Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Denmark
Date: 2025-06-04
Institutions: European Commission, Reform and Investment Task Force
Subjects: Denmark, budget policy, economic policy, economic recovery, economic reform, employment policy, energy policy, labour market, social policy, stability pact

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   EUROPEAN COMMISSION  Brussels, 4.6.2025  COM(2025) 204 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Denmark {SWD(2025) 204 final}  
 
Recommendation for a 

COUNCIL RECOMMENDATION 

on the economic, social, employment, structural and budgetary policies 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(2) and Article 148(4) thereof, 

Having regard to 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 Regulation (EC) No 1466/971, and in particular 
Article 3(3) thereof, 

Having regard to the recommendation of the European Commission, 

Having regard to the resolutions of the European Parliament, 

Having regard to the conclusions of the European Council, 

Having regard to the opinion of the Employment Committee, 

Having regard to the opinion of the Economic and Financial Committee, 

Having regard to the opinion of the Social Protection Committee, 

Having regard to the opinion of the Economic Policy Committee, 

Whereas: 

General considerations 

(1) 

Regulation (EU) 2024/1263, which entered into force on 30 April 2024, specifies the 
objectives  of  the  economic  governance  framework,  which  aims  at  promoting  sound 
and  sustainable  public  finances  and  sustainable  and  inclusive  growth  and  resilience 
through reforms and investments, and preventing excessive government deficits. The 
Regulation  stipulates  that  the  Council  and  the  Commission  conduct  multilateral 
surveillance in the context of the European Semester in accordance with the objectives 
and requirements set out in the TFEU. The European Semester includes, in particular, 
the  formulation,  and  the  surveillance  of  the  implementation  of  country-specific 
recommendations.  The  Regulation  also  promotes  national  ownership  of  fiscal  policy 
and  emphasises  its  medium-term  focus,  combined  with  more  effective  and  coherent 
enforcement. Each Member State must submit to  the Council and the Commission  a 
national  medium-term  fiscal-structural  plan,  containing  its  fiscal,  reform  and 
investment  commitments,  over  4  or  5  years,  depending  on  the  length  of the  national 
legislative  term.  The  net  expenditure2  path  in  these  plans  has  to  comply  with  the 

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OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj. 
Net  expenditure  as  defined  in  Article  2,  point  (2),  of  Regulation  (EU)  2024/1263:  ‘net  expenditure’ 
means government expenditure net of (i) interest expenditure; (ii) discretionary revenue measures; (iii) 
expenditure  on  programmes  of  the  Union  fully  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. 

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(2) 

(3) 

(4) 

Regulation’s  requirements,  including  the  requirements  to  put  or  keep  general 
government debt on a plausibly downward path by the end of the adjustment period, or 
for it to remain at prudent levels below 60% of gross domestic product (GDP), and to 
bring  and/or  maintain  the  general  government  deficit  below  the  3%-of-GDP  Treaty 
reference value over the medium term. Where a Member State commits to a relevant 
set  of  reforms  and  investments  in  accordance  with  the  criteria  set  out  in  the 
Regulation, the adjustment period may be extended by up to three years. 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council3,  which 
established  the  Recovery  and  Resilience  Facility  (the  ‘RRF’),  entered  into  force  on 
19 February 2021.  The  RRF  provides  financial  support  to  Member  States  for 
implementing  reforms  and  investments,  delivering  a  fiscal  impulse  financed  by  the 
Union.  In  line  with  the  priorities  of  the  European  Semester  for  economic  policy 
coordination, the RRF fosters economic and social recovery while driving sustainable 
reforms and investments, in particular promoting the green and digital transitions and 
making  Member  States’  economies  more  resilient.  It  also  helps  strengthen  public 
finances  and  boost  growth  and  job  creation  in  the  medium  and  long  term,  improve 
territorial cohesion within the Union and support the continued implementation of the 
European Pillar of Social Rights. 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council4  (the 
‘REPowerEU  Regulation’),  which  was  adopted  on  27 February 2023,  aims  to  phase 
out the Union’s dependence on Russian fossil-fuel imports. This helps achieve energy 
security  and  diversify  the  Union’s  energy  supply,  while  increasing  the  uptake  of 
renewables,  energy  storage  capacities  and  energy  efficiency.  Denmark  added  a  new 
REPowerEU chapter to its national recovery and resilience plan in order to finance key 
reforms and investments that will help achieve the REPowerEU objectives. 

