Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Denmark 
Date: 2024-11-26
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Denmark, budget deficit, coordination of EMU policies, economic reform, fiscal policy, investment, macroeconomics, national planning, public debt, structural adjustment

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   EUROPEAN COMMISSION  Strasbourg, 26.11.2024  COM(2024) 712 final  Recommendation for a COUNCIL RECOMMENDATION endorsing the national medium-term fiscal-structural plan of Denmark    
 
Recommendation for a 

COUNCIL RECOMMENDATION 

endorsing the national medium-term fiscal-structural plan of Denmark 

THE COUNCIL OF THE EUROPEAN UNION,  

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 121 thereof,  

Having regard to Regulation (EU) 2024/1263, and in particular Article 17 thereof,  

Having regard to the recommendation from the Commission,  

Whereas:  

GENERAL CONSIDERATIONS 

(1) 

(2) 

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2 

3 

4 

A reformed EU economic governance framework entered into force on 30 April 2024. 
Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary 
surveillance1,  together  with  the  amended  Regulation  (EC)  No  1467/97  on  the 
implementation  of  the  excessive  deficit  procedure2,  and  the  amended  Council 
Directive  2011/85/EU  on  the  budgetary  frameworks  of  Member  States3  are  the  core 
elements of the reformed EU economic governance framework. The framework aims 
at  ensuring  public  debt  sustainability  and  sustainable  and  inclusive  growth  through 
reforms  and  investments.  It  promotes  national  ownership  and  has  a  medium-term 
focus, combined with an effective and coherent enforcement of the rules. 

The  national  medium-term  fiscal-structural  plans  that  Member  States  submit  to  the 
Council  and  to  the  Commission  are  at  the  centre  of  the  new  economic  governance 
framework. The plans are to deliver on two objectives: i) ensuring that, by the end of 
the adjustment period, general government debt is on a plausibly downward trajectory, 
or stays at  prudent  levels,  and that the government  deficit is  brought and maintained 
below the reference value of 3% of GDP over the medium term, and ii) ensuring the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the context of the European Semester and addressing the common priorities of the EU. 
To that end, each plan is to present a medium-term commitment to a net expenditure4 

(OJ 

1466/97 

Regulation 

(EC)  No 

Regulation  (EU)  2024/1263  of  the  European  Parliament  and  of  the  Council  of  29  April  2024  on  the 
effective  coordination  of  economic  policies  and  on  multilateral  budgetary  surveillance  and  repealing 
Council 
ELI: 
http://data.europa.eu/eli/reg/2024/1263/oj). 
Council  Regulation  (EU)  2024/1264  of  29  April  2024  amending  Regulation  (EC)  No  1467/97  on 
speeding  up  and  clarifying  the  implementation  of  the  excessive  deficit  procedure  (OJ  L,  2024/1264, 
30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1264/oj). 
Council Directive (EU) 2024/1265 of 29 April 2024 amending Directive 2011/85/EU on requirements 
for  budgetary 
(OJ  L,  2024/1265,  30.4.2024,  ELI: 
http://data.europa.eu/eli/dir/2024/1265/oj). 
Net expenditure as defined in Article 2 of Regulation (EU) 2024/1263, namely government expenditure net 
of (i) interest expenditure, (ii) discretionary revenue measures, (iii) expenditure on Union programmes fully 

the  Member  States 

frameworks  of 

2024/1263, 

30.4.2024, 

L, 

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path, which effectively establishes a budgetary constraint for the duration of the plan, 
covering four or five years (depending on the regular term of legislature in a Member 
State).  In  addition,  the  plan  should  explain  how  the  Member  State  will  ensure  the 
delivery  of  reforms  and  investments  responding  to  the  main  challenges  identified  in 
the  context  of  the  European  Semester,  in  particular  in  the  country-specific 
recommendations  (including  those  pertaining  to  the  macroeconomic  imbalances 
procedure (MIP), if applicable), and how the Member State will address the common 
priorities of the Union. The period for fiscal adjustment covers a period of four years, 
which  may  be  extended  by  up  to  three  years  if  the  Member  State  commits  to 
delivering a set of relevant reforms and investments that satisfies the criteria set out in 
Regulation (EU) 2024/1263. 

