and  competitiveness  and 
fosters 
resilience  and  resource  security.  The  circularity 
transition  of  industry,  the  built  environment  and 
agri-food  can  generate  significant  environmental 
improvements (see Annex 6), as they rank among 
the most resource-intensive systems. 

Denmark’s  circular  economy  transition  is 
insufficient  and  needs  accelerating  to  meet 
the  EU’s  circular  economy  goals.  The  EU’s 
2020 circular economy action plan (CEAP) aims at 
doubling  circular  material  use  by  2030  vs  2020.  
Denmark’s  circular  use  of  material  declined  from 
8% in 2016 to 7.8% in 2021, in both years falling 
below  the  EU  average.  The  CEAP  also  aims  to 
significantly  decrease  the  EU’s  material  footprint. 
In  2020,  Denmark’s  material  footprint  was  25.6 
tonnes/head,  well  above  the  2020  EU  average  of 
13.7  tonnes/head,  and  confirms the  upward  trend 
since  2016.  The  labour  market  benefits  of  the 
circular  transition  are  not  being  realised;  direct 
circular jobs have decreased since 2016.  

Denmark  adopted  a  national  action  plan  for 
circular  economy  running  up  to  2032 (72),  as 
already mentioned in the 2021 country report. The 
plan  focuses  on  three  areas  with  significant 
environmental  and  climate 
impacts:  biomass, 
construction and plastics. The 2022 annual  report 
on  progress (73) 
the  129 
initiatives in the plan, 27 have been completed, 88 
are on schedule and 14 are delayed.  

indicates 

that  of 

Denmark  had  milestones  in  2022  in  its 
recovery  and  resilience  plan  on  mission 
roadmaps  for  circular  economy:  plastic  and 
textile  waste  and  for  climate  and  environment-
friendly  agriculture  and  food  production,  and  in 
2023 has obtained support for a technical support 
instrument on industrial ecosystems. 

(72)  Danish Environment Ministry, 2021, Action plan for circular 

economy - National plan for prevention and waste 
management 2020-2032 

(73)  Danish Environment Ministry, June 2022 

46 

Source: Eurostat 

Denmark  has  made  efforts  to  improve  its 
recycling  performance,  but  this  is  not  yet 
reflected  in  the  data.  As  part  of  implementing 
the  action  plan  for  circular  economy,  laws  were 
introduced  in  2022  for:  (i)  a  framework  for  
commercial  waste  treatment  and  (ii)  new  sorting 
and  collection  requirements  for  household  and 
commercial waste in 10 waste fractions. However, 
Denmark still has the highest municipal waste per 
head in the EU with 786 kg/year/head in 2021 (EU 
average  530  kg/year/head  in  2021);  furthermore, 
there  is  no  national  target  for  overall  waste 
reduction.  Denmark  also  needs 
to  make 
substantial efforts to meet the EU 2025 recycling 
target  for  municipal  and  packaging  waste;  it  fell 

0.0100.0200.0300.0400.0500.0600.00.05.010.015.020.025.030.0201620172018201920202021kg/capitatonnes/capitaMaterial footprint Denmark (tonnes/capita)Material footprint EU-27 (tonnes/capita)Trade in recyclable raw materials Denmark (imports extra EU, kg/capita)Trade in recyclable raw materials EU-27 (imports extra EU, kg/capita)830820814844814786-1000100200300400500600700800900201620172018201920202021Kg per capita Difference waste generated/treatmentLandfill/disposalTotal incineration (including energy recovery)Composting and digestionMaterial recyclingEU-27 
 
 
                                                 
            
 
        
 
trends  show  Denmark 

below the EU average of 48.5% in 2021. Denmark 
also relies on waste incineration, with over 53% of 
its  municipal  waste  being  incinerated  in  2020 
compared to the EU average of around 26% (2019 
average).  These 
is 
challenged  to  meet  its  own  set  target  of  a  30% 
reduction  in  incineration  capacity  by  2030  vs 
2020.  As  a  part  of  the  Climate  Plan,  the  Danish 
government  has  in  2023  proposed  a  law  that 
implies  greater  competition  in  the  Danish  waste 
incineration  sector.  The  law  is  expected  to  be 
presented in parliament in the 2nd quarter of 2023. 
The  estimate  is  that  the  law,  if  introduced,  will 
decrease  national  waste  incineration  with  0.6 
million tonnes in 2030.  

in  Denmark 

industrial  system 

is 
The 
relatively  static.  The  economy,  particularly 
industry,  is  less  efficient  at  using  materials  than 
the  EU  average,  with  a  resource  productivity  of 
1.7 PPS per kg in 2021 vs 2.3 for the EU (see also 
Annex  5).  Thus,  there  is  a  missed  opportunity  to 
boost  repair,  reuse  and the  use  of  secondary  raw 
materials.  Denmark’s  consumption  footprint  and 
material  input  dependency  are  well  above  the  EU 
its  competitive 
average,  which  can  threaten 
sustainability. 
environmental 
the 
sustainability  of  SMEs,  Denmark  is  performing 
worse than the EU average. The mandatory use of 
ecolabels  and  the  introduction  of  total  cost  of 
ownership  (TCO)  in  public  procurement  are  set  to 
take  place  in  2023;  Denmark  is  a  frontrunner  on 

Regarding 

green public procurement (with a 2020 strategy). 

The  built  environment  system  provides  an 
opportunity  to  increase  resource  efficiency. 
The  recovery  rate  of  construction  and  demolition 
waste has increased since 2016 and is above the 
EU average (97% vs 89%). Denmark has rules on 
selective  demolition,  imposed  limits  for  embodied 
GHG in buildings of 12 kg CO2 eq/m2/year starting 
in  2023  inside  its  2021  National  Strategy  for 
Sustainable  Construction,  and  uses  Building 
Informatic Modelling.  

The  agri-food  system  has  yet  to  design  out 
food waste. The food waste in Denmark in 2020 
at  221  kg  per  head  was  well  above  the  EU 
average;  reduction  targets  for  food  waste  still 
need  to  be  met  and  a  sustainable  food  labelling 
framework 
the  other  hand, 
Denmark’s  composting  and  anaerobic  digestion 
per head is better than the EU average.  

introduced.  On 

There remains a financing gap in the circular 
economy, 
including  waste  management 
requiring additional investments. The financing 
gap  was  estimated  at  EUR  601  million  per  year 
between  2014  and  2020.  Over  this  period, 
investment  needs  were  estimated  to  be  at  least 
investment 
EUR  1.2  billion  per  year,  while 
baselines were EUR 572 million per year (Annex 6). 

Table A9.1: Overall and systemic indicators on circularity 

(1) Persons employed in the circular economy only tracks direct jobs in selected sub-sectors of NACE codes E, C, G and S; (2) the 
circular material use rate measures the share of material recovered and fed back into the economy in overall material use, 
including composting and digestion; (3) the recovery rate of construction and demolition waste includes waste which is prepared 
for reuse, recycled or subject to material recovery, including through backfilling operations; (4) soil sealing: 2016 column refers to 
2015 data; (5) food waste includes primary production, processing and manufacturing, retail and distribution, restaurants and 
food services, and households.  N.B. Denmark informed the Commission 19/01/2023, the 2021 recycling rate reported figure was 
not accurate and an update would follow from Denmark. Sources: Eurostat, European Environment Agency 

47 

AREA201620172018201920202021EU-27 Latest year EU-27Overall state of the circular economyMaterial footprint (tonnes/capita)22.723.423.024.225.6-13.72020YoY growth in persons employed in the circular economy (%)1-1.40.02.2-2.9--2.92019Water exploitation index plus (WEI+) (%)6.15.54.42.7--3.62019IndustryResource productivity (purchasing power standard (PPS) per kilogram)1.51.61.61.61.71.72.32021Circular material use rate (%)28.07.98.17.67.57.811.72021Recycling rate (% of municipal waste)48.347.649.951.545.034.349.62021Built environmentRecovery rate from construction and demolition waste (%)390.0-97.0-97.0-89.02020Soil sealing index (base year = 2006)4103.3-107.7---108.32018Agri-foodFood waste (kg per capita)5----221.0-131.02020Composting and digestion (kg per capita)153.0154.0143.0152.0158.0178.0100.02021 
 
            
 
ANNEX 10: DIGITAL TRANSFORMATION 

transformation  by  2030, 

Digital  transformation  is  key  to  ensuring  a 
resilient and competitive economy. In line with 
the  Digital  Decade  Policy  Programme,  and  in 
particular  with  the  targets  in  that  Programme  for 
digital 
this  Annex 
describes Denmark’s performance on digital skills, 
digital 
the 
digitalisation  of  businesses  and  public  services. 
Where relevant, it makes reference to progress on 
implementing  the  Recovery  and  Resilience  Plan 
(RRP).  Denmark  allocates  25%  of  its  total  RRP 
budget to digital (EUR 0.4 billion) (74). 

infrastructure/connectivity 

and 

The  Digital  Decade  Policy  Programme  sets 
out a pathway for Europe’s successful digital 
transformation  by  2030.  The  Programme 
provides  a  framework  for  assessing  the  EU’s  and 
Member States’ digital transformation, notably via 
the  Digital  Economy  and  Society  Index  (DESI).  It 
also  provides  a  way  for  the  EU  and  its  Member 
States  to  work  together,  including  via  multi-
country  projects,  to  accelerate  progress  towards 
the  Digital  Decade  digital  targets  and  general 
objectives (75).  More  generally,  several  aspects  of 
digital  transformation  are  particularly  relevant  in 
the current context. In 2023, the European Year of 
Skills, building the appropriate skillset to make full 
use of the opportunities that digital transformation 
offers  is  a  priority.  A  digitally  skilled  population 
increases the development and adoption of digital 
technologies  and  leads  to  productivity  gains (76). 
Digital  technologies,  infrastructure  and  tools  all 
play  a  role  in  the  fundamental  transformation 
needed to adapt the energy system to the current 
structural challenges (77). 

The shortage of ICT specialists is a persistent 
challenge  for  Denmark  in  relation  to  digital 
skills.  The  country  scores  well  above  the  EU 
average in basic and above basic digital skills and 

(74)  The share of financial allocations that contribute to digital 
objectives has been calculated using Annex VII of the RRF 
Regulation. 

(75)  The Digital Decade targets as measured by DESI indicators 
and complementary data sources are integrated to the 
extent currently available and/or considered particularly 
relevant in the MS-specific context.  

(76)  See for example OECD (2019): OECD Economic Outlook, 

Digitalisation and productivity: A story of complementarities, 
OECD Economic Outlook, Volume 2019 Issue 1 | OECD 
iLibrary (oecd-ilibrary.org). 

(77)  The need and possible actions for a digitalisation of the 
energy system are laid out in the Communication 
‘Digitalisation the energy system – EU action plan’ 
(COM(2022)552. 

the  percentage  of  ICT  specialists  is  only  slightly 
above  the  EU  average  and  Danish  enterprises 
report difficulties in hiring ICT specialists (78).   

Denmark  remains  a  leader when  it  comes  to 
digital  infrastructure/connectivity  ensuring 
wide  coverage  of  fast  broadband  internet. 
Denmark  scores  significantly  above 
the  EU 
average  in  terms  of  very  high  capacity  network 
(VHCN),  fibre  to  the  premises  and  5G  coverage 
(overall and on 3.4-3.8 GHz spectrum band).  

embrace 

companies 

digital 
Danish 
technologies. 89% of SMEs have at least a basic 
level  of  digital  intensity,  which  is  20  percentage 
points higher than the EU average. Twice as many 
companies use big data and cloud technologies as 
the EU average. Danish enterprises remain the EU 
leader in using artificial intelligence.  

Denmark  is  one  of  the  leading  countries  in 
the EU in terms of ensuring wide availability 
of  digital  public  services.  The  country  scores 
above  EU  average  for  digital  public  services  for 
both  citizens  and  businesses.  Denmark  has  two 
eID  schemes  notified  under  the  eIDAS  regulation 
and  scores  well  above  the  EU  average  regarding 
access to electronic health records.  

(78)  Eurostat : Eurostat – European Union Survey on ICT Usage 

and eCommerce in Enterprises.  

48 

 
 
                                                 
                                                 
 
Table A10.1: Key Digital Decade targets monitored by DESI indicators 

(1) The 20 million target represents about 10% of total employment. 
(2) The Fibre to the Premises coverage indicator is included separately as its evaluation will also be monitored separately and 
taken into consideration when interpreting VHCN coverage data in the Digital Decade. 
(3) At least 75 % of Union enterprises have taken up one or more of the following, in line with their business operations: (i) cloud 
computing services; (ii) big data; (iii) artificial intelligence.  