On 30 April 2021, Denmark submitted its national recovery and resilience plan to the 
Commission, in accordance with Article 18(1) of Regulation (EU) 2021/241. Pursuant 
to Article 19 of that Regulation, the Commission assessed the relevance, effectiveness, 
efficiency  and  coherence  of  the  recovery  and  resilience  plan,  in  accordance  with  the 
assessment guidelines set  out  in  Annex V.  On  13 July  2021, the Council adopted its 
Implementing Decision approving the assessment of the recovery and resilience plan 
for Denmark5, which was amended under Article 18(2) on 9 November 2023 to update 
the maximum financial contribution for non-repayable financial support, as well as to 
include  the  REPowerEU  chapter6.  The  release  of  instalments  is  conditional  on  the 
adoption  of  a  decision  by  the  Commission,  in  accordance  with  Article 24(5),  stating 
that Denmark has satisfactorily achieved the relevant milestones and targets set out in 
the  Council  Implementing  Decision.  Satisfactory  achievement  requires  that  the 

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the  Recovery  and  Resilience  Facility 

Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
establishing 
(OJ  L  57,  18.2.2021,  p. 17,  ELI: 
http://data.europa.eu/eli/reg/2021/241/oj). 
Regulation  (EU)  2023/435  of  the  European  Parliament  and  of  the  Council  of  27 February 2023 
amending Regulation (EU) 2021/241 as regards REPowerEU chapters in recovery and resilience plans 
and  amending  Regulations  (EU)  No 1303/2013,  (EU)  2021/1060  and  (EU)  2021/1755,  and  Directive 
2003/87/EC (OJ L 63, 28.2.2023, p. 1, ELI: http://data.europa. eu/eli/reg/2023/435/oj). 
Council Implementing Decision of 13 July 2021 on the approval of the assessment of the recovery and 
resilience plan for Denmark (10154/2021). 
Council Implementing Decision of 9 November 2023 amending the Implementing Decision of 13 July 
2021 on the approval of the assessment of the recovery and resilience plan for Denmark (14473/2023). 

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achievement  of  preceding  milestones  and  targets  for  the  same  reform  or  investment 
has not been reversed. 

On  21  January  2025  the  Council,  upon  the  recommendation  of  the  Commission, 
adopted a recommendation endorsing the national medium-term fiscal-structural plan 
of Denmark7. The plan was submitted in accordance with Article 11 and Article 36(1), 
point (a)  of Regulation (EU) 2024/1263,  covers the period from  2025 until  2028 and 
sets a budgetary constraint in the form of a maximum net expenditure growth rate over 
four years. 

On  26 November  2024,  on  the  basis  of  Regulation  (EU)  No 1176/2011,  the 
Commission  adopted  the  2025  Alert  Mechanism Report,  in  which  it  did  not  identify 
Denmark as one of the Member States for which an in-depth review would be needed. 
The  Commission  also  adopted  a  recommendation  for  a  Council  recommendation  on 
the economic policy of the euro  area and  a proposal  for the 2025 Joint  Employment 
Report,  which  analyses  the  implementation  of  the  Employment  Guidelines  and  the 
principles  of  the  European  Pillar  of  Social  Rights.  The  Council  adopted  the 
Recommendation on the economic policy of the euro area8 on 13 May 2025 and  the 
Joint Employment Report on 10 March 2025. 