(3) 

(4) 

Following the submission of the plan, the Commission is to assess whether it complies 
with the requirements of Regulation (EU) 2024/1263.  

Upon  a  recommendation  from  the  Commission,  the  Council  is  to  then  adopt  a 
recommendation to set the net  expenditure path  of the Member State concerned and, 
investment  commitments 
the  set  of  reform  and 
where  applicable,  endorses 
underpinning an extension of the fiscal adjustment period. 

CONSIDERATIONS  CONCERNING  THE  NATIONAL  MEDIUM-TERM  FISCAL-
STRUCTURAL PLAN OF DENMARK 

Process prior to the submission of the plan 

(5) 

On 20 September 2024, Denmark submitted its national medium-term fiscal-structural 
plan to the Council and to the Commission. 

Process prior to the submission of the plan 

(6) 

Prior to the submission of its plan, Denmark requested technical information5, which 
the  Commission  provided  on  21  June  2024,  and  published  on  20  September  20246. 
The technical information indicates the level of the structural primary balance in 2028 
that is necessary to ensure that the general government deficit is maintained below 3% 
of  GDP  over  the  medium  term  and  that  the  general  government  debt  remains  below 
60%  of  GDP  over  the  medium  term,  in  the  absence  of  further  budgetary  measures 
beyond  the  4-year  adjustment  period.  The  medium  term  is  defined  as  the  ten-year 
period after the end of the adjustment period. The technical information was prepared 
and  transmitted  to  the  Member  State  under  two  scenarios:  a  scenario  including 

matched by revenue from Union funds, (iv) national expenditure on co-financing of programmes funded by 
the Union, (v) cyclical elements of unemployment benefit expenditure and (vi) one-offs and other temporary 
measures. 
Prior guidance transmitted to the Member States and Economic and Financial Committee includes technical 
information i) without and with an extension of the adjustment period (covering 4 and 7 years, respectively), 
and  ii)  with  and  without  the  deficit  resilience  safeguard.  It  also  includes  the  main  initial  conditions  and 
underlying  assumptions  used  in  the  Commission’s  medium-term  government  debt  projection 
framework.  The  reference  trajectory  was  calculated  on  the  basis  of  the  methodology  described  in  the 
Commission’s 
(https://economy-
finance.ec.europa.eu/publications/debt-sustainability-monitor-2023_en).  It  is  based  on  the  European 
Commission  Spring  2024  Forecast  and  its  medium-term  extension  up  to  2033,  and  long-term  GDP 
growth  and  ageing  costs  are  in  line  with  the  joint  Commission-Council  2024  Ageing  Report 
(https://economy-finance.ec.europa.eu/publications/2024-ageing-report-economic-and-budgetary-
projections-eu-member-states-2022-2070_en). 
https://economy-finance.ec.europa.eu/economic-and-fiscal-governance/national-medium-term-fiscal-
structural-plans_en#denmark 

Sustainability 

Monitor 

2023 

Debt 

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consistency  with  the  deficit  resilience  safeguard7,  in  line  with  Article  9(3)  of 
Regulation  (EU)  2024/126,  and  a  scenario  without  this  safeguard.  The  technical 
information  for  Denmark  sets  out  that,  in  order  to  comply  with  the  applicable  fiscal 
rules  over  an  adjustment  period  of  4  years,  and  based  on  the  Commission’s 
assumptions, the structural primary balance should amount to at least -1.4% of GDP at 
the  end  of  the  adjustment  period  (2028;  scenario  without  the  deficit  resilience 
safeguard),  as  per  the  following  table.  For  information,  considering  also  the  deficit 
resilience safeguard, the structural primary balance should amount to at least -1.1% of 
GDP  at  the  end  of  the  adjustment  period  (2028).  However,  the  deficit  resilience 
safeguard  is  not  a  requirement  for  Denmark,  which  is  eligible  for  technical 
information. 