Source: Digital Economy and Society Index 

49 

EUDigital Decade target by 2030 DESI 2021DESI 2022DESI 2023DESI 2023(EU)Digital skillsAt least basic digital skillsNA69%69%54%80%% individuals2021202120212030ICT specialists (1)5.3%5.6%5.6%4.5%20 million% individuals in employment aged 15-7420202021202120212030Digital infrastructure/connectivityFixed Very High Capacity Network (VHCN) coverage94%95%96%73%100%% households20202021202220222030Fibre to the Premises (FTTP) coverage (2)70%74%78%56%-% households20202021202220222030Overall 5G coverage80%98%98%81%100%% populated areas202020212022202220305G coverage on the 3.4-3.8 GHz spectrum bandNANA75%41%-% populated areas202220222030Digitalisation of businessesSMEs with at least a basic level of digital intensityNANA89%69%90%% SMEs202220222030Big data (3)27%27%27%14%75%% enterprises20202020202020202030Cloud (3)NA62%62%34%75%% enterprises2021202120212030Artificial Intelligence (3)NA24%24%8%75%% enterprises2021202120212030Digitalisation of public servicesDigital public services for citizensNA838477100Score (0 to 100)2021202220222030Digital public services for businessesNA898984100Score (0 to 100)2021202220222030Access to e-health recordsNANA9571100Score (0 to 100)202320232030Denmark 
 
 
  
 
 
 
 
 
 
 
ANNEX 11: INNOVATION 

This  Annex  provides  a  general  overview  of  the 
and 
performance 
innovation  (R&I)  system,  which  is  essential  for 
delivering the twin green and digital transition. 

of  Denmark’s 

research 

system, 

Thanks  to  a  very  strong  R&D  system, 
Denmark 
‘innovation 
is  among  Europe’s 
leaders’.  According  to  the  2022  edition  of  the 
European  Innovation  Scoreboard (79),  Denmark  is 
an innovation leader with performance at 134.8% 
of  the  EU  average.  Denmark  has  a  very  strong 
significant 
R&D 
underpinned 
(R&D 
investment.  Denmark’s  R&D 
expenditure as a percentage of GDP), at 2.81% in 
2021,  is  significantly  above  the  EU  average  and 
delivers  excellent  scientific,  technological  and 
innovation  outputs.  In  particular,  its  solid  public 
science  base 
is  a  key  asset  and  Denmark 
continues to rank high in the EU  in terms of both 
public R&D intensity (public expenditure on R&D as 
a  percentage  of  GDP)  and  the  share  of  scientific 
publications  that  are  highly-cited,  an  indicator  of 
scientific excellence. 

by 
intensity 

Denmark’s  Recovery  and  Resilience  Plan 
(RRP)  enables  it  to  further  mobilise  the 
strengths  of  its  R&D  system  to  accelerate 
the  twin  transitions.  The  Danish  RRP  has  a 
strong  R&D  focus,  with  more  than  17%  of  the 
total spending earmarked for R&D projects. In the 
plan, green R&I investments account for 56.2% of 
overall  R&I  investment,  while  19.4%  of  total  R&I 
investment is  directed  towards  digital-related  R&I 
areas. A key measure aimed at mobilising R&I for 
the  twin  transition  is  the  setting-up  of  mission-
based  R&D  partnerships,  which  will  focus  on 
solutions  for  achieving  Denmark’s  ambitious 
climate  goals.  This  will  enable  Denmark  to 
mobilise  its  existing  strength  in  green  innovation, 
as  reflected  in  the  share  of  environment-related 
patents  in  total  patent  applications  –  at  26%, 
double the EU average. 

to  Denmark’s 

The decline in business R&D intensity is a key 
challenge 
as 
innovation  leader.  Since  2016,  business  R&D 
intensity  has  been  on  a  decreasing  trend  (from 
2.01%  of  GDP  in  2016  to  1.75%  in  2021).  As 

position 

(79)  2022 European Innovation Scoreboard, Country profile: 

Denmark ec_rtd_eis-country-profile-dk.pdf (europa.eu). The 
EIS provides a comparative analysis of innovation 
performance in the EU countries, including the relative 
strengths and weaknesses of their national innovation 
systems (also compared to the EU average). 

noted  in  the  Horizon  Policy  Support  Facility  (PSF) 
review  of  the  Danish  R&I system (80),  strengths in 
science  could  be  leveraged  more  by  attracting 
foreign  companies  to  tap  into  existing  knowledge 
pools  through  R&D  investments  in  Denmark.  This 
is currently happening only to a limited degree and 
could allow Denmark to take full advantage of the 
globalisation of R&D. 

Graph A11.1: Business enterprise expenditure on 
R&D (BERD) as % of GDP 

Source: Eurostat 2022 

system 

pinpointed 

Addressing  the  growing  productivity  gap 
between large and small companies requires 
broadening  the  innovation  base.  The  growing 
large  and  small 
productivity  gaps  between 
companies suggest weaknesses in the diffusion of 
technological  advances.  The  PSF  review  of  the 
Danish  R&I 
the  high 
concentration  of  R&D  investment  in  a  small 
number  of  large  companies  and  the  need  to 
broaden  the  innovation  base  and  involve  more 
companies in R&D activities to promote innovation 
diffusion (81).  The  Danish  Business  Development 
Board  can  help  here,  by  strengthening  small  and 
medium-sized  enterprises’  (SMEs)  motivation  and 
capacity  for  innovation.  As  indicated  in  the  smart 
its 
specialisation  strategy 
activities have been focused on supporting greater 
insight  into  market  trends,  innovative  processes 
and  the  capacity  to  develop  and  implement 
innovative  products  and  processes.  Moreover,  in 
order  to  boost  business  R&D  investment,  the 

for  Denmark (82), 

(80)  Peer review of Danish R&I system, Horizon 2020 Policy 
Support Facility, 2019 (p. 55) PSF Denmark_Final report 
(europa.eu). 

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

Support Facility, 2019 (pp. 30-33, p. 54) PSF Denmark Final 
report (europa.eu). 

(82)  Business Development in Denmark 2020-23, Danish 

Business Development Board (in Danish) Erhvervsfremme i 
Danmark 2020-2023 (erhvervsfremmebestyrelsen.dk). 

50 

11.21.41.61.822.220102015201620172018201920202021EUDK 
 
                                                 
   
                                                 
 
Danish RRP contains a temporary increase in R&D 
tax deductibility for all companies. 

Table A11.1: Key innovation indicators 

(1) EU average for the latest available year or the year with the highest number of country data. 
Source: Eurostat, OECD, DG JRC, Science-Metrix (Scopus database and EPO’s Patent Statistical database), Invest Europe 

51 

R&D intensity (GERD as % of GDP)2,923,052,942,972,812,26Public expenditure on R&D as % of GDP0,951,111,091,131,050,76Business enterprise expenditure on R&D (BERD) as % of GDP1,961,941,841,831,751,49Scientific publications of the country within the top 10% most cited publications worldwide as % of total publications of the country 14,714,213,7::9,8Patent Cooperation Treaty patent applications per billion GDP (in PPS)6,36,36,2::3,3Public-private scientific co-publications as % of total publications12,211,912,612,312,57,1Public expenditure on R&D financed by business enterprise (national) as % of GDP0,0280,0270,022::0,054New graduates in science & engineering per thousand pop. aged 25-3415,817,119,618,9:16Total public sector support for BERD as % of GDP0,070,0890,093::0,194R&D tax incentives: foregone revenues as % of GDP0,0030,020,031::0,1Share of environment-related patents in total patent applications filed under the Patent Cooperation Treaty (%)23,22126::13,3Venture capital (market statistics) as % of GDP0,0450,0280,080,0940,1430,074Employment in fast-growing enterprises in 50% most innovative sectors6,54,55,7::5,5EU average (1)Finance for innovation and economic renewalKey indicators Quality of the R&I systemAcademia-business cooperationHuman capital and skills availabilityPublic support for business enterprise expenditure on R&D (BERD)Green innovation 2021Denmark2010201520192020 
 
  
 
ANNEX 12: INDUSTRY AND SINGLE MARKET 

communication  services  have  had  a  particularly 
high  contribution  to  productivity  growth  in  the 
tradables  sector  (see  Graph  A12.2).  Denmark  is  a 
frontrunner  in  clean  technology  and  digitalisation, 
but  SMEs  are  facing  specific  challenges. (85)  In 
particular,  many  SMEs  have  difficulties  finding 
qualified  staff,  which  is  a  major  obstacle  for 
investment  and  affects  the  green  and  digital 
transition. Skills shortages affect nearly all sectors, 
in  particular  the  construction  sector,  and  firms 
increasingly  have 
refuse  new  orders  or 
postpone  investments  due  to  the  lack  of  staff. 
While  innovation  levels  remain  high (86),  business 
R&D intensity has been on a decreasing trend and 
is  increasingly  concentrated  in  large  companies 
and few sectors, whereas SMEs’ innovation activity 
is modest (see also Annex 11). 

to 

Graph A12.2: Labour productivity by sector 

Productivity in Denmark is among the highest 
in  the  EU,  but  the  gap  between  large  and 
small  firms  is  growing.  At  142%  of  the  EU 
average in 2022, labour productivity (GDP per hour 
worked)  is  comparatively high.  Hourly  productivity 
growth slowed over a longer period but had picked 
up  in  the  years  leading  up  to  the  pandemic, 
especially in industry. A significant part of this can 
be  attributed  to  higher  total  factor  productivity 
(TFP)  growth,  especially  within  larger  and  more 
internationalised  firms (83)  (see  also  Annex  11). 
TFP remains ahead of its peers and also above the 
euro area average (see Graph A12.1). Denmark  is 
an  innovation  leader  in  the  European  Innovation 
Scoreboard  and  also  performs  well  on  indicators 
measuring human capital, absorptive capacity and 
technology  diffusion.  Productivity  was  strongly 
affected  by  the  COVID-19  pandemic,  causing 
significant  fluctuations  in  2020  and  2021.  In 
2022,  the  soaring  costs  for  energy  and  other 
inputs  caused  further  disruptions,  leading  to  a 
decline  in  productivity.  However,  productivity  is 
expected  to  recover  in  2023-2024  and  to  grow 
again above the euro area average. (84)  

Graph A12.1: Total factor productivity 

Source: European Commission. 

The soaring costs for energy and other inputs 
weighed considerably on business sentiment. 
Corporate  investment  had  held  up  well  in  2021 
and  represented  5.2%  of  Denmark’s  GDP,  well 
above the EU average of 3.2%. However, towards 
the  end  of  2022,  business  sentiment  dropped  to 
its  lowest  level  in  over  two  years  due  to  the 
increased  geopolitical  uncertainty  and  soaring 

(85)  SME Performance Review 2021/2022 and country fact sheet 

for Denmark, 20.6.2022, https://single-market-
economy.ec.europa.eu/smes/sme-strategy/sme-
performance-review_en  

(86)  EIBIS 2022, EIB Investment Survey 2022 - EU overview 
In 2021, innovation levels were highest among firms in 
Finland (52%), followed by those in Ireland and Denmark 
(50% in both countries).  

Source: European Commission. 

Denmark has a strong manufacturing sector, 
but  skills  shortages  and  soaring  costs  are 
dampening  productivity  growth.  Denmark  has 
a  strong  manufacturing  sector,  with  productivity 
considerably  above  the  EU  average  and  also 
ahead  of  some  of  the  other  Nordic  countries.  
information  and 
Within 

the  services  sector, 

(83)  Report from the Danish Economic Council, which constitutes 
the National Productivity Board of Denmark, “Productivity 
2022”, https://dors.dk/vismandsrapporter/produktivitet-2022  

(84)  European Commission, Autumn 2022 Economic Forecasts. 

52 

90951001051101150607080910111213141516171819202122(2010=100)DKDESENLEU27608010012014016018020022003050709111315171921Market services (G_N)Manufacturing (C)Construction (F)Tradable (A_E, G_J)Non tradable (F, K_U) 
 
      
                                                 
      
                                                 
 
 
staff  (86%) (90).  Indicators  on  labour  shortages  in 
industry are considerably above the EU average.   

Graph A12.3: Business environment and 
productivity drivers 

in 

employment. (88) 

costs, (87) 
indicating  stark  pessimism  among 
Danish  businesses,  which  is  affecting  investment. 
Manufacturing  output  and  new  orders  also 
dropped, and business started  to expect a decline 
also 
The  number  of 
bankruptcies  increased  during  the  last  months  in 
2022,  particularly 
in  construction  and  retail 
industries.  The  Danish  government  has  adopted 
several  measures 
to  help  households  and 
businesses  through  the  crisis,  including  the  latest 
winter  aid  package  adopted  in  September,  and 
encouraged  citizens  and  firms  to  further  reduce 
energy consumption (see also Annex 7). 

Supply  shortages  have  started  to  fall,  and 
firms  are  adapting  their  supply  chains. 
Following  the  pandemic,  Danish  manufacturing 
firms  have  also  been  grappling  with  supply 
problems  for  key  raw  materials  and  components, 
but  the  situation  has  since  started  to  improve.  In 
the  last  quarter  of  2022,  50%  of  firms  reported 
shortages  of  important  materials  and  primary 
products,  which  was  still  above  the  EU  average 
(32%). Regarding critical raw materials, Denmark’s 
import  concentration  index  is  in  line  with  the  EU 
average.  Dependencies  exist  for  a  broad  range  of 
raw  materials  and  components,  including  critical 
raw materials necessary for the green and digital 
transition.  Danish  industry  would  benefit  from 
further  strengthening  the  resilience  of  strategic 
supply chains.   

Denmark  provides  a  stable  and  favourable 
business  environment,  but  skills  shortages 
are a major obstacle for investment. Denmark 
IMD  World  Competitiveness 
leads  the  2022 
Ranking (89),  overtaking  Switzerland,  in  particular 
due  to  its  good  performance  in  digitalisation  but 
also due to a clear focus on sustainability and an 
agile  and  innovative  business  sector.  Denmark 
performs well on digitalisation, including in respect 
to  connectivity,  and  firms  benefit  from  easy 
access  to  digital  public  services  (see  also  Annex 
10).  The  biggest  long-term  barrier  to  investment 
cited  by  Danish  firms  is  the  availability  of  skilled 

(87)  In November 2022, the business sentiment index stood at 
minus 14.0, the lowest in over two years. Sentiment 
indicators for business - Statistics Denmark (dst.dk)  

(88)  Danish Chamber of Commerce, “Comment: Business now 

expects declining employment”, 29.11.2022 
https://www.danskerhverv.dk/  

Source: 1) % of GDP, 2021 Eurostat; 
2) composite indicator, 2021 European Investment Fund 
access to finance index;  
3) average payment delay in number of days, 2022 Intrum;  
4) % of firms in manufacturing facing constraints, 2022 
European Commission business consumer survey; 
5) proportion of contracts awarded with a single bidder, 2022 
Single Market Scoreboard. 

