Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Denmark
Date: 2026-06-03
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

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 3.6.2026  COM(2026) 204 final  Recommendation for a COUNCIL RECOMMENDATION on the economic, social, employment, structural and budgetary policies of Denmark {SWD(2026) 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  1466/97  ( ),  and  in 
particular Article 3(3) thereof, 

1

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: 

(1) 

(2) 

Regulation  (EU)  2024/1263  specifies  the  objectives  of  the  economic  governance 
framework,  which  aims  at  promoting  sound  and  sustainable  public  finances, 
sustainable  and  inclusive  growth  and  resilience  through  reforms  and  investments,  as 
well  as  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 
Treaty  on  the  Functioning  of  the  European  Union  (TFEU).  The  European  Semester 
includes, in  particular, the formulation and the surveillance of the implementation  of 
country-specific recommendations. 

On  16 July 2025,  the  Commission  adopted  its  proposal  for  a  regulation  establishing 
the European Fund for economic, social and territorial cohesion, agriculture and rural, 
fisheries and maritime, prosperity and security for the period 2028-2034 and amending 
Regulation (EU) 2023/955 and Regulation (EU, Euratom) 2024/2509 (2). The proposal 
aims to increase the effectiveness of Union funding by reducing the fragmentation of 

1 
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 1466/97 (OJ L, 2024/1263, 30.4.2024, ELI: http://data.europa.eu/eli/reg/2024/1263/oj)  
2 
Proposal  for  a  Regulation  of  the  European  Parliament  and  of  the  Council  establishing  the  European 
Fund for economic, social and territorial cohesion, agriculture and rural, fisheries and maritime, prosperity and 
security  for  the  period  2028-2034  and  amending  Regulation  (EU)  2023/955  and  Regulation  (EU,  Euratom) 
2024/2509 - COM(2025) 565 final. The proposed Regulation is currently the subject of negotiations with the co-
legislators. 

EN 

1 

  EN 

 
(3) 

(4) 

(5) 

(6) 

the  financial  architecture  and  to  support  Member  States  in  the  coordination  of  their 
economic policy in line with Article 175 TFEU. 

On  25 November 2025,  on  the  basis  of  Regulation  (EU)  No  1176/2011,  the 
Commission  adopted  the  2026  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,  a  recommendation  for  a  Council 
recommendation on human capital in the European Union, and a proposal for the 2026 
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  area  (3)  on 
21 April 2026 and the Joint Employment Report, and the Recommendation on human 
capital on 9 March 2026.  

On  29 January 2025,  the  Commission  published  the  Competitiveness  Compass,  a 
strategic  framework  that  aims  to  boost  the  Union’s  global  competitiveness  over  the 
next  five  years.  It  identifies  the  three  transformational  imperatives  of  innovation, 
decarbonisation  and  competitiveness,  and  security  as  critical  pillars  for  sustainable 
economic  growth.  The  European  Semester  is  aligned  with  the  Competitiveness 
Compass,  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  2026,  the  European  Semester  for  economic  policy  coordination  continues  to 
develop  alongside  the  final  stage  of  the  Recovery  and  Resilience  Facility  (RRF) 
implementation (4). Recovery and resilience plans (RRPs), along with cohesion policy 
funding, have been essential for delivering on the policy priorities under the European 
Semester, as the plans were required to effectively address all or a significant subset of 
challenges identified in the relevant country-specific recommendations issued in recent 
cycles, and programmes funded by the European cohesion policy were required to take 
country-specific recommendations into account. As the RRF approaches the end of its 
lifetime,  it  remains  essential  to  sustain  the  reforms  and  investments  supported  and 
implemented  under  the  RRF,  in  particular  those  that  contribute  to  addressing 
challenges identified in the country-specific recommendations. 

On  3 June 2026,  the  Commission  published  the 2026  country  report  for  Denmark.  It 
assessed  Denmark’s  progress 
relevant  country-specific 
in  addressing 
recommendations  and  took  stock  of  Denmark’s  implementation  of  the  RRP.  On  the 
basis  of  that  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 

(7) 

On  21 January 2025,  the  Council,  upon  the  assessment  and  recommendation  of  the 
Commission, adopted a Recommendation endorsing the national medium-term fiscal-

3 
4 
establishing 
http://data.europa.eu/eli/reg/2021/241/oj). 

OJ C, C/2026/2434, 28.4.2026, ELI:  http://data.europa.eu/eli/C/2026/2434/oj 
Regulation  (EU)  2021/241  of  the  European  Parliament  and  of  the  Council  of  12 February 2021 
17,  ELI: 

and  Resilience  Facility 

the  Recovery 

18.2.2021, 

(OJ  L 

57, 

p. 