Table 1: Technical information provided by the Commission to Denmark 

Final year of the adjustment period 

Minimum value of the structural primary balance (% of GDP), scenario without the deficit 
resilience safeguard 
For information only: Minimum value of the structural primary balance (% of GDP), scenario 
with the deficit resilience safeguard 

2028 

-1.4 

-1.1 

Source: Commission’s calculations 

(7) 

(8) 

(9) 

In line with Article 12 of Regulation (EU) 2024/1263, Denmark and the Commission 
engaged in  a technical  dialogue in  September 2024. The dialogue centred on the net 
expenditure path envisaged by Denmark and its underlying assumptions (in particular 
potential growth and the output gap as well as discretionary measures including one-
off  measures),  as  well  as  the  envisaged  reforms  and  investments  responding  to  the 
main challenges identified in the context of the European Semester and the common 
priorities  of  the  Union  in  fair  green  and  digital  transition,  social  and  economic 
resilience, energy security and the build-up of defence capabilities. 

According to the information provided by Denmark in its plan, a consultation process 
with  relevant  national  stakeholders  (including  social  partners)  prior  to  submission  as 
foreseen in Article 11(3) of Regulation (EU) 2024/1263 did not take place, in line with 
the  transitional  provisions  foreseen  in  Article  36(1),  point  (c),  of  Regulation  (EU) 
2024/1263. 

The plan asserts that Denmark’s Economic Councils continuously monitor compliance 
with  fiscal  targets  and  assess  the  sustainability  of  fiscal  policy,  as  well  as  economic 
policy  more  generally,  although  it  offers  no  details  on  their  substantial  contribution 
nor on how this effort materialised into the plan. 

(10)  The plan was presented to the national parliament following submission. 

Other related process 

(11)  On  21  October  2024,  the  Council  addressed  to  Denmark  a  series  of  country-specific 

recommendations (CSRs) in the context of the European Semester8. 

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The  deficit  resilience  safeguard  established  in  Article  8  of  Regulation  (EU)  2024/1263  establishes  that  the 
annual improvement in the structural primary balance is of 0.4 percentage points of GDP (or 0.25 percentage 
points of GDP in case of an extension of the adjustment period) until the structural deficit is lower than 1.5% 
of GDP. 
Council  Recommendation  on  economic,  budgetary,  employment  and  structural  policies  of  Denmark, 
not yet published. 

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SUMMARY OF THE PLAN AND THE COMMISSION’S ASSESSMENT THEREOF 

(12) 

In  line  with  Article  16  of  Regulation  (EU)  2024/1263,  the  Commission  assessed  the 
plan as follows: 

Context: macroeconomic and fiscal situation and outlook 

(13)  Economic activity in Denmark grew by 2.5% in  2023, driven by exports  and private 
consumption.  According  to  the  European  Commission  Autumn  2024  Forecast,  the 
economy  is  expected  to  grow  by  2.4%  in  2024, on  the  back  of  net  exports  and  both 
private and government consumption. In 2025, real GDP is set to increase by 2.5%, as 
private and government  consumption and investment  gain  additional momentum  and 
increasing inventories provide a positive contribution to growth. In 2026, real GDP is 
expected  to  increase  by  1.8%,  as  the  positive  trends  for  private  consumption  and 
investment  continue.  Over  the  forecast  horizon  (i.e.,  2024-2026),  potential  GDP 
growth in Denmark is expected to decrease from 2.1% to 1.7%, driven by a decrease 
in the contribution from potential labour originating from a decrease in the number of 
employed persons. The unemployment rate stood at 5.1% in 2023, and is projected by 
the  Commission  to  amount  to  5.8%  in  20249  and  5.8%  in  2025  and  5.8%  in  2026. 
Inflation (GDP deflator) is projected to increase from -3.8% in 2023 to 1.6% in 2024, 
and to reach 2.2% in 2025 and 1.9% in 2026. 