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic framework that aims to boost the EU’s global competitiveness over the next 
five  years.  It  identifies  the  three  transformative  imperatives  of  sustainable  economic 
growth: (i) innovation; (ii) decarbonisation and competitiveness; and (iii) security. To 
close  the  innovation  gap,  the  EU  aims  to  foster  industrial  innovation,  support  the 
growth of start-ups through initiatives like the EU Start-up and Scale-up Strategy, and 
promote the adoption of advanced technologies like artificial intelligence and quantum 
computing.  In  pursuit  of  a  greener  economy,  the  Commission  has  outlined  a 
comprehensive Affordable Energy Action Plan and a Clean Industrial Deal, ensuring 
that  the  shift  to  clean  energy  remains  cost-effective,  competitiveness-friendly, 
particularly  for  energy-intensive  sectors,  and  is  a  driver  for  growth.  To  reduce 
excessive dependencies and increase security, the Union is committed to strengthening 
global  trade  partnerships,  diversifying  supply  chains  and  securing  access  to  critical 
raw materials and clean energy sources. These priorities are underpinned by horizontal 
enablers, namely regulatory simplification, deepening of the single market, financing 
competitiveness and a Savings and Investments Union, promotion of skills and quality 
jobs, and better coordination of EU policies. The Competitiveness Compass is aligned 
with  the  European  Semester,  ensuring  that  Member  States’  economic  policies  are 
consistent with the Commission’s strategic objectives, creating a unified approach to 
economic governance that fosters sustainable growth, innovation and resilience across 
the Union. 

In  2025,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  implementation  of  the  RRF.  The  full  implementation  of  the 
recovery and resilience plans remains essential  for delivering on the policy priorities 
under the European Semester, as the plans help effectively address all or a significant 
subset  of  challenges  identified  in  the  relevant  country-specific  recommendations 

Council  Recommendation  of  21  January  2025  endorsing  the  medium-term  fiscal-structural  plan  of 
Denmark, OJ C/2025/654, 10.2.2025. 
Council  Recommendation  of  13  May  2025  on  the  economic  policy  of  the  euro  area  (OJ  C, 
C/2025/2782, 22.5.2025, ELI: http:// data.europa.eu/eli/C/2025/2782/oj). 

(5) 

(6) 

(7) 

(8) 

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issued  in  recent  years.  These  country-specific  recommendations  remain  equally 
relevant  for  the  assessment  of  amended  recovery  and  resilience  plans  in  accordance 
with Article 21 of Regulation (EU) 2021/241. 

(9) 

The  2025  country-specific  recommendations  cover 
the  key  economic  policy 
challenges that are not sufficiently addressed by measures included in the recovery and 
resilience  plans,  taking  into  account  the  relevant  challenges  identified  in  the  2019-
2024 country-specific recommendations. 

(10)  On 4 June 2025, the Commission published the 2025 country report for  Denmark. It 
assessed  Denmark’s  progress 
relevant  country-specific 
in  addressing 
recommendations  and  took  stock  of  Denmark’s  implementation  of  the  recovery  and 
resilience plan. Based on this analysis, the country report identified the most pressing 
challenges  Denmark  is  facing.  It  also  assessed  Denmark’s  progress  in  implementing 
the  European  Pillar  of  Social  Rights  and  in  achieving  the  Union  headline  targets  on 
employment, skills and poverty reduction, as well as progress in achieving the United 
Nations Sustainable Development Goals. 

the 

Assessment of the Annual Progress Report 

(11)  On 21 January 2025 the Council recommended the following maximum growth rates 
of net expenditure for Denmark: 5.0% in 2025, 5.7% in 2026, 3.8% in 2027, and 2.9% 
in  2028,  which  correspond  to  the  maximum  cumulative  growth  rates  calculated  by 
reference  to  2023  of  12.6%  in  2025,  18.9%  in  2026,  23.5%  in  2027,  and  27.1%  in 
2028.  On  30  April  2025  Denmark  submitted  its  Annual  Progress  Report9,  on  the 
adherence  to  the  recommended  maximum  growth  rates  of  net  expenditure  and  the 
implementation  of  reforms  and  investments  responding  to  the  main  challenges 
identified  in  the  European  Semester  country-specific  recommendations.  The  2025 
Annual  Progress  Report  also  reflects  Denmark’s  biannual  reporting  on  the  progress 
made  in  achieving  its  recovery  and  resilience  plan  in  accordance  with  Article  27  of 
Regulation (EU) 2021/241. 

(12)  Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  recommended  to 
activate the national  escape  clause of the Stability and Growth Pact  in  a coordinated 
manner to support the EU efforts to achieve a rapid and significant increase in defence 
spending and this proposal was welcomed by the European Council of 6 March 2025. 
Following the request of Denmark on 30 April 2025, on [date] the Council, upon the 
recommendation of the Commission, adopted a recommendation allowing Denmark to 
deviate  from,  and  exceed,  the  recommended  maximum  growth  rates  of  net 
expenditure10. 