EN 

2 

  EN 

 
structural plan of Denmark (5). The plan 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.  The  Council  recommended  the  following  maximum  growth  rates  of  net 
expenditure:  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  the 
base  year  of  2023  of  12.6%  in  2025,  18.9%  in  2026,  23.5%  in  2027  and  27.1%  in 
2028. 

Russia’s  war  of  aggression  against  Ukraine  and  its  repercussions  constitute  an 
existential  challenge  for  the  European  Union.  The  Commission  has  invited  Member 
States  to  request  the  activation  of  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  (6)  and  this  proposal  was  welcomed  by  the 
European  Council  of  6 March 2025.  Following  the  request  of  Denmark,  on 
8 July 2025  the  Council,  upon  a  recommendation  from  the  Commission,  adopted  a 
Recommendation  allowing  Denmark  to  deviate  from  the  recommended  maximum 
growth  rates  of  net  expenditure  (7).  The  period  when  the  national  escape  clause  is 
activated  (2025-2028)  allows  Denmark  to  reprioritise  government  expenditure  or 
increase  government  revenue  so  that  lastingly  higher  defence  expenditure  would  not 
endanger fiscal sustainability in the medium term.  
On  30 April 2026,  Denmark  submitted  its  2026  Annual  Progress  Report  (8)  on 
adherence to the recommended maximum growth rates of net expenditure. 

(8) 

(9) 

(10)  Real  GDP  growth  in  2025  was  2.9%  and  HICP  inflation  stood  at  1.8%.  The 
Commission  Spring  2026  Forecast  projects  real  GDP  to  grow  by  1.9%  in  2026  and 
1.8% in 2027, and HICP inflation to stand at 1.8% in 2026 and 1.9% in 2027. 
(11)  Based  on  data  provided  by  Eurostat  (9),  Denmark’s  general  government  surplus 
decreased from  4.5% of  GDP in  2024 to 2.9% of GDP in  2025. The decrease in  the 
surplus  in  2025  mainly  reflects  increased  spending  on  defence.  Based  on  policy 
measures  known  by  the  cut-off  date  of  the  forecast,  the  Commission  Spring  2026 
Forecast projects a surplus of 0.9% of GDP in 2026 and 0.5% of GDP in 2027. The 
decrease  in  the  2026  surplus  mainly  reflects  increased  expenditure,  notably  on 
defence, as well as some revenue measures. 

(12)  Based  on  data  provided  by  Eurostat  (10),  general  government  debt  decreased  from 
30.5%  of  GDP  at  the  end  of  2024  to  27.9%  of  GDP  at  the  end  of  2025.  Based  on 
policy  measures  known  at  the  cut-off  date  of  the  forecast,  the  Commission  Spring 
2026 Forecast projects the debt-to-GDP ratio to decrease to 27.0% by the end of 2026 
and to further decrease to 26.2% by the end of 2027.  

5 

6 

7 

8 

9 
10 

Council Recommendation of 21 January 2025 endorsing the national medium-term fiscal-structural plan 
of Denmark (OJ C, C/2025/654, 10 02 2025, ELI: http://data.europa.eu/eli/C/2025/654/oj). 
Communication  from  the  Commission,  'Accommodating  increased  defence  expenditure  within  the 
Stability and Growth Pact’, Brussels, 19 3 2025, C(2025) 2000 final. 

Council Recommendation of 8 July 2025 allowing Denmark to deviate from the maximum growth rates 
of net expenditure as set by the Council under Regulation (EU) 2024/1263  (Activation of the national 
escape clause), (OJ C, C/2025/3963, 20.8.2025, ELI: http://data.europa.eu/eli/C/2025/3963/oj). 
The  2026  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    
Eurostat-Euro Indicators, 22 04 2026 
Eurostat-Euro Indicators, 22 April 2026. 

EN 

3 

  EN 

 
(13)  Based on Eurostat data (11), total general government defence expenditure in Denmark 
amounted  to  2.2%  of  GDP  in  2025,  corresponding  to  an  increase  of  1.0  percentage 
points  of  GDP  compared  to  the  reference  year  2021.  According  to  the  Commission 
Spring  2026  Forecast,  it  is  projected  at  2.6%  of  GDP  in  2026,  corresponding  to  an 
increase of 1.4 percentage points of GDP compared to 2021. 

(14)  The  Union  continues  to  face  risks  of  energy  supply  disruptions  and  elevated  price 
volatility,  exacerbated  by  geopolitical  tensions  which  affect  global  oil  and  gas 
markets.  Experience  from  the  2022–2023  energy  crisis  has  shown  that  broad  and 
untargeted  measures  entail  large  fiscal  costs  and  are  socially  and  economically 
inefficient.  Since  the  outbreak  of  the  war  in  the  Middle  East  in  February  2026, 
Denmark  has  not  adopted  new  fiscal  policy  measures  to  mitigate  the  impact  of  high 
energy prices on households and firms (12). 