(14)  Regarding  fiscal  developments,  in  2023  Denmark’s  general  government  surplus 
amounted  to  3.3%  of  GDP.  According  to  the  European  Commission  Autumn  2024 
Forecast, it is set to reach 2.3% of GDP in 2024 and to decline further to 1.5% of GDP 
in 2025 and, on a no-policy change basis, to 0.9% in 2026. The European Commission 
Autumn 2024 Forecast includes Denmark’s draft budget for 2025 that the government 
proposed  to  the  national  parliament  in  August  2024.  General  government  debt  was 
33.6%  of  GDP  at  end-2023.  According  to  the  European  Commission  Autumn  2024 
Forecast,  the  debt  ratio  is  expected  to  decline  to  31.0%  of  GDP  at  end-2024.  It  is 
projected to decline to 29.3% of GDP at end-2025 and 28.3% at end-2026. The fiscal 
forecast by the Commission does not consider the policy commitments in the medium-
term plans as such until they are underpinned by credibly announced and sufficiently 
specified concrete policy measures. 

Net expenditure path and main macroeconomic assumptions in the plan 

(15)  Denmark’s  national  medium-term  fiscal-structural  plan  covers  the  period  2025-2028 

and presents a fiscal adjustment over four years. 

(16)  The  plan  contains  all  information  required  by  Article  13  of  Regulation  (EU) 

2024/1263. 

(17)  The  plan commits  to the net  expenditure path  indicated in  Table 2, corresponding to 
average  net  expenditure  growth  of  4.4%  over  the  years  2025-2028.  The  technical 
information  (assuming  a  linear  adjustment  path)  is  consistent  with  an  average  net 
expenditure  growth  of  5.8%  over  the  adjustment  period  (2025-2028).  The  net 
expenditure  path  committed  to  in  the  plan  is  reported  to  lead  to  a  structural  primary 
balance of 0.5%10 of GDP at the end of the adjustment period (2028). This is higher 

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The rise in the unemployment rate in 2024 is mainly driven by a changed methodology for the labour force 
survey. 
This  figure  corresponds  to  the  structural  primary  balance  calculated  following  commonly  agreed 
methodology.  The  structural  primary  balance  reported  by  Denmark  in  the  plan  is  not  directly 

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than  the  minimum  level  of  the  structural  primary  balance  of  -1.4%  of  GDP  in  2028 
provided by the Commission in the technical information on 21 June 202411. The plan 
assumes potential GDP growth to increase from 2.1% in 2024 to 2.6% in 2025 before 
decreasing to 0.9% by 2028. In addition, the plan expects the growth rate of the GDP 
deflator  to  increase  by  2.1%  annually  on  average  over  2025-2028  and  converge  to 
2.0% by 2028. 

Table 2: Net expenditure path and main assumptions in Denmark’s plan 

2024 

2025 

2026 

2027 

2028 

Average over the 
period of validity 
of the plan 

2025-2028 

Net expenditure growth  
(annual, %) 

Net expenditure growth  
(cumulative, from base 
year 2023, %) 

7.2 

5.0 

5.7 

3.8 

2.9 

4.4 

7.2 

12.6 

18.9 

23.5 

27.1 

n.a. 

Potential GDP growth 
(%) 

2.1 

2.6 

Inflation (GDP deflator 
growth) (%) 

2.0 

1.7 

1.2 

2.6 

1.3 

2.0 

0.9 

2.0 

1.5 

2.1 

Source: Medium-term fiscal-structural plan of Denmark and Commission calculations. 
Implications of the plan’s net expenditure commitments for general government debt 

(18) 

If the net  expenditure path  committed to  in  the plan and the underlying assumptions 
materialise, general government debt would, according to the plan, gradually increase 
from 32.8% in 2024 to 35.6% of GDP at the end of the adjustment period (2028), as 
per the following table. After the adjustment, over the medium term (i.e. until 2038), 
the debt ratio is expected to gradually increase further, according to the plan, reaching 
44.4% of GDP in 2038. 

comparable  to  the  technical  information  as  it  is  based  on  different  technical  and  conceptual 
assumptions, as explained in the plan, Box 2.2. 
In the scenario without the deficit resilience safeguard. 

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Table  3:  General  government  debt  and  balance  developments  in  Denmark’s 
plan 

2023 

2024 

2025 

2026 

2027 

2028 

2038 

Government debt 

(% of GDP) 

Government 
balance 

(% of GDP) 

33.6 

32.8 

31.4 

32.7 

33.9 

35.6 

44.4 

3.3 

1.9 

1.0 

0.4 

0.3 

-0.1 

-0.8 

Source: Medium-term fiscal-structural plan of Denmark 

Thus,  according  to  the  plan,  general  government  debt  would  stay  below the  Treaty 
reference  value  of  60%  of  GDP  over  the  medium  term.  Therefore,  based  on  the 
plan’s  policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure 
path put forward in the plan is consistent with the requirement for debt as set out in 
Article 16(2) of Regulation (EU) 2024/1263. 