(13)  Based  on  data  validated  by  Eurostat11,  Denmark’s  general  government  surplus 
increased from 3.3% of GDP in 2023 to 4.5% in 2024, while the general government 
debt  fell  from  33.6%  of  GDP  at  the  end  of  2023  to  31.1%  at  the  end  of  2024. 
According to the Commission’s calculations, these developments correspond to a net 
expenditure  growth  rate  of  3.3%  in  2024.  In  the  Annual  Progress  Report,  Denmark 
estimates the net expenditure growth in 2024 at 5.1%. The Commission estimates that 

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The  2025  Annual  Progress  Reports  are  available  on:  https://economy-finance.ec.europa.eu/economic-
and-fiscal-governance/stability-and-growth-pact/preventive-arm/annual-progress-reports_en  
Council  Recommendation  allowing  Denmark  to  deviate  from,  and  exceed,  the  recommended  net 
expenditure path (Activation of the national escape clause), OJ C/2025/xxx, x.x.2025. 
Eurostat-Euro Indicators, 22.4.2025. 

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the  net  expenditure  growth  was  lower  than  in  the  Annual  Progress  Report.  The 
difference  between  the  Commission’s  calculations  and  the  estimates  of  national 
authorities  is  due  to  a  higher  Commission  estimate  of  the  cyclical  component  of 
unemployment  benefit  expenditure.  The  difference  is  explained  by  methodological 
differences,  as  Denmark  uses  a  national  method  (rather  than  the  commonly  agreed 
method)  relying  on  other  data  than  the  Labour  Force  Survey.  Based  on  the 
Commission’s  estimates,  the  fiscal  stance12,  which  includes  both  nationally  and  EU 
financed expenditure, was contractionary, by 0.5% of GDP, in 2024. 

(14)  According to the Annual Progress Report, the macroeconomic scenario underpinning 
the  budgetary  projections  by  Denmark  expects  real  GDP  growth  at  2.3%  in  2025, 
while  HICP  inflation  is  projected  at  2.0%  in  2025.  The  Commission  Spring  2025 
Forecast  projects  real  GDP  to  grow  by  3.6%  in  2025  and  2.0%  in  2026,  and  HICP 
inflation to stand at 1.6% in 2025 and 1.5% in 2026. 

(15) 

In the Annual Progress Report, the general government surplus is expected to decrease 
to  0.8%  of  GDP  in  2025,  while  the  general  government  debt-to-GDP  ratio  is  set  to 
decrease  to  30.0%  by  the  end  of  2025.  These  developments  correspond  to  net 
expenditure growth of 8.2% in 2025. The Commission Spring 2025 Forecast projects a 
general government surplus of 1.5% of GDP in 2025. The decrease of the surplus in 
2025  mainly  reflects  higher  net  nationally  financed  primary  expenditure,  including 
defence  expenditure,  and  lower  revenue,  including  pension  yield  tax  revenue. 
According  to  the  Commission’s  calculations,  these  developments  correspond  to  net 
expenditure  growth  of  10.0%  in  2025.  These  higher  projections  of  net  expenditure 
growth  than  in  the  Annual  Progress  Report  are  due  to  different  assumptions 
concerning the cyclical component of unemployment benefits as well as base effects. 
The difference between the general government surplus projected by the Commission 
and  Denmark  is  due  to  a  lower  Commission  estimate  for  government  expenditures, 
notably  defence  expenditures,  where  the  spending  profile  is  not  yet  fully  specified. 
Based  on  the  Commission’s  estimates,  the  fiscal  stance,  which  includes  both 
nationally and EU financed expenditure, is projected to be expansionary, by 2.6% of 
GDP, in 2025. The general government debt-to-GDP ratio is set to decrease to 29.7% 
by the end of 2025. 