While  many  companies  are  created 
in 
Denmark, start-ups and small and innovative 
companies  struggle  to  grow  and  scale  up. 
Denmark  has  a  favourable  business  environment 
for  firms  and  entrepreneurs  and  is  among  the 
countries  with  the  highest  share  of  green  start-
ups. (91)  Denmark  has  been  the  birthplace  for  11 
new  “unicorns”  since  2010,  but  many  have  later 
moved  their  headquarters.  Access  to  capital  and 
challenges  in  recruiting  qualified  staff  are  crucial 
factors for start-ups and often determine whether 
firms  stay  in  Denmark  or  relocate  elsewhere. (92) 
Equity  financing  is  less  pronounced  than  in  some 
of  the  other  Nordic  countries  but  has  further 
improved  and  is  better  than  the  EU  average  (see 
also  Annex  11).  Late  payments  can  be  a  problem 
for certain small companies and the rate of SMEs 

(90)  EIB Investment Survey 2022 

(91)  OECD 2022, The New Green Economy, Green growth and 

sustainable development - OECD 

(89)  IMD, World Competitiveness Rankings, 

https://www.imd.org/centers/world-competitiveness-
center/rankings/world-competitiveness/ 

(92)  Danish Chamber of Commerce, new analysis about tech 

start-ups in Denmark: ‘Denmark: A Unicorn Factory – but why 
do they leave?’ 14.9.2022 https://www.danskerhverv.dk/  

53 

1) Businessinvestments2) EIF access tofinance index3) Payment gap- G2B3) Payment gap- B2B4) Materialshortage4) Labourshortage5) Single bidsEuropean UnionDenmark 
                                                 
      
                                                 
whose  bank  loans’  applications  were  refused  or 
rejected is above the EU average.  

for 

improvement, 

Denmark  still  has  scope 
further 
in  enforcing  Single  Market 
improvement 
rules.  Denmark  is  closely  integrated  into  the 
Single Market. Its trade integration for both goods 
and services is above the EU average. Overall the 
country  performs  relatively  well  in  the  Single 
Market  Scoreboard, (93)  but  still  has  scope  for 
further 
in  respect  to 
ongoing infringement cases relevant for the Single 
Market,  e.  g.  on  transport,  environment  or  energy. 
For the third consecutive year, Denmark managed 
to decrease its number of pending cases. While its 
average  case  duration  increased  over  the  last 
years,  it  remains  below  the  EU  average. (94)  An 
ongoing project by the Single Market Enforcement 
Taskforce  (SMET)  aims  to  further  reduce  the 
length  of  planning  and  permitting  procedures  for 
renewable energy projects (see also Annex 7).  

including 

For 

real 

regulated 

professions, 

In 
regulatory 
restrictiveness  in  Denmark  is  lower  than  or 
in  line  with  the  EU  average,  except  for  real 
estate  agents. 
estate  agents, 
restrictiveness  is  above  the  EU  average (95).  The 
duration  of  mandatory  qualification  requirements 
for  real  estate  agents  could  be  reassessed. 
Moreover, lawyers in Denmark are subject to legal 
rules  and 
form 
multidisciplinary  restrictions,  which  could  affect 
the potential of this sector to innovate and roll out 
digital solutions and new business models. 

incompatibility 

requirements, 

(93)  Single Market Scoreboard, https://single-market-

scoreboard.ec.europa.eu/performance-overview_en 

(94)  European Commission, Single Market Scoreboard, Country 

data: Denmark, https://single-market-
scoreboard.ec.europa.eu/countries/denmark_en 

(95)  European Commission, Communication on updating the 
reform recommendations for regulation in professional 
services, COM(2021)385.  

54 

 
 
 
                                                 
 
 
Table A12.1: Industry and the Single Market 

(*) Last available year  
Source: (1) AMECO, (2) Eurostat: NAMA_10_LP_A21, (3) ECFIN BCS, (4) Eurostat: jvs_a_rate_r2, (5) COMEXT, (6) Eurostat: 
nrg_inf_epc, (7) Eurostat: BOP_C6_A, (8) OECD, (9) Single Market Scoreboard, (10) EIB survey, (11) Eurostat: sts_rb_a, (12) Intrum, 
(13) SAFE Survey, (14) EIF SME Access to Finance Index. 

55 

POLICY AREAINDICATOR NAME20182019202020212022EU27 average (*)Net private investment, level of private capital stock, net of depreciation, % GDP (1)4.53.644.96.73.7Net public investment, level of public capital stock, net of depreciation, % GDP (1)0.80.610.90.90.4Real labour productivity per person in industry (% yoy)(2)0.50.9-1.24.311.91.4Cost competitive-nessNominal unit labour cost in industry (% yoy)(2)0.41.73.7-1.2-7.62.9Material shortage (industry), firms facing constraints, % (3)847285047Labour shortage using survey data (industry), firms facing constraints, % (3)1184243528Vacancy rate (business economy)(4)1.921.82.93.43.1Concentration in selected raw materials, Import concentration index based on a basket of critical raw materials (5)0.160.150.160.160.160.18Installed renewables electricity capacity, % of total electricity produced (6)45.945.946.549.4n.a.50.9Single Market integrationEU trade integration, % (7)26.927.426.128.431.645.8RestrictionsEEA Services Trade Restrictiveness Index (8)0.040.030.040.040.040.05Public procurement Single bids, % of total contractors (9)111315182329Investment obstaclesImpact of regulation on long-term investment, % of firms reporting business regulation as major obstacle (10)7.85.95.85.36.229.6Bankruptcies, Index (2015=100)(11)187.4228.2152.3236221.886.8Business registrations, Index (2015=100) (11)142.8141.7123.3119.4100.9121.2Payment gap - corporates B2B, difference in days between offered and actual payment (12)3320121113Payment gap - public sector, difference in days between offered and actual payment (12)2525101415Share of SMEs experiencing late payments in past 6 months, % (13)n.a.38.724.935.139.343EIF Access to finance index - Loan, Composite: SME external financing over last 6 months, index values between 0 and 1 (14)0.220.180.20.23n.a.0.46EIF Access to finance index - Equity, Composite: VC/GDP, IPO/GDP, SMEs using equity, index values between 0 and 1 (14)0.470.230.290.46n.a.0.23BUSINESS ENVIRONMENT - SMEsBusiness demographyLate paymentsAccess to financeEconomic StructureRESILIENCEShortagesStrategic dependenciesSINGLE MARKET 
 
 
 
      
 
ANNEX 13: PUBLIC ADMINISTRATION 

This  Annex  outlines  the  performance  of 
Denmark’s  public  administration,  which  is 
essential for providing services  and carrying 
out  reforms.  The  Danish  public  administration 
has consistently been one of the most effective in 
the  EU  and  has  seen  its  position  further  improve, 
as  reflected  in  the  government  effectiveness 
indicator  in  2021 (96).  Denmark  typically  scores 
above  the  EU  average  on  most  indicators  related 
to  public  administration,  but  scores  below  the  EU 
the  field  of  policymaking,  and 
average 
in 
specifically 
impact 
assessments  and  stakeholder  consultation  (Graph 
A13.2).  Denmark’s  recovery  and  resilience  plan 
aims  to strengthen 
institutional  resilience  and 
prepare  the  public  administration  for  future 
challenges by adopting digital technologies. 

in  the  use  of  regulatory 

Denmark  has  a  relatively  young  and  skilled 
civil  service.  The  ratio  of  those  aged  25-49 
compared  to  50–64  year-olds  is  above  the  EU 
average.  The  share  of  civil  servants  with  higher 
education is well above the EU  average, as is the 
share of those in adult learning. However, despite 
improvements in recent years, the gender balance 
in  senior  positions  in  the  public  administration 
remains relatively poor by EU-27 standards (Graph 
A13.1).  

Denmark is the EU’s best performer in terms 
of  digital  public  administration.  98%  of  all 
services  are  offered  online.  The  share  of  e-
government users has remained above 92% since 
2017 (EU: 65%) (97). Most people (81%) login using 
their  eID  (67%  for  the  EU).  Denmark  outperforms 
the EU average in the provision of digital services 
for all life events, apart from a few areas such as 
the  transparency  of  services  for  regular  business 
operations or starting a cross-border small claims 
procedure (in the field of justice). 

Denmark’s  performance  on  evidence-based 
policymaking is around the EU average. There 
are gaps in how it carries out  ex ante evaluations 
and stakeholder consultations, which could reduce 
the  quality  of  legislation  in  the  future  (Graph 
A13.2). Denmark however, performs above the EU 
average  when  it  comes  to  ex  post  evaluation  of 
both  primary  and  secondary  legislation,  despite  a 
drop  in  its  performance  since  2017.  Of  the  four 

iREG 

dimensions  of 
indicators, 
the  OECD 
Denmark’s performance compared to the EU-27 is 
weakest  in  the  category  of  oversight  and  quality 
control,  followed  by  the  transparency  dimension 
(Graph A13.2).  

Graph A13.1: Denmark. Public administration. 
Share of women and men in senior positions. 

(1) 2022 data 
Source: European Institute for Gender Equality  

The  justice  system  works  efficiently  overall. 
The  clearance  rate  for  civil  and  commercial 
litigation  fell  to  97.6%  in  2021  from  111.1%  in 
2020.  The  overall  quality  of  the  justice  system  is 
good.  However,  there  are  some  challenges  in 
terms  of  human  and  financial  resources  of  the 
justice system, which have increasingly negatively 
impacted the length of proceedings, notably in civil 
and  criminal  cases.  The  level  of  digitalisation  is 
advanced.  Despite  a  few  gaps,  digital  tools  are 
widely used in courts, including an electronic case 
management  system,  distance  communication 
remote  working 
technology  and  a  secure 
environment 
court  staff.  No  systemic 
deficiencies  in  judicial  independence  have  been 
reported (98). 

for 

(96)  Worldwide Governance Indicators, 2022. In 2021, Denmark 

scored 2.004 on a scale between -2.5 and +2.5. 

(97)  E-government benchmark report, 2023, forthcoming. 

(98)  For a more detailed analysis of the performance of the 
justice system in Denmark, see the 2023 EU Justice 
Scoreboard (forthcoming) and the country chapter for 
Denmark in the 2023 Rule of Law Report (forthcoming). 

56 

0102030405060708090100DKEU-27MenWomen 
 
                                                 
     
                                                 
 
Table A13.1: Public administration indicators 

(1) High values denote a good performance, except for indicator # 6. (2) 2022 value. If not available, the 2021 value is shown. 
(3) 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. (4) Defined as the absolute value of the difference between the 
percentage of men and women in senior civil service positions. 
Flags: (b) break in time series; (d) definition differs; (u) low reliability. 
Source: ICT use survey, Eurostat (# 1); E-government benchmark report (# 2); Open data maturity report (# 3); Labour Force 
Survey, Eurostat (# 4, 5, 7), European Institute for Gender Equality (# 6); Fiscal Governance Database (# 8, 9); OECD Indicators of 
Regulatory Policy and Governance (# 10).  

Graph A13.2: a) Regulatory impact assessment and b) Stakeholder engagement 

Source: Indicators of Regulatory Policy and Governance Surveys 2017 and 2021 (http://oe.cd/ireg). 

57 

DK201720182019202020212022EU-27(2)191.793.594.191.893.2n/a64.82n/an/an/a85.484.385.172.93n/a0.40.81.00.90.90.8458.1 (b)59.361.662.364.7 (b)67.352.0533.3 (b)28.532.824.829.0 (b)32.916.9650.652.639.640.047.239.411.071.6 (b)1.71.82.01.8 (b)1.81.580.60.60.60.60.6n/a0.791.01.01.01.01.0n/a1.5101.61n/an/an/a1.61n/a1.7Medium term budgetary framework indexIndicator (1)E-government and open government dataShare of individuals who used the internet within the last year to interact with public authorities (%)E-government benchmark overall score (3) Open data and portal maturity indexEducational attainment level, adult learning, gender parity and ageingShare of public administration employees with tertiary education (levels 5-8, %)Participation rate of public administration employees in adult learning (%)Gender parity in senior civil service positions (4)Ratio of 25-49 to 50-64 year olds in NACE sector OPublic financial management Strength of fiscal rules indexEvidence-based policy makingRegulatory governance0.000.501.001.502.002.503.0000.511.522.53DK2017DK2021DK2017DK2021Primary lawsSecondary lawsb) Stakeholder engagement MethodologyOversightSystematic adoptionTransparencyEU-270.000.501.001.502.002.503.0000.511.522.53DK2017DK2021DK2017DK2021Primary lawsSecondary lawsa) Regulatory impact assessmentMethodologyOversightSystematic adoptionTransparencyEU-27 
 
 
   
 
      
FAIRNESS 
ANNEX 14: EMPLOYMENT, SKILLS AND SOCIAL POLICY CHALLENGES IN LIGHT OF 
THE EUROPEAN PILLAR OF SOCIAL RIGHTS  

The  European  Pillar  of  Social  Rights  is  the 
compass  for  upward  convergence  towards 
better  working  and  living  conditions  in  the 
EU. This Annex provides an overview of Denmark’s 
progress in implementing the Pillar’s 20 principles 
and EU headline and national targets for 2030 on 
employment, skills and poverty reduction. 