Implications  of  the  plan’s  net  expenditure  commitments  for  the  general  government 
balance 

(19)  Based  on  the  plan’s  net  expenditure  path  and  assumptions,  the  general  government 
surplus would gradually fall over the adjustment period, towards a deficit of 0.1% of 
GDP by 2028. Thus, according to the plan, the general government balance would not 
exceed the 3% of GDP reference value at the end of the adjustment period (2028). In 
addition,  in  the  ten  years  following  the  adjustment  period  (i.e.  until  2038),  the 
government  deficit  would  not  exceed  3%  of  GDP.  Therefore,  based  on  the  plan’s 
policy  commitments  and  macroeconomic  assumptions,  the  net  expenditure  path  put 
forward in the plan is consistent with the requirement for deficit as set out in  Article 
16(2) of Regulation (EU) 2024/1263. 

Macroeconomic assumptions of the plan 

(20)  The  plan  is  based  on  a  set  of  assumptions  which  differs  from  the  Commission’s 
assumptions  transmitted  to  Denmark  on  21  June  2024.  In  particular,  the  plan  uses 
different assumptions for eight variables, namely the starting point (structural primary 
balance  in  2024),  potential  GDP  growth,  GDP  deflator  growth,  real  GDP  growth, 
nominal  interest  rate,  fiscal  multiplier,  stock-flow  adjustments  and  one-offs.  An 
assessment of these differences in assumptions is provided below. The differences in 
assumptions  with  the  most  significant  impact  on  average  net  expenditure  growth  are 
listed below, together with an assessment of each difference considered in isolation. 

• 

The  plan  assumes  the  structural  primary  balance  in  2024  to  be  lower  than  the 
Commission’s assumptions. This contributes to lowering the expenditure ceiling, i.e. 
the net expenditure growth path over the adjustment period in the plan compared to 
the  Commission’s  assumptions.  The  less  favourable  assumption  in  the  plan  can  be 
explained  by  the  plan’s  reliance  on  a  national  concept  of  output  gaps  that  differs 
from the commonly agreed methodology and implies a higher cyclical contribution. 
Whereas  the  national  assessment  of  the  output  gap  conceptually  deviates  from  the 
commonly agreed methodology, it is to some extent corroborated by other estimates 
of  labour  market  tightness  and  capacity  pressures  in  the  economy.  Moreover,  the 
August 2024 national forecast is based on more recent data which is in line with the 

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• 

• 

• 

• 

European Commission Autumn  2024  Forecast. Consequently,  this more demanding 
assumption is deemed to be duly justified.  

The  plan  assumes  potential  GDP  growth  to  be  higher  than  the  Commission’s 
assumptions.  This  contributes  to  higher  average  net  expenditure  growth  over  the 
adjustment period in the plan than according to the Commission’s assumptions. This 
more favourable assumption in the plan than the Commission’s assumptions can be 
explained by the plan’s reliance on national estimates conceptually different from the 
ones  from  the  commonly  agreed  methodology.  The  plan  is  based  on  a  national 
estimate  of  a  positive  output  gap  in  2024,  whereas  the  commonly  agreed 
methodology suggests a negative output gap. In order to reach closure of the output 
gap the potential growth over the adjustment period is higher in the plan. The higher 
potential  GDP  growth  rates  over  the  adjustment  period  are  compensated  by  lower 
potential GDP growth rates at the lower end of the projections horizon. As a result, 
the  Danish  estimates  are  more  stable  than  the  ones  resulting  from  the  Commission 
medium-term  government  debt  projection  framework,  while  the  cumulated  growth 
over  the  projections  horizon  remains  slightly  lower  than  the  results  of  that 
methodology.  Consequently,  in  accordance  with  the  transitional  provisions  for  the 
first national medium-term fiscal structural plans as set out in Article 36(1), point (f) 
of Regulation (EU) 2024/1263, this assumption is deemed to be duly justified.  