(16)  General  government  expenditure  amounting  to  0.0%  of  GDP  is  expected  to  be 
financed  by  non-repayable  support  (“grants”)  from  the  Recovery  and  Resilience 
Facility  in  2025,  compared  to  less  than  0.1%  of  GDP  in  2024,  according  to  the 
Commission Spring 2025 Forecast. Expenditure financed by Recovery and Resilience 
Facility  non-repayable  support  enables  high-quality  investment  and  productivity-
enhancing  reforms  without  a  direct  impact  on  the  general  government  balance  and 
debt of Denmark.  

(17)  General  government  defence  expenditure  in  Denmark  amounted  to  1.2%  of  GDP  in 
2021,  1.2%  of  GDP  in  2022  and  1.8%  of  GDP  in  202313.  According  to  the 
Commission  Spring  2025  Forecast,  expenditure  on  defence  is  projected  at  2.1%  of 

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The fiscal stance is defined as a measure of the annual change in the underlying budgetary position of 
the  general  government.  It  aims  to  assess  the  economic  impulse  stemming  from  fiscal  policies,  both 
those  that  are  nationally  financed  and  those  that  are  financed  by  the  EU  budget.  The  fiscal  stance  is 
measured as the difference between (i) the medium-term potential growth and (ii) the change in primary 
expenditure net of discretionary revenue measures and including expenditure financed by non-repayable 
support (grants) from the Recovery and Resilience Facility and other Union funds. 
Eurostat, government expenditure by classification of functions of government (COFOG).  

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GDP  in  2024  and  3.0%  of  GDP  in  2025.  This  corresponds  to  an  increase  of  1.8 
percentage  points  of  GDP  compared  to  2021.  The  period  when  the  national  escape 
clause 
to  reprioritise  government 
expenditure  or  increase  government  revenue  so  that  lastingly  higher  defence 
expenditure would not endanger fiscal sustainability in the medium term.  

is  activated  (2025-2028)  allows  Denmark 

(18)  According  to  the  Commission  Spring  2025  Forecast,  net  expenditure  in  Denmark  is 
projected to grow by 10.0% in 2025 and 13.6% cumulatively in 2024 and 2025. Based 
on the Commission Spring 2025 Forecast, the net expenditure growth of  Denmark in 
2025 is projected to be above the recommended maximum growth rate, corresponding 
to  a  deviation14  of  2.1%  of  GDP  in  annual  terms.  When  considering  2024  and  2025 
together, the cumulative growth rate of net  expenditure is also projected to be above 
the  recommended  maximum  growth  rate,  corresponding  to  a  deviation  of  0.5%  of 
GDP. However, the projected deviation is within the flexibility of the national escape 
clause based on current projections for defence spending.  

(19)  The  Annual  Progress  Report  does  not  include  budgetary  projections  beyond  2025. 
Based on policy measures known at the cut-off date of the forecast, the Commission 
Spring 2025 Forecast projects a general government surplus of 0.6% of GDP in 2026. 
The decrease of the surplus in 2026 mainly reflects growth in expenditures, including 
defence  expenditures.  These  developments  correspond  to  net  expenditure  growth  of 
5.4% in 2026. Based on the Commission’s estimates, the fiscal stance, which includes 
both nationally and EU financed expenditure, is projected to be expansionary, by 0.7% 
of  GDP,  in  2026.  The  general  government  debt-to-GDP  ratio  is  projected  by  the 
Commission to decrease to 29.4% by the end of 2026. 

Key policy challenges 

(20) 

In accordance with Article 19(3), point (b), of Regulation (EU) 2021/241 and criterion 
2.2  of  Annex  V  to  that  Regulation,  the  recovery  and  resilience  plan  includes  an 
extensive set  of mutually reinforcing  reforms and investments  to  be implemented by 
2026.  These  are  expected  to  help  effectively  address  all  or  a  significant  subset  of 
challenges  identified  in  the  relevant  country-specific  recommendations.  Within  this 
tight timeframe, finalising the effective implementation of the recovery and resilience 
plan,  including  the  REPowerEU  chapter,  is  essential  to  boost  Denmark’s  long-term 
competitiveness  through  the  green  and  digital  transitions,  while  ensuring  social 
fairness. The systematic involvement of local and regional authorities, social partners, 
civil society and other relevant stakeholders remains essential in order to ensure broad 
ownership for the successful implementation of the recovery and resilience plan. 