Table A14.1: Social Scoreboard for Denmark 

(1) Update of 27 April 2023. 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 2023. 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. 
Source: Eurostat. 

Despite  the  unstable  economic  environment, 
the Danish labour market is performing well, 
with  employment  and  unemployment  rates 
hitting  record  values.  The  employment  rate 
settled  at  80.1%  in  2022,  reaching  its  highest 
peak  since  2005,  higher  than  the  EU  average  of 
74.6%.  As  a  result,  Denmark  has  reached  its 
national  employment  rate  target  of  80.0%  by 

58 

2030.  Similarly,  the  unemployment  rate  hit  a 
record  low  of  4.5%  in  2022.  Also  the  long-term 
unemployment rate of 0.5% was the lowest in the 
EU, where the average was 2.4%.  

Denmark  managed  to  substantially  improve 
the  labour  market 
integration  of  young 
people  and  persons  with  disabilities,  while 
the  gender  employment  gap  remains  stable. 
The unemployment rate among young people aged 
15-29 was 8.6% in 2022, against the EU average 
of  11.3%.  After  rising  from  2006  (4.7%)  until 
2020  (10.2%),  the  share  of  young  people  not  in 
education, employment or training (NEET) reached 
pre-pandemic levels in 2020 (8.3%) and settled at 
7.9%  in  2022  (9.6%  in  2019).  The  disability 
employment  gap,  which  had  been  higher  than  16 
percentage points (pps) since 2014, was halved to 
7.9  pps  in  2021.  The  employment  gap  fell  for 
people  with  only  some  activity  limitations  (from 
11.5  pps  in  2019  to  5.2  pps  in  2021)  and  for 
people  with  severe  activity  limitations  (from  37.4 
pps in 2019 to 20.9 pps in 2021). Furthermore, the 
gender  employment  gap  has  been  stable  at 
around  7 pps  since  2011  and  stood  at  5.4  pps  in 
2022  (vs.  EU:  10.7  pps).  The  inactivity  trap  for 
second  earners  is  one  of  the  highest  in  the  EU, 
above 50%, and is a considerable disincentive for 
second earners to take up paid work. 

Labour  shortages  reached  unprecedented 
peaks  in  2022  and are still at  a particularly 
critical  level  in  the  service  sector.  After 
crossing the 40% threshold in Q2-2022, the share 
of  employers  who  identified  labour  shortages  as 
the main factor limiting production in the industrial 
sector  settled  at  21.2%  in  Q4-2022  (vs.  EU: 
25.9%),  up  from  6.4%  in  Q4-2019.  In  the  service 
sector,  this  figure  was  still  as  high  as  39.0%  in 
Q4-2022  (vs.  EU:  30.2%),  which  is  more  than 
double  of  what  it  was  in  2019  (16.2%  in  Q4-
2019).  The  job  vacancy  rate  in  the  business 
economy  stood  at  3.4%  in  Q3-2022  (vs.  EU:  
3.1%),  up  from  2.0%  in  Q3-2019.  Based  on  this 
the  most  affected  sectors  were 
indicator, 
administrative  and  support  service  activities 
(4.9%), accommodation and food service activities 
(4.2%),  and  electricity,  gas,  steam,  and  air-
conditioning  supply 
job 
vacancy rate was in the capital region (3.9%), and 
the  lowest  was  in  northern  (2.5%)  and  central 
Denmark  (2.9%).  Moreover,  small  businesses  with 

(4.2%).  The  highest 

1068.657.95.43.9380.14.50.5116.0717.31453.937.915.569.11.3Critical situationTo watchWeak but improvingGood but to monitorOn averageDynamic labour markets and fair working conditionsEmployment rate(% of population aged 20-64, 2022)Unemployment rate(% of active population aged 15-74, 2022)Long term unemployment(% of active population aged 15-74, 2022)GDHI per capita growth                                                              (2008=100, 2021)Social protection and inclusionAt risk of poverty or social exclusion rate                                            (% of total population, 2021)At risk of poverty or social exclusion rate for children                       (% of population aged 0-17, 2021)Impact of social transfers (other than pensions) on poverty reduction (% reduction of AROP, 2021)Disability employment gap(percentage points, 2021)Housing cost overburden(% of total population, 2021)Children aged less than 3 years in formal childcare(% of population under 3-years-old, 2021)Self-reported unmet need for medical care(% of population 16+, 2021)Better than averageBest performersPolicy areaHeadline indicatorEqual opportunities and access to the labour marketEarly leavers from education and training(% of population aged 18-24, 2022)Share of individuals who have basic or above basic overall digital skills (% of population aged 16-74, 2021)Youth NEET rate(% of population aged 15-29, 2022)Gender employment gap(percentage points, 2022)Income quintile ratio(S80/S20, 2021) 
 
 
 
  
 
 
low  work 

period,  real  GDHI  per  capita  in  the  EU  increased 
from 108.0 (2020) to 109.8 (2021). The share of 
people  at  risk  of  poverty  or  social  exclusion 
increased  from  16.8%  (2020)  to  17.3%  (2021). 
The  number  of  people  living  in  households  with 
terms 
in  absolute 
intensity 
very 
increased  from  414 400 
(2019)  to  429 300 
(2021).  The  pandemic  was  also  a  factor  for  this. 
Nonetheless, social transfers in 2021 managed to 
reduce  the  risk  of  poverty  by  53.9%  (EU:  37.1%). 
This  reverses  a  long-term  negative  trend  as  the 
impact  of  social  transfers  on  reducing  poverty 
constantly decreased from 2005 (60.5%) to 2019 
(47.3%). Minimum income adequacy and coverage 
are  both  excellent:  Denmark  is  one  of  the  few 
Member  States  where  adequacy  is  above  80%  of 
the  poverty  threshold  and  coverage  is  close  to 
100%  of  the  population  at  risk  of  poverty.  It  is 
also  the  only  Member  State,  apart  from  Belgium, 
where 
to 
unemployment  benefits  extends  to  2  years  or 
more.  The  ESF+  contains  measures  to  increase 
employment  for  people  excluded  from  the  labour 
market, and 6 400 people are expected to benefit. 
This  should  contribute  to  achieving  the  national 
target of 30 000 fewer people living in households 
with very low work intensity by 2030 (compared to 
2019). 

entitlement 

duration 

the 

of 

There  is  a  shortage  of affordable  housing  in 
some  areas,  especially 
in  bigger  cities, 
resulting  in  very  high  housing  costs.  In  2021, 
the  share  of  the  Danish  population  living  in 
households  where  housing  costs  represent  more 
than  40%  of  the  total  disposable  household 
income  was  15.5%,  up  from  14.1%  in  2020  (vs. 
EU:  8.3%).  The  housing  cost  overburden  rate  is 
extremely  high  for  single  people  (41.0%  vs.  9.8% 
for couples) and for tenants paying rent at market 
prices (30.3%, compared to 4.6% for homeowners 
paying  a  mortgage).  It  is  also  disproportionately 
high  for  people  living  in  cities  (21.9%,  against 
10.5%  in  rural  areas)  and  for  non-EU  citizens 
(21.9%  among  those  aged  18  and  over,  against 
17.1% 
former 
government  proposed  an  initiative  to  combat  the 
increases 
in  rent  for  some  private  housing 
contracts, legislated in fall 2022 which introduces 
a  2-year  ceiling  to  the  increases  in  rent  to  a 
maximum  of  4%  yearly  as  regards  private  rental 
contracts. 

for  Danish 

citizens). 

The 

nine  or  less  employees  (3.7%)  had  the  highest 
rate,  and  medium-sized  businesses  with  50-99 
employees (2.7%) had the lowest. 

(ESF+) 

More  efforts  are  needed  to  reduce  the 
number  of  early  leavers  from  education  and 
training  and  raise  the  level  of  digital  skills. 
The  share  of  people  aged  18-24  who  did  not 
complete  their  education  or  training  has  been 
broadly  stable  since  2000  and  stood  at  10.0%  in 
2022.  Meanwhile,  the  EU  average  has  been 
declining  since  2002  (from  16.9%  to  9.6%  in 
2022). The share of individuals who have basic or 
above basic overall digital skills has been declining 
since  2016  (78%)  and  reached  68.7%  in  2021. 
Although this is still above the EU average (54%), 
more  efforts  in  this  area  would  help  alleviate 
skilled labour shortages. The European Social Fund 
Plus 
includes  measures  to  raise  the 
workforce's  formal  education  level  and  to  upskill 
and  reskill  employed  and  unemployed  people. 
These measures will further contribute to reaching 
the national  target  of 60% of adults participating 
in  training  every  year  by  2030.  Despite  different 
governments  continued  focus  on  admission  and 
graduates  from  VET-programmes,  the  numbers 
remain low. For the two biggest VET-programmes, 
which  provide  labour  to  the  health  care  sector 
where there is also a shortage, the tendency is the 
same. The shortage is very likely to continue and a 
shortage  of  around  16,000  healthcare  assistants 
and  helpers  is  expected  in  2030 (99).  Besides 
providing 
labour  market  with  a  skilled 
workforce, VET has a significant role in supporting 
the  green  and  digital  transition.  The  already  well-
identifying 
established 
educational  needs  in  the  education  sector  also 
helps recognizing needs for new skills linked to the 
green  and  digital  transition  in  the  VET  sector.  It 
could further support VET providers' capacity in the 
development  and  adaptation  of  the  training  and 
education  to  reduce  systemic  delays,  particularly 
as regards the matching between  the educational 
system and the needs for new skills 

tripartite 

system 

the 

In 2021, social transfers managed to cushion 
the impact of a deteriorating social situation. 
real  gross  disposable  household 
Denmark’s 
income  (GDHI)  per  capita,  fell  from  117.2  (2020) 
to 116.1 (2021) (2008=100). While the pandemic 
was  an  important  factor,  the  government  took 
different measures to among other things help the 
citizens  and  vulnerable  families.  In  the  same 

(99)  Om bare 8 år kan vi mangle 16.000 SOSU’er (kl.dk) 

59 

 
                                                 
Table A14.2: Situation of Denmark on 2030 
employment, skills and poverty reduction targets 

(1) Adult Education Survey, adults in learning in the past 12 
months. 
(2) EU headline target set in terms of number of persons at 
risk of poverty or social exclusion (AROPE), reference year 
2019. 
(3) Denmark expresses its national target as a reduction in 
the number of persons living in households with very low work 
intensity (VLWI), reference year 2019. 
Source: Eurostat, DG EMPL. 

60 

IndicatorsLatest dataTrend            (2015-2021)National target by 2030EU target by 2030Employment (%)79.1         (2021)8078Adult learning1 (%)50.4      (2016)6060Poverty reduction2,3 (thousands) +15     (2021)  -30 -15,000 Adult Education Survey, adults in learning in the past 12 monthsEU headline target set in terms of number of persons at risk of poverty or social exclusion (AROPE), reference year 2019Denmark expresses its national target as a reduction in the number of persons living in households with very low work intensity (VLWI), reference year 2019 
 
     
 
 
 
ANNEX 15: EDUCATION AND TRAINING 

This  Annex  outlines  the  main  challenges  for 
Denmark’s  education  and  training  system  in  light 
of  the  EU-level  targets  and  other  contextual 
indicators  under  the  European  Education  Area 
strategic framework, based on the 2022 Education 
and Training Monitor. 

Denmark  faces  difficulties  in  attracting  and 
training  enough  teachers.  Teacher  shortages 
and a lack of fully trained teachers is a challenge. 
For  instance,  the  goal  of  the  2014  Folkeskole 
reform was that 95% of teachers should, by 2020, 
have  teaching  competencies  in  the  subjects  they 
teach. This has been postponed to 2025. Too few 
young  people  are  attracted  to  initial  teacher 
training  programmes,  and  many  drop  out  during 
training (100).  Continued  teacher  training  is  not 
compulsory  in  Denmark  and,  in  an  international 
comparison,  teachers  are  less  satisfied  with  their 
training opportunities (101). 

Denmark  has  a  high  participation  rate  in 
early  childhood  education  and  care  (ECEC). 
The share of children between 3 years and the age 
of  compulsory  education  in  ECEC  was  97.6%  in 
2020, above the 96% EU-level target and 3.7 pps 
above  the  EU  average.  The  government  is  taking 
measures to improve ECEC quality (102). 

In  Denmark,  while  equity  remains  high 
schools  differ  in  teaching  time  and  quality 
and  pupils  with  a  migrant  background 
achieve 
education 
significantly  worse 
outcomes.  Students  in  disadvantaged  schools 
have less access to class teaching time than their 
peers  in  advantaged  schools;  class  teaching  time 
also  differs  between 
public 
schools (103).  According  to  the  OECD  PISA  2018 
isolation  index (104),  Danish  young  people  with  a 
migrant  background  tend  to  attend  schools  in 
which  most  of  their  classmates  have  a  similar 
the  distribution  of 
background. 
comprehensively 
varies 
educated 
throughout  the  country,  with  educated  teachers 

private  and 

In  addition, 

teachers 

(100) European Commission/EACEA/Eurydice (2021), Teachers in 

Europe: Careers, Development and Well-being. 

(101) European Commission, Education and Training Monitor 2021. 