The  plan  assumes  GDP  deflator  growth  to  be  lower  than  the  Commission 
assumptions.  This  contributes  to  lower  average  net  expenditure  growth  over  the 
adjustment period in the plan than according to the Commission’s assumptions. The 
more cautious assumption in the plan can be explained by the plan’s reliance on the 
August  2024  national  forecast  based  on  more  recent  data.  Consequently,  this 
assumption is deemed to be duly justified. 

The  plan  assumes  stock-flow  adjustments  to  be  on  average  higher  than  the 
Commission’s  assumptions.  This  contributes  to  higher  average  debt  ratio  growth 
over  the  adjustment  period  in  the  plan  and  thus  a  lower  average  net  expenditure 
growth over the adjustment period than according to the Commission’s assumptions. 
The more cautious assumption in the plan can be explained by government lending to 
social  housing  entities  classified  outside  the  government  sector  and  by  the  use  of 
more recent data, in line with the August 2024 national forecast. Consequently, this 
assumption is deemed to be duly justified.  

The  plan  assumes  one-offs  to  be  higher  than  the  Commission’s  assumptions.  This 
contributes  to  higher average net  expenditure growth over the adjustment period in 
the  plan  than  according  to  the  Commission’s  assumptions.  The  more  favourable 
assumption  in  the  plan  can  be  explained  by  the  plan’s  use  of  outturn  data  for  the 
repayment  of  excessively  collected  housing  tax.  Consequently,  this  assumption  is 
deemed to be duly justified. 

The  remaining  differences  do  not  have  a  significant  impact  on  average  net 
expenditure  growth  compared  to  the  Commission’s  assumptions. Taken  together, 
they contribute to lower average net expenditure growth in the plan than implied by 
the technical information. Overall, all the differences in assumptions taken together 
lead to an average net expenditure growth  in the plan that is lower in the plan than 
the average net expenditure growth implied by the technical information. Moreover, 
in its plan, Denmark commits to a net expenditure path that is lower than this ceiling. 
The  Commission  will  take  into  account  the  above  assessment  of  the  plan’s 
assumptions in future assessments of compliance with the net expenditure path. 

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Fiscal strategy of the plan 

(21)  According  to  the  indicative  fiscal  strategy  in  the  plan,  the  commitments  on  net 
expenditure are  consistent  with 
increased  government  expenditure,  notably 
prioritisation  of  citizen-oriented  public  services,  ensuring  that  funding  adjusts  in 
response to changes in the demographic composition, including the increasing number 
of the elderly. Denmark intends to bolster defence capabilities, ensuring that defence 
and  security  expenditures  constitute  at  least  2  percent  of  GDP.  Furthermore,  the 
government  aims  at  reducing  personal  income  taxes  resulting  in  lower  tax  revenue, 
with  a  phasing-in  of  the  personal  income  tax  reform  from  2025  onwards. The 
specification of the policy measures to be adopted is to be confirmed or adjusted and 
quantified in the annual budgets. The budget that the government tabled in the national 
parliament in August 2024 for 2025 specifies the policy measures through which the 
net expenditure commitment for 2025 will be achieved. 

Reform  and  investment  intentions  in  the  plan  responding  to  the  main  challenges 
identified in the context of the European Semester and addressing the common priorities 
of the Union 

(22)  The plan describes policy intentions concerning reforms and investments to respond to 
the main challenges identified in the context of the European Semester, especially the 
CSR, and to address the common priorities of the EU. The plan includes 91 measures, 
of which 11 are supported by the RRF, and 5 are funded by the cohesion policy funds. 