(21)  The implementation  of  cohesion  policy programmes, which encompass support from 
the  European  Regional  Development  Fund  (ERDF),  the  Just  Transition  Fund  (JTF) 
and  the  European  Social  Fund  Plus  (ESF+),  has  accelerated  in  Denmark.  It  is 
important to continue efforts to ensure the swift implementation of these programmes, 
while maximising their impact on the ground. Denmark is already taking action under 
its  cohesion  policy  programmes  to  boost  competitiveness  and  growth.  Yet,  there  is 
scope  to  further  upskill  the  workforce  and  improve  regional  competitiveness,  also 
considering the disparities between urban and rural areas. In accordance with Article 
18  of  Regulation  (EU)  2021/1060,  Denmark  is  required  –  as  part  of  the  mid-term 
review of the cohesion policy funds – to review each programme taking into account, 

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From  2026  these  figures  will  appear  in  the  control  account  that  is  established  in  Article  22  of  the 
Regulation (EU) 2024/1263. 

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things, 

identified 

the  challenges 

among  other 
the  2024  country-specific 
recommendations.  The  Commission  proposals  adopted  on  1  April  202515  extend  the 
deadline for submitting an assessment – for each programme – of the outcome of the 
mid-term review beyond 31 March 2025. It also provides flexibilities to help speed up 
programme implementation and incentives for Member States to allocate resources to 
five  strategic  priority  areas  of  the  Union,  namely  competitiveness  in  strategic 
technologies, defence, housing, water resilience and energy transition. 

in 

(22)  The  Strategic  Technologies  for  Europe  Platform  (STEP)  provides  the  opportunity  to 
invest in a key EU strategic priority by strengthening the EU’s competitiveness. STEP 
is channelled through 11 existing EU funds. Member States can also contribute to the 
InvestEU  programme  supporting  investments  in  priority  areas.  Denmark  could  use 
these initiatives to support the development or manufacturing of critical technologies, 
including clean and resource-efficient technologies. 

(23)  Beyond the economic and social challenges addressed by the recovery and resilience 
plan  and  other  EU  funds,  Denmark  faces  several  additional  challenges  related  to 
innovation  and  growth,  the  decarbonisation  and  sustainability  of  the  economy,  skills 
shortages and mismatches, and housing. 

(24)  Productivity levels in Denmark are among the highest in the EU. However, there is a 
widening  productivity  gap  between  large  companies  and  small  and  medium-sized 
enterprises (SMEs). This points to weaknesses in the rate of diffusion of technological 
advances.  In  addition,  R&D  investments  are  concentrated  in  a  few  large  companies. 
Facilitating the diffusion of technologies and increasing cooperation between large and 
small  firms  and  research  institutions,  particularly  in  sectors  with  emerging  potential 
such  as  quantum  computing,  space  technologies  and  defence,  has  the  potential  to 
involve  more  companies  in  research  and  innovation  activities  and  raise  productivity 
across  companies  of  all  sizes.  Despite  recent  progress,  improving  access  to  venture 
capital  and  private  equity,  along  with  improving  framework  conditions  for  initial 
public offerings, could help boost investment in innovative companies and support the 
scaling up of activities. 

(25)  Denmark  has  committed  to  achieving  ambitious  climate  and  energy  targets.  The 
country  is  a  frontrunner  in  the  uptake  and  production  of  net-zero  technologies, 
particularly wind power and carbon capture and storage technologies. Denmark has an 
outstanding  penetration  rate  of  renewables  in  its  electricity  generation  mix:  in  2024, 
88%  of  Denmark’s  electricity  was  generated  from  renewable  sources,  with  wind 
accounting for 58%. Despite these achievements, two recent tenders for a combined 6 
gigawatts  of  additional  offshore  wind  capacity  failed  to  attract  interest  from 
developers. This highlights the need for a supportive environment for companies in the 
sector  and  a  potential  redesign  of  the  tender  terms.  In  this  context,  a  political 
agreement on ‘tender frameworks for three offshore wind farms’ was announced on 19 
May 2025, envisaging upcoming offshore wind tenders for at least 3 GW of additional 
capacity  to  qualify  for  state  support.  Additionally,  Denmark  would  benefit  from 
swiftly  acting  on  the  recommendations  issued  by  the  National  Energy  Crisis  Team 
(NEKST)  to  streamline  and  expedite  permitting  and  administrative  procedures  for 
deploying wind and solar energy on land. 