(102) Draft Finance Act for the financial year 2023 (fm.dk) 

(103) OECD (2022) Mending the Education Divide: Getting Strong 
Teachers to the Schools That Need Them Most, TALIS, OECD 
Publishing, Paris. 

(104) The isolation index measures whether students of a certain 

type are more concentrated in some schools.  

61 

favouring  cities  over 
rural  areas.  Educated 
teachers  are  also  more  likely  to  work  in  private 
than  in  public  schools.  These  differences  may 
in 
affect  education  outcomes.  Overall,  pupils 
Denmark  have,  on  average,  good  ability 
in 
reading  and  science.  However, 
mathematics, 
according  to  PISA  2018,  pupils  with  a  migrant 
background perform considerably worse in reading 
(-65  score  points)  than  native-born  pupils.  Even 
socio-economic 
after 
disadvantage, the gap stands at  -34 score points, 
about  twice  the  EU  average  (18.3).  The  share  of 
young  people  failing  to  reach  a  sufficient  level  in 
reading  among  foreign-born  pupils  is  also  very 
high,  38.3%,  against  only  13.3%  among  native-
born. 

account 

taking 

of 

Early school leaving is increasing in contrast 
to overall decreasing trends in the EU. At 10% 
in  2022,  the  rate  of  young  people 
leaving 
education  and  training  prematurely  remained 
above  the  9%  EU-level  target,  with  a  0.2  pps 
increase  compared  with  2021.  Since  2015,  the 
rate  has  increased  by  1.9  pps  in  Denmark  while 
the EU average decreased by 1.5 pps. 

Graph A15.1: Early leavers from education and 
training (18-24) in 2016 and 2022 (%) 

Source: Eurostat 

Denmark  is  one  of  the  frontrunners  on 
digitalisation in education, but more progress 
is needed in certain areas. In 2021, 80% of 16-
19-year-olds considered themselves to have basic 
or  above-basic  digital  skills,  11 pps  above  the  EU 
average.  Nevertheless, 
for 
improvement.  Danish  teachers  in  public  schools 
report higher needs for ICT training and those who 
need  more  intensive  training  tend  to  be  located 
more in rural areas than in cities (105). 

there  are  areas 

(105) OECD (2022) Mending the Education Divide: Getting Strong 
Teachers to the Schools That Need Them Most, TALIS, OECD 
Publishing, Paris. 

0%2%4%6%8%10%12%DenmarkEU20162022 
 
                                                 
  
                                                 
 
Table A15.1: EU-level targets and other contextual indicators under the European Education Area 
strategic framework 

Source: (1,3,4,5,7,8,9,10,11) = Eurostat; 2 = OECD (PISA); 6 = European Commission (Joint Research Centre). Notes: Data is not 
yet available for the remaining EU-level targets under the European Education Area strategic framework, covering 
underachievement in digital skills and participation of adults in learning. The equity indicator shows the gap in the share of 
underachievement in reading, mathematics and science (combined) among 15-year-olds between the lowest and highest quarters 
of socio-economic status. 

Since 2015, Denmark has markedly improved 
its share of science, technology, engineering, 
and  mathematics  (STEM)  graduates  among 
all  graduates,  but  it  still  lags  behind  the  EU 
average.  In  2022,  tertiary  education  attainment 
stood  at  49.% (0.7  pps less  than in  2021),  above 
the  EU  average  (42%)  and  the  EU-level  target 
(45%).  In  2020,  compared  with  the  EU,  fewer 
students  graduated  in  Denmark  in  STEM  subjects. 
Their  share  was  at  23%,  1.9  pps  below  the  EU 
average.  Nevertheless,  the  increase  since  2015  is 
remarkable,  when  Denmark’s  share  of  STEM 
graduates among all graduates was the lowest in 
the  EU.  Danish  graduates  choose  similar  studies 
compared with other EU countries with, however, a 
smaller  share  of  graduates  in  education  (5.2%  / 
9.7%) and a larger one in ICT (5.4% / 3.9%). 

Overall, Denmark has very good systems both for 
vocational  education  and  training  and  for  adult 
learning,  but  skills  shortages  do  exist  (see  Annex 
14). 

62 

96%98.0%91.9%97.6%202093.0%2020Reading< 15%15.0% 20.0%16.0%201822.5%2018Mathematics< 15%13.6% 22.3%14.6%201822.9%2018Science< 15%15.9% 21.1%18.7%201822.3%2018< 9 %8.1%11.0%10.0% 9.6%Men9.9%12.5%12.1%11.1%Women6.2%9.4%7.8%8.0%Cities5.8%9.6%6.3%8.6%Rural areas11.3%12.2%15.3%10.0%Native8.0%10.0%9.9%8.3%EU-born:u20.7%:u20.3%Non EU-born9.5%u23.4%12.0%u22.1%6Equity indicator (percentage points)::12.2201819.320187Exposure of VET graduates to work based learningTotal ≥ 60% (2025) : :65.3%60.1%45%43.0%36.5%49.0%42.0%Men34.6%31.2%40.0%36.5%Women52.0%41.8%58.3%47.6%Cities57.9%46.2%61.6%52.2%Rural areas26.3%26.9%32.8%30.2%Native41.9%37.7%49.1%43.0%EU-born59.7%u32.7%59.9%39.5%Non EU-born44.6%u27.0%42.5%35.7%33.2% 38.3%32.9%202039.2%2020Tertiary educational attainment (age 25-34)8Total8By gender9By degree of urbanisation10By country of birth11Share of school teachers (ISCED 1-3) who are 50 years or over1Participation in early childhood education (age 3+)2Low achieving 15-year-olds in:Early leavers from education and training (age 18-24)3Total3By gender4By degree of urbanisation5By country of birth20152022IndicatorTargetDenmarkEU27DenmarkEU27 
 
  
 
ANNEX 16: HEALTH AND HEALTH SYSTEMS 

A  healthy  population  and  an  effective, 
accessible  and  resilient  health  system  are 
prerequisites  for  a sustainable  economy and 
society.  This  Annex  provides  a  snapshot  of 
in 
population  health  and  the  health  system 
Denmark.  

Life  expectancy  in  Denmark  decreased  only 
slightly from 81.6 years (2020) to 81.5 years 
(2021), which is still above the EU average of 
80.1  years.  Treatable  mortality  rates  are  well 
below the EU average. In 2020, leading causes of 
death were cancer and diseases of the circulatory 
system. Cancer mortality in Denmark was 271 per 
100 000 population (2020), above the EU average 
of  242  (2020).  In  2021  COVID-19  mortality 
the  year 
slightly  decreased 
before. (106) 

compared 

to 

Graph A16.1: Life expectancy at birth, years 

terms,  spending  on  prevention 
in  Denmark 
increased  by  50%  between  2019  and  2020 
(compared  to  a  26%  increase  for  the  EU  overall). 
Across  the  EU,  this  increase  was  primarily  driven 
by  spending  on  disease  detection,  surveillance, 
control  and  response  programmes  as  part  of  the 
public  health  response  to  COVID-19.  Between 
remarkable  proportional 
2019  and  2020,  a 
increase 
in 
Denmark for epidemiological surveillance, risk and 
disease  control  programmes  and  immunisation 
for 
programmes. 
the 
immunisation  programmes 
observed  increased  influenza  vaccination  in  the 
population in 2020. Of further relevance to public 
health  is  the  fact  that  the  consumption  of 
antimicrobials is well below the EU average. 

in  reported  spending  was  noted 

increase 
is 

in 
linked 

costs 
to 

The 

Public  spending  on  health  is  projected  to 
increase by 0.9 percentage points of GDP by 
2070,  in  line  with  the  EU  average.  The  public 
share  of  health  expenditure  was  84.9%  (2020), 
above the EU average of 81.2% (2020). 

Graph A16.2: Projected increase in public 
expenditure on healthcare over 2019-2070 

Source: Eurostat 

Health  spending  relative  to  GDP  in  Denmark 
was 10.5%, slightly below the EU average of 
10.9%  (2020).  Compared  to  the  years  before, 
health  spending  relative  to  GDP  remained  fairly 
constant. Per capita spending (in purchasing power 
standards) in 2020 was EUR 3 964, above the EU 
average  of  EUR  3  269.  Outpatient  care  made  up 
34%  of  total  current  health  expenditure,  well 
above  the  EU  average  of  22.5%.  Spending  on 
inpatient  care  as  a  share  of  overall  health 
expenditure  (26.6%)  is  similar  to  the  EU  average 
of  26.4%.  With  10.5%,  the  share  of  spending  on 
medical  goods  (including  medicines)  was  clearly 
lower than the EU average of 18.2%.  

Denmark has increased the share of spending 
on prevention.  In 2020, Denmark spent 3.2% of 
current  health 
prevention, 
expenditure 
compared  to  2.2%  in  2019.  However,  this  is  still 
below the EU average of 3.4% (2020). In absolute 

on 

AWG reference scenario 
Source: European Commission / EPC (2021) 

Denmark  has  more  doctors  and  nurses  than 
the  EU  average.  There  were  4.3  doctors  per 
1 000  population  (2019),  more  than  the  EU 
average of 3.9 (2020). There were 10.1 nurses per 
1 000  population  (2019),  more  than  the  EU 
average  of  8.3  (2020).  However,  more  than  27% 
of  the  nursing  workforce  are  older  than  55  years 
(2017),  which  raises  some  concerns  about  the 
sustainability  of  workforce  numbers.  The  Danish 
government  agreed  in  2022  on  a  reform  which 
aims  to  strengthen  the  health  system,  including 
through  improved medical  coverage  in  areas  with 
a  shortage  of  doctors. (107)  The  government  also 

(106) Based on data provided directly by Member States to ECDC 
under the European Surveillance System (data current as of 
13 April 2023). 

(107) See: https://commission.europa.eu/system/files/2023-

05/2023-Denmark-NRP_en.pdf 

63 

80.981.181.081.581.681.580.980.981.081.380.480.1201620172018201920202021DenmarkEU6.66.70.90.902468EUDenmark% of GDP20192070increase 
 
          
                                                 
          
                                                 
 
 
Table A16.1: Key health indicators 

Note: The EU average is weighted for all indicators, except for (*) and (**), for which the EU simple average is used. The simple 
average for (*) uses data for 2020 or most recent year if former not available. Doctors' density data refer to practising doctors in 
all countries except EL, PT (licensed to practice) and SK (professionally active). Nurses' density data refer to practising nurses in all 
countries except FR, PT, SK (professionally active) and EL (nurses working in hospitals only). 
Source: Eurostat; except: ** ECDC 

established  a  “Resilience  Commission”  to  look  at 
staff  shortages  and  recruitment  issues.  In  2023 
the  government  announced  an  acute  package  to 
address  challenges  with  increasing  waiting  lists 
and shortages of key staff. (108).  

Denmark  is  further  stepping  up  policies  to 
foster  integrated  care.  Most  recently,  this  was 
done by setting up ‘health clusters’ around the 21 
acute  care  hospitals,  optimising  the  delivery  of 
care services based in the community (109). 

Through  its  recovery  and  resilience  plan 
(RRP),  Denmark  plans  to  invest  EUR  33 
million  (2.1%  of  the  RRP’s  total  value)  in 
healthcare. The Danish RRP contains investments 
aimed  at  ensuring  sufficient  stocks  of  critical 
medicines 
emergency 
improving 
management  and  monitoring  of  these  stocks. 
Furthermore, Denmark is working on strengthening 
digital  solutions  in  the  healthcare  sector.  Still 
pending is a clinical study on the long-term effect 
of COVID-19 vaccines. 

and 

the 

(108) See: https://eurohealthobservatory.who.int/monitors/health-
systems-monitor/updates/hspm/denmark-2012/acute-
package-to-address-waiting-lists-and-staff-shortages.  

(109) See: https://eurohealthobservatory.who.int/monitors/health-
systems-monitor/updates/hspm/denmark-2012/health-
clusters-now-mandatory-across-denmark. 

64 

20172018201920202021EU average (latest year) Treatable mortality per 100 000 population (mortality avoidable through optimal quality healthcare)73.273.066.263.5NA91.7 (2020)Cancer mortality per 100 000 population284.7279.8282.5271.0NA242.2 (2020)Current expenditure on health, % GDP 10.110.110.110.5NA10.9 (2020)Public share of health expenditure, % of current health expenditure84.083.883.784.9NA81.2 (2020)Spending on prevention, % of current health expenditure 2.42.32.23.2NA3.4 (2020)Acute care beds per 100 000 population254254249NANA387.4 (2019)Doctors per 1 000 population *4.14.24.3NANA3.9 (2020)Nurses per 1 000 population *10.010.110.1NANA8.3 (2020)Consumption of antibacterials for systemic use in the community, daily defined dose per 1 000 inhabitants per day (total consumption for CY and CZ) **14.313.613.412.512.614.5 (2021) 
                                                 
 
 
      
 
ANNEX 17: ECONOMIC AND SOCIAL PERFORMANCE AT REGIONAL LEVEL 

regional  dynamics 

This  Annex  showcases  the  economic  and 
in  Denmark, 
social 
providing  an  update  on  economic,  social  and 
territorial  cohesion  in  and  among  the  Danish 
regions compared with the EU as a whole and the 
main regional economic recovery challenges.  

Denmark  had  the  third  highest  GDP  per 
capita  in  the  EU  in  2021,  but  regional 
disparities  have  slightly  increased  between 
the capital region and the rest of the country.  