(23)  Concerning  the  common  priority  of  a  fair  green  and  digital  transition,  including  the 
climate objectives set out in Regulation (EU) 2021/1119, the plan includes a consistent 
set  of  reforms  and  investments.  Over  30  measures  contribute  to  the  environmental 
objectives.  Measures  on  climate  change  mitigation  include  a  green  tax  reform  on 
industry (included in the recovery and resilience plan (RRP)), an increase in the diesel 
tax  and  reforms  and  investments  on  carbon  capture  and  storage  to  enhance  the 
regulatory  framework  and  increase  uptake  of  the  technology  (included  in  the  RRP). 
The plan also includes measures on the decarbonisation of transport (CSR on transport 
in 2019), both for road transport and aviation. Measures on the transition to a circular 
economy  (CSRs  in  2022  and  2023)  include  a  new  action  plan  on  plastic  waste, 
extended  producer  responsibility  for  packaging  and  single-use  plastics.  Measures  on 
pollution  prevention  and  control  include  reforms  to  increase  regulation  of  biocide 
chemicals,  pesticides  and  PFAS.  They  are  complemented  by  measures  to  address 
emissions from  agriculture (CSR on  environmental  policy and resource  management 
in 2024). These include an agreement on a green Denmark, with a tax reform for CO2-
equivalents in agriculture, as well as investments in land conversion into natural areas 
and improvements of agricultural practices (some of which are included in the RRP). 
Together  with  the  updated  Marine  Plan,  these  measures  contribute  to  the  protection 
and  restoration  of  biodiversity  and  ecosystems.  The  plan  includes  9  measures  to 
support the digital transition (CSRs on budgetary framework and fiscal governance in 
2020,  2021,  2022  and  2023).  These  include  a  digitalisation  strategy  comprising  61 
initiatives  (included  in  the  RRP),  investments  in  the  digitalisation  of  public  services 
and  the  development  of  advanced  technologies  for  the  public  sector,  support  for  the 
digital transformation of companies (some included in the RRP and others supported 
by cohesion  funds) and investments  to  improve broadband coverage (included in  the 
RRP). 

(24)  Concerning  the  common  priority  of  social  and  economic  resilience,  including  the 
European  Pillar  of  Social  Rights,  the  plan  includes  over  40  initiatives.  The  main 

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priorities  of  the  plan  in  this  area  are  bolstering  Danish  businesses  and  employment. 
Measures  to  support  businesses  (CSR  on  research  and  innovation  (R&I)  issued  in 
2019)  include  a  large  increase  in  funds  to  support  businesses,  an  entrepreneurship 
package, and reforms to increase the tax deduction for R&I (included in the RRP). The 
plan has a strong focus on policies to support employment, including a reform of the 
personal income tax, several changes to the assistance system, making permanent the 
right to educational boost at 110 percent unemployment benefits, as well as reforms to 
increase access to international labour. The plan also includes a range of initiatives on 
equal  opportunities  and  access  to  the  labour  market.  Measures  on  education  and 
training  (CSR in  2019) include reforms  on  primary school  and higher education  and 
investments  to  improve  VET  and  adult  learning,  especially  for  the  green  transition 
(included in the RRP) (CSR on skills in 2023). The plan includes a range of initiatives 
on fair working conditions, such as reforms to improve the working environment. The 
plan  includes  a  range  of  initiatives  on  social  protection  and  inclusion,  with  a 
Children’s Act reform to increase the rights of children, simplification of the sickness 
benefit system and the permanent extension of the social exemption card as of 2025. 
On healthcare (CSR in 2020), the plan includes a reform of the local healthcare system 
to better distribute healthcare personnel and resources across Denmark, investments in 
psychiatry,  emergency  care  and  hospital  infrastructure.  This  is  complemented  with  a 
reform  of  the  long-term  care  sector  and  training  of  staff  to  cater  for  people  with 
disabilities.  Measures  on  housing  (CSRs  in  2022  and  2023)  include  a  housing  tax 
reform which entered into force in 2024 and investments in social housing. 