15 

Proposal  for  a  REGULATION  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL 
amending  Regulations  (EU)  2021/1058  and  (EU)  2021/1056  as  regards  specific  measures  to  address 
strategic challenges in the context of the mid-term review - COM(2025) 123 final. 

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(26)  Electricity  accounted  for  approximately  one  fifth  of  the  country’s  final  energy 
consumption in 2023, a share that has remained relatively stable over the past decade. 
The  high  proportion  of  renewables  in  Denmark’s  electricity  generation  mix  means 
there  is  significant  potential  for  further  electrification  across  sectors  to  help  reduce 
overall  greenhouse  gas  emissions  and  enable  consumers  to  reap  the  benefits  of 
affordable  renewable  generation.  Higher  domestic  demand  for  electricity  also 
strengthens  the  long-term  business  case  for  developers  to  expand  renewable-energy 
capacity, thereby driving further investment and growth in the clean energy sector. To 
achieve higher electrification and renewable energy penetration rates, it is necessary to 
upgrade  the  electricity  grid  and  promote  both  demand-  and  supply-side  clean 
flexibility  solutions,  such  as  storage,  distributed  renewable  generation,  and  demand 
response. 
issued 
recommendations to accelerate expansion of the electricity grid. A political agreement 
was  reached  on  some  of  those  recommendations  identifying  three  areas  where 
permitting  procedures  for  electricity  infrastructure  could  be  simplified.  While  the 
commitments  contained  in  the  agreement  are  a  positive  step  forward,  swift 
implementation of a wider set of NEKST recommendations remains crucial to ensure 
that grid management is able to meet the future needs with higher installed renewable 
capacity  and  higher  demand  for  electricity.  In  terms  of  flexibility,  Denmark  could 
further promote energy storage owned by end consumers and  market participation in 
distributed energy resources and in balancing and flexibility services. 

thematic  NEKST  working  group 

In  December  2024,  a 

(27)  The Danish agricultural sector is one of the main sources of the country’s greenhouse 
gas  emissions  covered  by  the  Effort  Sharing  Regulation16.  Intensive  agricultural 
practices  are  also  causing  excessive  nutrient  leaching  and  run-off  from  fields,  with 
serious  repercussions  on  soil  health  and  on  aquatic  and  marine  ecosystems.  Making 
the agri-food sector more sustainable is therefore key to achieving climate objectives, 
as well as to restoring degraded biodiversity and ecosystems. On 18 November 2024, 
the government reached a broad political agreement on a ‘Green Denmark’ with most 
opposition  parties.  The  measures  outlined  in  the  agreement,  complemented  by  other 
initiatives  under  Denmark’s  common  agricultural  policy  strategic  plan  and  the 
recovery and resilience plan, aim to improve sustainable land use and management in 
the country. Swift implementation and enactment of the agreed measures is now key to 
meet the ambitious climate and environmental objectives set out in the agreement, as 
well as to ensure competitiveness and social fairness. 

(28)  Despite  recent  efforts,  Denmark  continues  to  face  challenges  in  transitioning  to  a 
stronger circular economy and enhancing its waste management policies. According to 
the  latest  available  Eurostat  data,  the  country  has  the  second  highest  volume  per 
person of food and municipal waste generated in the EU, and its circular material use 
rate  and municipal  waste recycling rate remain  below the EU  average,  with  no clear 
sign  of  an  upward  trend.  The  move  to  bring  in  a  separate  collection  system  for  all 
waste  streams  in  most municipalities  in  Denmark  and  to  enforce  stricter  commercial 
waste  management  rules  as  of  January  2025  are  positive  steps  forward.  Moreover, 

16 

Regulation (EU) 2023/857 of the European Parliament and of the Council of 19 April 2023 amending 
Regulation  (EU)  2018/842  on  binding  annual  greenhouse  gas  emission  reductions  by  Member  States 
from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement, and 
Regulation 
ELI: 
L 
http://data.europa.eu/eli/reg/2023/857/oj. 