All  Danish  regions  have  performed  largely 
above  the  EU  average  in  terms  of  regional 
competitiveness.  Hovedstaden  is  the  motor  of 
the  Danish  economy,  accounting  for  42%  of  the 
national  GDP in 2020 and with GDP per capita at 
178%  above 
the  EU  average.  Syddanmark, 
Midtjylland  and  Nordjylland  had  GDP  per  capita 
between  105%  and  120%  of  the  EU  average. 
Sjælland  is  the  only  transition  region  in  Denmark 
with GDP per capita below the EU average (89%). 

Graph A17.1: GDP per capita (2010) and GDP per 
capita growth (2011-2020) 

(1) Bubble sizes correspond to population size 
Source: Eurostat, DG REGIO elaboration 

Despite  the  COVID-19  pandemic,  GDP  grew 
slightly  in  all  regions  between  2019  and 
2020.  All  regions  had  an  annual  real  GDP  per 
capita  growth  rate  above  the  EU  average  (0.6%), 
although Nordjylland was close to the EU average. 
Nordjylland  was  also  the  only  Danish  region  with 
real GDP growth below the long-term EU average.  

Regional  disparities  in GDP  per  capita partly 
stem  from  variations  in  labour  productivity.  
Labour  productivity  peaked  in  2019  but  was 
affected  by  the  pandemic  in  2020  (Graph  A17.1). 
The gap between the capital region and the rest of 
the  country  remained  the  same  in  2020  as  all 
regions lost labour productivity.  

65 

Graph A17.2: Evolution of labour productivity in 
the Danish regions 

Real Gross Value Added in millions of euros (2015 prices) by 
employment in thousands of persons; The light red circles 
show the capital city region. The blue circles show the 
remaining NUTS 2 regions. The green diamond shows the 
national average. The purple line shows the EU-27 average.  
Source: Eurostat 

low 

and 

level 

All  Danish  regions  have  a  high  level  of 
employment 
of 
a 
unemployment; however, the lack of a skilled 
workforce is a cause for concern. The average 
unemployment  rate  was  5%  and  was  consistent 
across all the regions. This and population growth 
in  all  Danish  regions  contributed  to  the  country's 
overall GDP growth.   

Graph A17.3: Unemployment in Danish regions in 
2019-2021 

Source: Eurostat 

The  COVID-19  pandemic  did  not  increase 
regional  economic  disparities.  Unemployment 
rose  in  all  regions  during  the  first  year  of  the 
COVID-19 crisis but fell back again in 2021 to pre-
pandemic levels (Graph A17.3). 

in 

the  EU  by 

Hovedstaden  was  the  third  best  performing 
regional 
region 
competitiveness index (RCI) in 2022. The index 
measures  the  ability  of  a  region  to  offer  an 
attractive  and  sustainable  environment  for  firms 

the 

 
 
 
 
 
 
 
Table A17.1: Selected indicators at regional level - Denmark 

Source: Eurostat, EDGAR database 

and  residents  to  live  and  work.  The  RCI  of  the 
other  Danish  regions  was  lower  but  still  largely 
above the EU average. (Map A17.1, Table A17.1). 

Map A17.1:  Regional Competitiveness Index - 
Denmark 

show  R&D  expenditure  in  the  business  enterprise 
sectors  (BERD)  below  the  EU  average  and  the 
share  of  overall  R&D  expenditure  of  GDP  either 
below or around the EU average. (Table A17.1) 

Denmark  has  succeeded  to  reduce 
its 
greenhouse  gas  emissions  substantially,  but 
with  variation  between  the  regions.  In  2021 
Denmark produced 49% less greenhouse gas than 
it  did  in  1990,  with  a  variation  between  22  and 
61%  in  the  regions.  With  an  average  emission  of 
6.8 tonne per capita (Map A17.1), it has one of the 
lowest carbon footprints in the EU. 

Map A17.2:  Greenhouse gas emissions per capita 
in Danish regions in 2021 

Hovedstaden  outperformed  other  regions  in 
terms  of  employment  in  high-technology 
sectors,  knowledge-intensive  services,  and 
high  educational  attainment.  In  Syddanmark, 
only 2.2% of the total workforce was employed in 
high-technology  sectors  (compared  with  10%  in 
in  knowledge-
Hovedstaden)  and  employment 
intensive  services  was  more  than  10%  less  in  all 
the other regions than in Hovedstaden. In Sjælland 
and Nordjylland, the share of the population aged 
30-34 with a high level of educational attainment 
was  below  the  EU  average.  Sjælland  also  had  a 
relatively  high  share  of  early  school  leavers 
(13.8%  of  the  population  aged  18-24)  compared 
with the national average of 9.8%. (Table A17.1) 

Hovedstaden  also  stands  out  in  terms  of 
overall R&D expenditure used. All other regions 

66 

NUTS region nameGDP per head (PPS)GDP growthGDP per head growthPopulation aged 30-34 with high educational attainmentEarly school leaversR&D expenditureR&D expenditure in the business enterprise sector (BERD)Employment in high-technology sectorsEmployment in knowledge-intensive servicesRegional Competitiveness Index (RCI)Index, EU27 = 100, 2021Average % change on the preceding year, 2011-2020Average % change on the preceding year, 2011-2020% of population aged 30-34, 2021% of population aged 18-24, 2021% of GDP, 2019% of GDP, 2019/2020% of total employment, 2021% of total employment, 2021Index, EU27 = 100, 2019tCO2 equivalent per headNUTS2ref. year 2021Percentage change (%) 1990-2021EU10011421022541100Danmark1331.470.9752.8             9.8               2.9               1.8                5.8                 49.4               122.9Hovedstaden1782.241.3268.1             8.6               4.6               3.1                10.4               58.2               137.73.04-43.73Sjælland891.301.0835.4             13.8             1.3               0.7                4.6                 46.5               115.46.66-26.42Syddanmark1161.090.9144.4             10.4             1.5               1.0                2.3                 43.1               113.611.46-60.99Midtjylland1201.611.0550.3             9.6               2.3               1.4                4.4                 45.5               119.86.49-33.34Nordjylland1050.820.6340.3             8.9               2.0               0.4                2.7                 46.2               113.210.27-21.62Green House Gas emissions 
 
 
 
 
 
 
 
 
 
 
  
 
MACROECONOMIC STABILITY 
ANNEX 18: KEY FINANCIAL SECTOR DEVELOPMENTS 

in 

interest 

Denmark  has  a  reasonably  well  developed  and 
solvent  banking  sector.  Danish  banks’  capital-
adequacy ratio was not affected by the pandemic 
and it continues to exceed the EU average (22.5% 
vs  an  EU  average  of  18.6%  in  Q3-2022).  The 
stress test conducted by Denmark’s central bank in 
June  2022  showed  that,  although  banks  have 
sufficient  capital  to  withstand  a  severe-recession 
scenario,  a  few  systemically  important  banks 
would  come  close  to  breaching  excess  capital 
requirements under a severe-recession scenario (a 
severe  economic  downturn  coupled  with  an 
increase 
rates).  Also,  during  a 
hypothetical  one-year  period  of  financial  stress 
issuing  new  debt 
and 
instruments,  several  systemically  important  credit 
institutions  and  some  non-systemically  important 
banks could face difficulties in meeting their total 
minimum  requirement  for  own  funds  and  eligible 
liabilities  (MREL).  This  is  particularly  important 
because  some 
to 
refinance  maturing  debt 
issuances,  either  to 
accumulate capital or to issue new debt in order to 
meet  the  MREL  requirement.  To  increase  banks’ 
resilience, and following the Danish Systemic Risk 
Council 
countercyclical 
buffer  has  been  increased  to  2.5%  as  of  March 
2023. 

institutions  already  need 

limited  possibility  of 

recommendation, 

the 

considerably 

few  years 

The  Danish  banking  sector  is  stable  overall 
and  has  weathered  the  uncertainties  of  the 
past 
relatively  well,  but 
vulnerabilities remain. Banks’ liquidity positions 
are  sound,  but  both  higher  market  volatility  and 
customers’ increased need for liquidity have had a 
depressing  effect.  Loan-to-deposit 
ratio  has 
decreased slightly, but the values are still elevated 
mainly  due  to  a  high  market  funding  ratio,  as 
mortgages are backed by bonds.  Profitability has 
decreased 
since  2021,  with 
annualised return-on-equity  (ROE) reaching 1% at 
Q3 2022 (vs 8.2% in 2021), which could be due to 
negative  value  adjustments  resulting  from  large 
fluctuations  in  the  financial  markets  and  price 
declines.  High  inflation  generated  soaring  staff 
costs that depressed banks’ efficiency, with costs-
to-income  reaching  81.1%  in  Q3-2022  (vs  60.6% 
at EU level). In the future, increased interest rates 
are  expected  to  generate  higher  net  interest 
income  to  some  extent.  At  the  same  time,  higher 
interest  rates,  elevated  inflation  and  the  prospect 
of 
reduced  economic  activity  may  affect 
customers’  debt-service  capacity,  and  this  would 

increased 

in  2021,  driven  by: 

likely  be  reflected  in  new  impairment  charges. 
Thus,  although  the  non-performing-loan  (NPL) 
ratio  is  at  a  historically  low  level  (1.5%  in  Q3-
2022),  increases  in  the  NPL  ratio  should  not  be 
ruled  out.  Credit  to  non-financial  corporations 
(NFCs) 
(i) 
government support schemes; (ii) strong economic 
activity  in  several  industries;  (iii)  stockpiling;  and 
(iv)  more  accommodative 
credit  standards. 
However,  starting  in  Q3-2022,  banks  began  to 
signal  tighter  credit  conditions.  Coupled  with 
slowing  customer  demand  and  increasing  risks, 
these  tighter  credit  conditions  could  put  pressure 
on  banks’  profits.  Among  NFCs, 
the  most 
vulnerable  ones  are  the  small  and  medium-sized 
enterprises (SMEs), which have lower liquidity and 
solvency  ratios,  and  which  are  primarily  financed 
by  medium-sized  banks  (SMEs  account  for  about 
65%  of  banks’  corporate-loan  portfolio)  that  in 
turn face higher risks of losses. 

in 

the  overall  mortgage 

The demand for mortgages continued to rise 
in  2022,  although  at  a  slower  pace,  while 
house  prices  began  decreasing.  The  house 
prices  have  risen  steadily  in  the  last  2  years, 
especially 
the  greater  Copenhagen  area.  
Nevertheless,  the  growth  has  slowed  since  mid-
2021,  and  reversed  from  Q2  2022.  At  the  same 
time, 
lending  growth 
continued,  but  it  has  moderated.  As  prices  are 
expected  to  decrease  further  in  2023,  the  risk  of 
technical  insolvency  rises,  primarily  among  highly 
indebted recent borrowers. A noticeable  trend has 
been  the  larger  number  of  households  taking  out 
loans,  of  which  an 
variable-rate  mortgage 
increasing 
deferred 
are  with 
proportion 
amortisation,  making  them  vulnerable  to  both 
interest-rate  hikes  and  house-price  declines. 
However,  these  borrowers  generally  have  a  lower 
debt-service  ratio  than  customers  with  other  type 
of  loans.  The  preference  for  variable-interest-rate 
mortgages is also often due to a decision by home 
owners  to  refinance  their  loans,  which  frequently 
results in a reduction in their overall debt. 

67 

 
 
 
 
 
 
 
 
Table A18.1: Financial soundness indicators 

(1) Last data: Q3 2022. 
(2) Data is annualized.  
Source: ECB, Eurostat, S&P Global Capital IQ Pro. 

and 

companies 

increased  considerably 

life-insurance 
Pension 
companies  are  generally  solvent  and  well 
capitalised,  but  there  are  vulnerabilities  in 
insurance  and  pension 
the  market.  Life 
companies,  representing  around  35%  of  the 
financial  market,  are  generally  solvent  and  well 
capitalised. Until  end  2021,  pension  funds’  assets 
in  recent  years, 
have 
mainly  due  to  sizeable  returns  from  investments 
and  large  pension  contributions  by  people  paying 
into  pension  plans.  Insurers  have  benefited  from 
the  rise  in  risk-free  rates,  which  drove  down  the 
value  of  their  liabilities.  However,  insurers  (and 
especially non-life insurers) have been affected by 
the  rise  in  inflation.  At  the  same  time,  due  to 
volatile markets and higher interest rates, pension 
and life-insurance companies have experienced an 
increasing  need  for  liquidity  to  pay  variation 
margins  on  their  derivatives  contracts.  Danish 
insurers  and  pension  companies  have  sufficient 
liquid  assets  to  handle  an  interest-rate  hike,  but 
their  cash  holdings  are  still  limited.  Furthermore, 
the  exemption  from  the  requirement  to  provide 
cash  for  variation  margin  calls  as  part  of  the 
implementation 
European  Market 
the 
Infrastructure  Regulation  ends  in  June  2023,  and 
this  could  generate  additional  needs  for  liquidity. 
Work is ongoing with the banking sector to develop 
a  framework  that  would  give  pension  funds  and 
insurers  access 
repo 
potential 
via 
transactions 
vulnerability  of  pension  companies  could  stem 
from  the  value  loss  recorded  in  2022  on  bonds 
and  interest-rate  derivatives.  These  losses  could 
generate  lower  pay-outs  to  pension  savers  and 

centrally 
banks.  Another 

cleared 

of 

to 

thus raise the risk of negative public perception of 
the business.  