(25)  Concerning the common priority of energy security, the plan includes a consistent set 
of  measures,  which  all  respond  to  the  CSRs  on  renewable  energy,  energy 
infrastructure  and  networks  addressed  to  Denmark  in  2022  and  2023.  Measures  to 
increase the availability and uptake of green heating include investments to accelerate 
the rollout of district heating and incentives for households to switch from gas heating 
to green heating (included in the RRP). On low carbon and sustainable fuels, the plan 
includes investments to build electrolyser capacity of 4-6 GW by 2030, investments in 
Power-to-X technologies supported by REACT-EU and Just Transition funds and two 
IPCEIs  on  hydrogen.  Measures  to  increase  renewable  energy  production  include 
reforms  to  accelerate  permitting  through  the  National  Energy  Crisis  Taskforce 
(included  in  the  RRP),  as  well  as  investments  to  quadruple  land-based  renewable 
energy production by 2030, to increase offshore wind production, including with two 
energy islands. These are complemented by measures to reinforce the resilience of the 
electricity  system,  such  as  grid  expansion  and  an  updated  framework  for  electricity 
grid  companies.  Measures  to  diversify  supply  sources,  which  cover  reducing 
dependence  on  fossil  fuels  from  outside  of  the  Union,  include  investments  to 
temporarily increase gas extraction from Danish  fields in the North Sea and increase 
biogas production. 

(26)  Concerning the common priority of defence capabilities, the plan includes a ten-year 
framework  agreement  for  Danish  defence  in  2024-2033  which  increases  defence 
spending by DKK 190 billion over the period (corresponding to an average of 0.7% of 
2023 GDP per year). In addition, Denmark allocated over DKK 60 billion for military 
support  to  Ukraine  between  2023  and  2028.  Altogether,  this  is  expected  to  bring 
annual spending on defence above 2% of GDP from 2023 to the end of the framework 
agreement period. 

(27)  The  plan  provides 

the  consistency  and,  where  appropriate, 
complementarity,  with  the  cohesion  policy  funds  and  Denmark’s  RRP.  There  is 

information  on 

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information on a number of measures in the plan that are included in the RRP and that 
contribute  to  the  green  and  digital  transitions.  The  plan  also  mentions  measures 
financed  through  structural  funds  and  adds  some  contextual  information  on  the 
interplay of cohesion policy funds with the national policies addressing EU common 
priorities and CSRs. 

(28)  The plan aims to contribute to meet the public investment needs of Denmark related to 
the  common  priorities  of  the  EU.  On  fair  green  and  digital  transition,  Denmark’s 
investment needs relate to its commitment to reduce greenhouse gas emissions by 70% 
compared to 1990 levels by 2030 and to achieve climate neutrality by 2045. The plan 
also  mentions  investment  needs  related  to  artificial  intelligence,  digital  skills  and 
digitalisation of businesses. On social and economic resilience, the investment  needs 
are  related  to  changing  demographics,  increasing  employment  and  skills  as  well  as 
public service provision  on welfare. The investment  needs related to  energy security 
concern  phasing  out  of gas,  independence  from  Russian  gas  and  framework  for  new 
technologies  like  Power-to-X.  On  defence,  the  plan  includes  an  increase  in  defence 
spending  to  over  2%  of  GDP,  in  alignment  with  NATO  commitments.  The  table  on 
investment  needs  is  complemented  by  an  extensive  list  of  measures  addressing  the 
common priorities. 

Conclusion of the Commission’s assessment 

(29)  Overall, the Commission is of the view that Denmark’s plan fulfils the requirements of 

Regulation (EU) 2024/1263. 

OVERALL CONCLUSION 

(30) 

In accordance with Article 17 of Regulation (EU) 2024/1263, the net expenditure path 
as set in the plan should be recommended by the Council to Denmark. 

HEREBY RECOMMENDS that Denmark 

1. 

Ensure  that  net  expenditure  growth  does  not  exceed  the  maxima  established  in 
Annex I to this Recommendation.  

In  addition,  the  Council  invites  Denmark  to  ensure  the  delivery  of  reforms  and 
investments  responding  to  the  main  challenges  identified  in  the  context  of  the 
European  Semester,  in  particular  in  the  country-specific  recommendations,  and 
addressing the common priorities of the Union.  

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ANNEX I 

Maximum growth rates of net expenditure  
(annual and cumulative growth rates, in nominal terms) 
Denmark 

Years 

Growth 
rates (%) 

Annual 
Cumulative (*) 

2025 
5.0 
12.6 

2026 
5.7 
18.9 

2027 
3.8 
23.5 

2028 
2.9 
27.1 

(*) The cumulative growth rates are calculated by reference to the base year of 2023. 

Done at Strasbourg, 

For the Council 
The President 

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