2018/1999 

26.4.2023, 

p. 1-14), 

(EU) 

111, 

(OJ 

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Denmark’s  2021  action  plan  for  a  circular  economy  includes  a  range  of  waste 
prevention and management measures along the entire circular value chain. However, 
additional  action  is  needed,  especially  to  reduce  waste  production  and  incineration, 
replace  waste  incineration  with  more  environmentally  friendly  sources  of  heat 
generation in national district heating systems, and boost the collection and recycling 
rate of e-waste. 

(29)  The Danish labour market is tight and linked to some skills shortages and mismatches, 
potentially holding back employment and growth. The skills shortages are particularly 
widespread in certain healthcare professions, among ICT specialists, skilled workers in 
construction  and  other  sectors,  including  sectors  linked  to  the  green  transition.  To 
address these shortages, Denmark has benefited from an influx of foreign workers over 
recent  years.  Further  progress  on  tackling  these  skills  shortages  could  be  made  by 
effectively  addressing attainment  inequalities in  education and training.  The share of 
early  school  leavers  has  been  rising  in  recent  years  and  is  now  higher  than  the  EU 
average; reversing this trend could help boost labour supply and potentially reduce the 
skills shortages. 

(30) 

In recent years, the construction of non-profit housing has fallen short of plans. High 
construction  costs,  high  prices  for  owner-occupied  housing,  highly  regulated  rental 
markets  and  lengthy  waiting  times  for  non-profit  housing  have  led  to  persistent 
shortages in  affordable housing in  major urban areas. Partly as  a result, a  significant 
proportion of households, including  many young people living  alone,  face a  housing 
cost overburden. The construction of non-profit housing might increase if the ceiling 
for construction costs were more closely aligned with market prices. 

HEREBY RECOMMENDS that Denmark take action in 2025 and 2026 to: 

1. 

2. 

3. 

4. 

Reinforce overall defence spending and readiness in line with the European Council 
conclusions  of  6  March  2025.  Adhere  to  the  maximum  growth  rates  of  net 
expenditure recommended by the Council on 21 January 2025, while making use of 
the allowance under the national escape clause for higher defence expenditure. 

In  view  of  the  applicable  deadlines  for  the  timely  completion  of  reforms  and 
investments under Regulation (EU) 2021/241, ensure the effective implementation of 
the recovery and resilience plan, including the REPowerEU chapter. Accelerate the 
implementation of cohesion policy programmes (ERDF, JTF, ESF+), building, where 
appropriate, on the opportunities offered by the mid-term review. Make optimal use 
of EU instruments, including the scope provided  by the InvestEU and the Strategic 
Technologies for Europe Platform, to improve competitiveness. 

Address  the  productivity  gap  between  large  and  small  companies  by  supporting 
SMEs  to  innovate  and  adopt  new  technologies,  notably  in  sectors  with  emerging 
potential.  Boost  innovative  businesses  by  improving  access  to  venture  capital  and 
private equity and the framework conditions for initial public offerings. 

Reduce reliance on fossil fuels by supporting  clean and efficient  energy production 
and  use,  and  by  accelerating  electrification  across  sectors.  Address  increasing 
demand and flexibility needs by providing incentives to make the electricity network 
upgrades  needed  at  transmission  and  distribution  level,  and  by  promoting  demand 
response,  energy  storage  and  other  clean  flexibility  solutions.  In  line  with  planned 
measures,  reduce  the  intensity  of  agricultural  and  farming  activities. Strengthen  the 
circular  economy  and  waste  management  policies  by  promoting  waste  prevention 
and the reuse of municipal and other waste, increasing recycling rates, reducing food 

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waste and shifting away from the incineration of municipal waste for heat generation 
to using cleaner sources. 

5. 

Address the skills shortages to meet labour market needs, including by stepping up 
action  to  tackle  attainment  inequalities  in  education  and  training  and  to  ensure  the 
provision  and  acquisition  of  the  skills  needed  for  the  green  and  digital  transition. 
Implement measures to improve the affordability of housing. 

Done at Brussels, 

For the Council 
The President 

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