68 

201720182019202020212022EUMedianTotal assets of the banking sector (% of GDP)363.0349.4384.6402.0370.6375.0276.8207.9Share (total assets) of the five largest banks (%)65.764.566.267.165.6--68.7Share (total assets) of domestic credit institutions (%)193.093.092.993.493.093.9-60.2NFC credit growth (year-on-year % change)-------9.1HH credit growth (year-on-year % change)-------5.4Financial soundness indicators:1        - non-performing loans (% of total loans)2.52.31.91.91.81.51.81.8- capital adequacy ratio (%)22.121.622.423.222.822.518.619.8- return on equity (%)210.88.08.74.58.21.36.16.6Cost-to-income ratio (%)151.257.761.063.358.381.160.651.8Loan-to-deposit ratio (%)1228.7240.7248.9215.8222.3205.588.678.0Central bank liquidity as % of liabilities0.10.10.00.10.1--2.9Private sector debt (% of GDP)216.7215.3221.2221.3214.7--120.7Long-term interest rate spread versus Bund (basis points)15.95.86.815.031.333.7-93.3Market funding ratio (%)44.842.441.440.238.2-50.840.0Green bonds issued to all bonds (%)0.30.41.11.32.54.33.92.31-34-1011-1718-2425-27Colours indicate performance ranking among 27 EU Member States. 
 
 
 
 
 
   
 
facing  challenges 

highest mortgage interest payment tax deductions 
in  the  EU,  which  incentivises  the  financing  of 
residential  property  through  debt.  The  Danish 
authorities  have  been 
in 
implementing  a  new  property  tax  system  to 
address  the  debt  incentive  and  increase  fairness. 
The  new  system  is  based  on  new  and  improved 
information  for  each  property  and  allows  for  the 
property  owner  to  add  more  data.  Adjustments 
have also been made to the system to assure the 
quality  of  the  appeal  procedure.  After  several 
delays  the  system 
is  expected  to  be  fully 
implemented by 2024.  

Denmark’s  Recovery  and  Resilience  Plan 
focuses on a fair transition towards greener 
energy  sources  and  digitalising  services.  It 
includes  a  Green  Tax  reform  that  comprises 
several policies to accelerate decarbonisation in a 
wide  range  of  sectors.  In  the  short-term,  the 
reform  accelerates  depreciations  to  provide  an 
investment  window  that  incentivises  business, 
including  small  and  medium-sized  enterprises,  to 
invest in the green transition. 

ANNEX 19: TAXATION  

This  Annex  provides  an 
indicator-based 
overview of Denmark’s tax system. It includes 
information on the tax structure  (the types of tax 
that  Denmark  derives  most  of  its  revenue  from), 
the  tax  burden  on  workers,  and  the  progressivity 
and redistributive effect of the tax system. It also 
provides 
tax  collection  and 
compliance. 

information  on 

Denmark’s  tax  revenue  is  relatively  high  in 
relation  to  its  GDP.  It  is  well-balanced 
between  different  tax  types  in  a  growth 
friendly  way.  Table  A19.1  shows  Denmark’s 
revenues from different tax types as a percentage 
of  GDP.  Denmark’s  total  tax  revenue  as  a 
percentage  of  GDP  was  the  highest  in  the  EU  in 
2021.  Revenues  from  labour,  consumption  and 
environmental  taxation  were  comparatively  high 
relative  to  other  EU  countries  as  a  percentage  of 
GDP  (see  Table  A19.1).  While  labour  taxes  as  a 
share of GDP were higher in Denmark compared to 
the EU as a whole, labour taxes as a share of total 
taxes were lower in Denmark (50.5%)  than in the 
EU  as  a  whole  (51.4%)  (see  Graph  A19.1). 
is  characterised  by 
Denmark’s  tax  structure 
comparatively 
and 
consumption 
environmental  tax  revenues  as  a  share  of  total 
taxation compared to the EU aggregate. Recurrent 
taxes  on  property  were  among  the  highest  in  the 
EU  both  as  a  percentage  of  GDP  and  of  total  tax 
revenues.  However,  Denmark  also  has  one  of  the 

high 

Table A19.1: Taxation indicators 

(1) Forward-looking effective tax rate (OECD). 
(2) A higher value indicates a stronger redistributive impact of taxation. 
(*) EU-27 simple average 
For more data on tax revenues as well as the methodology applied, see European Commission, Directorate-General for Taxation 
and Customs Union, Taxation trends in the European Union: data for the EU Member States, Iceland, Norway and United Kingdom: 
2021 edition, Publications Office of the European Union, 2021, https://data.europa.eu/doi/10.2778/843047 and the Data on 
Taxation webpage, data https://ec.europa.eu/taxation_customs/taxation-1/economic-analysis-taxation/data-taxation_en. 
For more details on the VAT gap, see European Commission, Directorate-General for Taxation and Customs Union, VAT gap in the 
EU: report 2022, Publications Office of the European Union, 2022, https://data.europa.eu/doi/10.2778/109823. 
Source: European Commission, OECD. 

69 

2010201920202021202220102019202020212022Total taxes (including compulsory actual social contributions) (% of GDP)45.047.147.348.142.337.939.940.040.6Labour taxes (as % of GDP)22.723.324.224.320.020.721.320.9Consumption taxes (as % of GDP)14.613.613.913.410.811.110.711.2Capital taxes (as % of GDP)7.710.19.210.47.18.18.08.5Total property taxes (as % of GDP)2.52.72.72.51.92.22.22.2Recurrent taxes on immovable property (as % of GDP)2.02.02.01.91.11.21.21.1Environmental taxes as % of GDP4.03.33.22.92.42.42.22.2Tax wedge at 50% of average wage (Single person) (*)31.230.430.230.430.833.932.331.932.131.7Tax wedge at 100% of average wage (Single person) (*)35.935.535.335.435.541.040.139.939.639.7Corporate income tax - effective average tax rates (1) (*)20.320.320.019.519.419.1Difference in Gini coefficient before and after taxes and cash social transfers (pensions excluded from social transfers) (2) (*)12.211.311.212.08.67.78.17.8Outstanding tax arrears: total year-end tax debt (including debt considered not collectable) / total revenue (in %) (*)8.48.131.640.7VAT Gap (% of VAT total tax liability, VTTL)8.55.011.09.1DenmarkEU-27Tax structureProgressivity & fairnessTax administration & compliance 
 
 
 
          
 
 
 
 
 
 
 
 
 
 
Graph A19.1: Tax revenues from different tax types as % of total taxation 

Note: Values for EU are GDP-weighted EU averages (EU aggregates) 
Source: European Commission 

the 

Denmark’s  labour  tax  burden  is  lower  than 
the  EU  average  across 
income 
distribution.  Graph  A19.2  shows  that  the  labour 
tax wedge for Denmark in 2022 was below the EU 
average  for  single  people  at  all  wage  levels.  The 
tax  wedge  for  second  earners  at  67%  of  the 
average  wage,  whose  spouses  earn  the  average 
wage,  is  around  the  EU  average.  However,  the 
difference  between  the  tax  wedge  of  second  and 
single  earners  at  67%  of  the  average  wage  was 
much wider for Denmark than the EU average. The 
higher  tax  wedge  for  second  earners  in  Denmark  
implies  lower  work  incentives  for  second  earners 
than  for  single  earners  at  the  same  wage  level. 
Given  that  second  earners  are  often  women,  this 
difference  could  perpetuate  gender  stereotypes. 
Overall,  in  2021  the  tax-benefit  system  helped 
reduce  inequality  (as  measured  by  the  GINI 
coefficient)  by  substantially  more  than  the  EU 
average.  The  average  forward-looking  effective 
corporate  income  tax  rates  were  above  the  EU 
average in 2021. 

Denmark  performs  relatively  well  on  tax 
compliance  and  tax  administration.  Denmark 
has introduced a new IT system (PSRM) which has, 
according  to  official  sources (110),  doubled  debt 
collection from DKK 1.6 billion in 2020 to DKK 3.7 
billion  in  2021.  Outstanding  tax  arrears  have 
decreased  slightly  by  0.3 pps  from  2019 to  2020 
to 8.1% of net revenue. This is significantly below 
the EU-27 average, which increased by  9.1 pps to 
40.7% from 2019 to 2020 and is inflated by very 
large  values in  a  few  Member  States.  The  Annual 
Report  on  Taxation  2022  highlights  that  there  is 

(110) See: Nyt gældsinddrivelsessystem har inddrevet 10 mia. | 

Gældsstyrelsen (gaeldst.dk) 

70 

scope  to  improve  the  rate  of  online   filing  of 
personal income tax returns  (111). The VAT gap (an 
indicator of the effectiveness of VAT enforcement 
and  compliance,  where  a  low  gap  indicates  high 
effectiveness)  dropped  significantly  by  3.5 pps  to 
5.0% in 2020 and is well below the EU-wide gap, 
which dropped by 1.9 pps to 9.1% (Table A19.1).  

Graph A19.2: Tax wedge for single and second 
earners as a % of total labour costs, 2022 

Note: Second earners are members of a family with the 
primary earner earning 100% of the average wage and no 
children. For the methodology of the tax wedge for second 
earners see OECD (2016) “Taxing Wages 2014-2015” 
Source: European Commission 

(111) European Commission, Directorate-General for Taxation and 
Customs Union, Annual Report on Taxation 2022: review of 
taxation policies in the EU Member States, Publications 
Office of the European Union, 2022. 

30.832.935.541.238.520253035404550100150Tax wedge, % of total labour costsEarnings in % of the average wageSingle earner - DKSingle earner - EU averageSecond earner -  DKSecond earner -  EU average51.4327.5421.0150.4827.8821.64Tax revenue shares in 2021, Denmark (outer ring) and the EU (inner ring)Taxes on labourTaxes on consumptionTaxes on capital3.234.322.431.000.340.193.872.641.352.7501234567Denmark -environmentaltaxationEU -environmentaltaxationDenmark -property taxationEU - propertytaxationEnvironmental and property taxation as % of total tax revenue, Denmark and the EUEnergy taxesTransport taxesResource/pollution taxesRecurrent property taxesOther property taxes 
                                                 
        
 
                                                 
          
 
ANNEX 20: TABLE WITH ECONOMIC AND FINANCIAL INDICATORS 

Table A20.1: Key economic and financial indicators 

(1) Domestic banking groups and stand-alone banks, EU and non-EU foreign-controlled subsidiaries and EU and non-EU foreign-
controlled branches. 
(2) Net international investment position (NIIP) excluding direct investment and portfolio equity shares.  
Source: Eurostat and ECB as of 2 May 2023, where available; European Commission for forecast figures (Spring forecast 2023). 

71 

2004-072008-122013-1920202021202220232024Real GDP (y-o-y)2.5-0.42.1-2.04.93.80.31.5Potential growth (y-o-y)1.51.11.61.61.92.21.91.6Private consumption (y-o-y)3.3-0.31.9-1.44.2-2.30.11.3Public consumption (y-o-y)1.61.60.8-1.44.2-3.5-0.11.1Gross fixed capital formation (y-o-y)5.8-3.63.75.16.28.6-3.5-0.3Exports of goods and services (y-o-y)6.21.03.6-6.38.08.61.11.4Imports of goods and services (y-o-y) 9.50.53.7-3.68.04.2-1.00.6Contribution to GDP growth:Domestic demand (y-o-y)3.2-0.51.80.14.30.1-0.80.8Inventories (y-o-y)0.3-0.20.0-0.20.00.8-0.20.2Net exports (y-o-y)-1.00.30.2-1.90.52.91.30.6Contribution to potential GDP growth:Total Labour (hours) (y-o-y)0.2-0.10.20.40.60.80.70.4Capital accumulation (y-o-y)0.80.30.50.70.91.10.90.8Total factor productivity (y-o-y)0.60.90.90.50.30.20.30.4Output gap3.3-2.3-1.6-4.1-1.30.3-1.2-1.3Unemployment rate4.56.76.15.65.14.55.05.1GDP deflator (y-o-y)2.42.20.82.62.87.60.22.1Harmonised index of consumer prices (HICP, y-o-y)1.52.40.50.31.98.54.32.5HICP excluding energy and unprocessed food (y-o-y)1.22.10.70.91.15.36.33.4Nominal compensation per employee (y-o-y)3.42.61.62.62.92.94.95.3Labour productivity (real, hours worked, y-o-y)1.50.71.41.01.0-0.70.71.4Unit labour costs (ULC, whole economy, y-o-y)2.32.00.83.50.63.04.23.5Real unit labour costs (y-o-y)0.0-0.20.00.9-2.1-4.34.01.4Real effective exchange rate (ULC, y-o-y)1.2-0.3-0.3-0.40.3-0.3-1.10.0Real effective exchange rate (HICP, y-o-y)0.1-0.40.01.1-0.7-1.2..Net savings rate of households (net saving as percentage of net disposable income)-2.7-0.13.55.73.28.4..Private credit flow, consolidated (% of GDP)17.55.32.95.012.39.1..Private sector debt, consolidated (% of GDP)192.3224.0216.7221.3214.7184.6..of which household debt, consolidated (% of GDP)116.5136.5120.6111.8104.286.0..of which non-financial corporate debt, consolidated (% of GDP)74.886.895.8109.4110.498.6..Gross non-performing debt (% of total debt instruments and total loans and advances) (1).2.93.32.01.7...Corporations, net lending (+) or net borrowing (-) (% of GDP)3.67.86.36.15.87.96.26.5Corporations, gross operating surplus (% of GDP)22.722.324.324.826.229.427.226.9Households, net lending (+) or net borrowing (-) (% of GDP)-4.8-1.01.01.5-0.32.12.43.1Deflated house price index (y-o-y)11.1-6.03.84.79.5-7.3..Residential investment (% of GDP)6.24.34.35.76.06.2..Current account balance (% of GDP), balance of payments3.05.28.17.99.013.110.710.7Trade balance (% of GDP), balance of payments4.25.56.86.37.110.6..Terms of trade of goods and services (y-o-y)0.40.60.32.40.4-0.2-5.2-0.5Capital account balance (% of GDP)0.10.1-0.10.00.10.2..Net international investment position (% of GDP)-0.814.551.670.076.364.1..NENDI - NIIP excluding non-defaultable instruments (% of GDP) (2)-25.6-18.513.832.531.4...IIP liabilities excluding non-defaultable instruments (% of GDP) (2)139.7163.7163.2183.1164.7...Export performance vs. advanced countries (% change over 5 years)3.2-1.0-5.111.211.3...Export market share, goods and services (y-o-y)-1.6-3.80.66.6-2.34.6-1.5-2.3Net FDI flows (% of GDP)1.82.11.72.35.7-0.1..General government balance (% of GDP)4.3-1.60.70.23.63.32.31.3Structural budget balance (% of GDP)..0.82.64.43.13.52.1General government gross debt (% of GDP)35.141.438.442.236.730.130.128.8forecast 
 
 
 
      
 
 
 
ANNEX 21: DEBT SUSTAINABILITY ANALYSIS 

This  Annex  assesses  fiscal  sustainability 
risks  for  Denmark  over  the  short,  medium 
and  long  term.  It  follows  the  same  multi-
dimensional 
European 
Commission’s  2022  Debt  Sustainability  Monitor, 
updated  based  on  the  Commission’s  2023  spring 
forecast. 

approach 

the 

as 

1  -  Short-term  risks  to  fiscal  sustainability 
are 
low  overall.  The  Commission’s  early-
detection  indicator  (S0)  does  not  signal  major 
short-term  fiscal  risks  (Table  A21.2). (112)  Gross 
financing needs are expected to remain limited at 
around  5%  of  GDP  in  the  short-term  (i.e.  over 
2023-2024)  and  to  decline  compared  with  the 
recent  peak  in  2020  (Table  1  of  this  annex). 
Financial  markets’  perceptions  of  sovereign  risk 
remain  positive,  as  confirmed  by  the  spread  and 
the  ‘AAA’  rating  that  the  three  major  rating 
agencies assigned to Danish government debt. 

2 - Medium-term risks to fiscal sustainability 
are low overall.  

The  DSA  for  Denmark  shows  that,  under  the 
baseline,  the  government  debt-to-GDP  ratio 
is expected to decline and remain well below 
60% of GDP over the medium term (at 7.3 % 
of  the  GDP  in  2033)  (Graph  1). (113), (114)  The 
assumed  structural  primary  balance  (a  surplus  of 
2.6%  of  GDP)  seems  plausible  compared  to  past 
fiscal performance. At the same time, the baseline 

(112) The S0 is a composite indicator of short-term risk of fiscal 
stress. It is based on a wide range of macro-financial and 
fiscal variables that have proven to perform well in the past 
in detecting situations of upcoming fiscal stress.  

(113) The assumptions underlying the Commission’s ‘no-fiscal 
policy change’ baseline notably comprise: (i) a structural 
primary surplus, before ageing costs, of 2.6% of GDP as of 
2024; (ii) inflation converging linearly towards the 10-year 
forward inflation-linked swap rate 10 years ahead (which 
refers to the 10-year inflation expectations 10 years from 
now); (iii) the nominal short- and long-term interest rates on 
new and rolled over debt converging linearly from current 
values to market-based forward nominal rates by T+10; (iv) 
real GDP growth rates from the Commission 2023 spring 
forecast until 2024, followed by EPC/OGWG ‘T+10 
methodology projections between T+3 and T+10, i.e. for 
2025-2033 (on average 1.1%); (v) ageing costs in line with 
the 2021 Ageing Report (European Commission, Institutional 
Paper 142, November 2020). For information on the 
methodology, see the 2022 Debt Sustainability Monitor. 

projections  up  to  2033 benefit  from  a  favourable 
(although  diminishing)  snowball  effect  with  real 
GDP  growth  at  around  1.1%  of  GDP  over  2025-
2033.  Government  gross  financing  needs  are 
expected  to  become  negligible  and  on  a  strong 
declining path over the projection period. 

The  baseline  projection 
is  stress-tested 
against  four  alternative  scenarios  to  assess 
the  impact  of  changes  in  key  assumptions 
(Graph 1). Overall, the baseline debt projection for 
Denmark 
in  the 
is  very  robust  to  changes 
underlying  macroeconomic  assumptions.  Reducing 
the  SPB 
level  permanently  by  half  of  the 
cumulative  forecast  change  under  the  ‘lower 
structural primary balance’ scenario. would lead to 
a  higher  government  debt-to-GDP  ratio  by  2033 
(about  6  pps.)  as  compared  with  the  baseline. 
Under  the  ‘historical  structural  primary  balance 
(SPB)’ scenario, i.e. the SPB gradually converges to 
a  surplus  of  2.4  %  of  GDP  (its  historical  15-year 
average),  the  projected  debt-to-GDP  would  be 
slightly  higher  (about  2  pps.)  than  in  the baseline 
in  2033.  A  permanent  worsening  of  the  macro-
the 
financial  conditions,  as 
‘adverse interest- growth rate differential’ scenario 
(i.e.  1 pp.  higher than  the baseline)  would  lead  to 
slightly  higher  government  debt-to-GDP  ratio 
(about  1  pp.)  by  2033,  as  compared  with  the 
baseline.  A  temporary  worsening  of  financial 
conditions,  as  reflected  in  the  ‘financial  stress 
‘scenario (i.e. temporarily increase of interest rates 
by  1  pp.),  would  lead  to  a  broadly  similar  public 
debt-to-GDP  ratio  by  2033  compared  with  the 
baseline.  

reflected  under 

indicate  a 

Additionally,  stochastic 
low 
sensitivity  of  these  projections  against 
plausible  unforeseen  events  (Graph  2). (115) 
to  10% 
These  stochastic  simulations  point 
probability of the debt ratio in 2027 being greater 
than  in  2022,  entailing  low  risk  given  the  initial 
low debt level. In addition, such shocks point to low 
uncertainty  (i.e.  the  difference  between  the  10th 
and 90th debt distribution percentiles) surrounding 
the government debt baseline projections.  

(114) Table 1 shows the baseline debt projections and its 

(115) The stochastic projections show the joint impact on debt of 

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.  

2000 different shocks affecting the government’s budgetary 
position, economic growth, interest rates and exchange rates. 
The cone covers 80% of all the simulated debt paths, 
therefore excluding tail events. 

72 

 
 
                                                 
                                                 
 
 
the banking sector point to moderate risks. On the 
other-hand,  risk-mitigating  factors  include  the 
lengthening  of  debt  maturity  in  recent  years, 
relatively  stable 
(with  a 
diversified  and  large  investor  base),  the  currency 
low 
denomination  of  debt,  and  historically 
borrowing  costs.  In  addition,  Denmark’s  positive 
net  international  investment  position  (stronger 
compared to 2020) helps mitigating vulnerabilities.  

financing  sources 

3  -  Long-term  risks  to  fiscal  sustainability 
are low overall. (116)  

The S2 indicator (at -0.7 pp. of GDP) points to 
low  fiscal  sustainability  risks.  The  indicator 
shows that, relative to the baseline, the SPB would 
not  need  to  improve  to  ensure  debt  stabilisation 
over  the  long  term.  This  result  is  underpinned  by 
the favourable initial budgetary position (-2.3 pps. 
of GDP), which is partially offset  by the projected 
increase  in  ageing-related  costs  (contribution  of 
1.6  pps.  of  GDP).  Ageing  costs’  developments  are 
primarily driven by the projected increase in health 
and in particular long-term care spending over the 
projection  period  (joint  contribution  of  3.4  pps.  of 
GDP),  while  public  pension  expenditure  are 
projected to decrease (contribution of  -1.5 pps. of 
GDP) (Table 2).  

Combined  with  low  debt  vulnerabilities,  as 
highlighted by the S1 indicator, overall long-
term risks are assessed as low. Indeed, the S1 
sustainability  gap  indicator  (at  -2.3  pps  of  GDP) 
signals  that  the  structural  primary  balance  could 
deteriorate  and  still  ensure  debt  converging  to 
60% of GDP by 2070. This result is mainly driven 
by  the  favourable  initial  budgetary  position  (-2.7 
pps.  of  GDP),  which  is  partially  offset  by  the 
projected 
costs 
ageing 
of 
(contribution of 1.2 pps. of GDP) (Table 2). 

increase 

the 

Finally,  several  additional  risk  factors  need 
to  be  considered  in  the  assessment.  On  one 
hand,  risk-increasing  factors  are  related  to  the 
recent increase in interest rates, contingent liability 
risks  stemming  from  the  private  sector,  including 
via  the  possible  materialisation  of  sizeable  state 
guarantees  granted  to  firms  and  self-employed 
during  the  COVID-19  crisis.  Overall,  this  risk 
remains  currently  limited  due  to  relatively  low 
take-up.  Contingent  liability  risks  stemming  from 

(116)The S2 fiscal sustainability gap indicator measures the 

permanent fiscal effort (SPB adjustment) in 2024 that would 
be required to stabilise public debt over the long term. It is 
complemented by the S1 fiscal sustainability gap indicator, 
which measures the permanent fiscal effort required in 2024 
to bring the debt-to-GDP ratio to 60% in the long term (by 
2070). For both the S1 and S2 indicators, the risk 
assessment depends on the amount of fiscal consolidation 
needed: ‘high risk’ if the required effort exceeds 6 pps. of 
GDP, ‘medium risk’ if it lies between 2 pps. and 6 pps. of 
GDP, and ‘low risk’ if the effort is negative or below 2 pps. of 
GDP. The overall long-term risk classification brings together 
the risk categories derived from S1 and S2. S1 may notch up 
the risk category derived from S2 when it signals a higher 
risk than S2. See the 2022 Debt Sustainability Monitor for 
further details. 

73 

 
                                                 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table A21.1: Debt sustainability analysis - Denmark 

Source: Commission services. 

Table A21.2: Heat map of fiscal sustainability risks - Denmark 

Source: Commission services (for further details on the Commission's multidimensional approach, see the 2022 Debt 
Sustainability Monitor). 

74 

Table 1. Baseline debt projections20202021202220232024202520262027202820292030203120322033Gross debt ratio (% of GDP)42.236.730.130.128.826.223.721.018.516.213.811.59.37.3Changes in the ratio8.5-5.5-6.60.1-1.4-2.5-2.6-2.7-2.4-2.3-2.4-2.3-2.2-2.0of whichPrimary deficit-0.8-4.2-4.1-2.9-1.8-2.0-2.2-2.4-2.2-2.1-2.2-2.1-1.9-1.8Snowball effect0.4-2.5-3.10.4-0.5-0.5-0.4-0.3-0.2-0.2-0.2-0.2-0.2-0.2Stock-flow adjustments8.91.10.62.51.00.00.00.00.00.00.00.00.00.0Gross financing needs (% of GDP)14.67.86.15.44.83.52.41.20.4-0.1-0.5-0.6-0.7-0.8S1S2Overall index  (pps. of GDP)-2.3-0.7of which Initial budgetary position-2.7-2.3Debt requirement-0.7Ageing costs1.21.6of which    Pensions-1.1-1.5     Health care0.40.6     Long-term care2.02.8Others-0.2-0.3Table 2. Breakdown of the S1 and S2 sustainability gap indicators05101520253035404520202021202220232024202520262027202820292030203120322033Graph 1. Deterministic debt projections Historical SPB scenarioLower SPB scenarioFinancial stress scenarioAdverse 'r-g' scenarioBaseline% of GDPp10p20p40p60p80p900102030405020202021202220232024202520262027% of GDPGraph 2. Stochastic debt projections 2023-2027MedianBaselineBaselineHistorical SPBLower SPBAdverse 'r-g'Financial stressOverallLOWLOWLOWLOWLOWLOWDebt level (2033), % GDP7.39.213.18.87.5Debt peak year20232023202320232023Fiscal consolidation space68%69%74%68%68%Probability of debt ratio exceeding in 2027 its 2022 level10%Difference between 90th and 10th percentiles (pps. GDP)17.8(1)Debtlevelin2033.Green:below60%ofGDP.Yellow:between60%and90%.Red:above90%.(2)Thedebtpeakyearindicateswhetherdebtisprojectedtoincreaseoveralloverthenextdecade.Green:debtpeaksearly.Yellow:peaktowardsthemiddleoftheprojectionperiod.Red:latepeak.(3)Fiscalconsolidtationspacemeasurestheshareofpastfiscalpositionsinthecountrythatweremorestringentthantheoneassumedinthebaseline.Green:highvalue,i.e.theassumedfiscalpositionisplausiblebyhistoricalstandardsandleavesroomforcorrectivemeasuresifneeded.Yellow:intermediate.Red:low.(4)Probabilityofdebtratioexceedingin2027its2022level.Green:lowprobability.Yellow:intermediate.Red:high(alsoreflectingtheinitialdebtlevel).(5)thedifference 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.Short termMedium term - Debt sustainability analysis (DSA)Long termOverall                               (S0)Overall Deterministic scenariosStochastic projectionsS2S1Overall(S1 + S2)LOWLOWLOWLOWLOW