(15)  Based on the Commission’s calculations, net expenditure in Denmark grew by 7.3% in 
2025 and by 10.9% cumulatively over 2024 and 2025. The net expenditure growth in 
2025 is above the recommended maximum growth rate, corresponding to a deviation 
of  1.0%  of  GDP  in  annual  terms.  When  considering  2024  and  2025  together,  the 
cumulative  growth  rate  of  net  expenditure  is  below  the  recommended  maximum 
growth rate (13). 

(16)  Based on the Commission’s calculations, net expenditure in Denmark is projected to 
grow  by  6.7%  in  2026,  and  18.3%  cumulatively  over  2024,  2025  and  2026.  The 
projected  net  expenditure  growth  in  2026  is  above  the  recommended  maximum 
growth  rate,  corresponding  to  a  deviation  of  0.4%  of  GDP  in  annual  terms.  When 
considering 2024, 2025 and 2026 together, the projected cumulative growth rate of net 
expenditure is below the recommended maximum growth rate (14). 

(17)  The systematic, meaningful and timely 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 Union’s funding 
instruments, as well as in the context of the European Semester.   

(18)  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+) in Denmark, is above the average pace at 
EU  level,  both  in  terms  of  project  selection  and  payments.  It  is  important  to  keep 
current  momentum,  while  maximising  the  impact  of  investments  on  the  ground. 
Denmark  is  already  taking  action  under  its  cohesion  policy  programmes  to  boost 
competitiveness  and  growth.  It  is  essential  to  ensure  that  the  new  investments 
identified  by  Denmark  in  its  mid-term  review  of  the  cohesion  policy  funds,  notably 
those linked to the five priorities identified in the Mid-Term Review Regulation (15), 
are deployed rapidly and effectively. 

11 
12 
13 

14 

Eurostat, government expenditure by classification of functions of government (COFOG). 
This reflects the situation at the cut-off date of the Commission Spring 2026 Forecast (4 May 2026). 
As  Denmark  benefits  from  flexibility  under  the  national  escape  clause,  the  assessment  of  compliance 
focusses on the latter comparison. 
As  Denmark  benefits  from  flexibility  under  the  national  escape  clause,  the  assessment  of  compliance 
focusses on the latter comparison. 
15 
Regulation  (EU)  2025/1914  of  the  European  Parliament  and  of  the  Council  of  18 September 2025 
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. 

EN 

4 

  EN 

 
(19)  Denmark  faces  several  challenges  related  to  innovation  and  productivity,  energy 
transition, sustainable agriculture, circular economy and waste management, skills and 
housing.  

(20)  Productivity  growth  remains  concentrated  in  a  small  number  of  large  firms,  while 
small and medium-sized enterprises (SMEs) continue to face barriers to innovate and 
adopt  new  technologies,  especially  in  regions  outside  of  the  Capital  Region, 
highlighting  a  limited  diffusion  of  innovation  among  SMEs.  Denmark  has  made 
progress in fostering innovation with political agreements on multiannual research and 
innovation  funding  and  on  strengthening  knowledge  and  technology  transfers  from 
universities  to  businesses.  However,  while  recent  policy  measures  are  positive,  they 
are  not  fully  tackling  specific  weaknesses  of  the  innovation  system.  Strengthening 
access  to  more  targeted  and  streamlined  innovation  support  instruments,  reducing 
fragmentation  and  administrative  burden,  improving  knowledge  diffusion  between 
research  institutions  and  firms,  and  enhancing  the  national  innovation  procurement 
framework  would  help  SMEs  integrate  cutting-edge  solutions  and  participate  more 
actively in research and innovation ecosystems. 

(21)  Access  to  scale-up  financing  is  critical  for  supporting  the  growth  of  innovative 
businesses  and  their  contribution  to  productivity and  economic  dynamism.  Despite  a 
sizeable equity market, the number of initial public offerings is low, with the market 
being  dominated  by  a  small  number  of  large  companies.  At  the  same  time,  venture 
capital  activity  has  remained  broadly  stable  in  recent  years  while  some  Danish 
larger 
companies  have  been  seeking  scale-up  capital 
international  markets  with  deeper  capital  pools  and  more  supporting  frameworks  to 
scale. These indicate that there is scope for further development of growth-stage equity 
and improving conditions for initial public offerings in Denmark to secure capital for 
expansion,  internationalisation  and  innovation  of  local  dynamic  firms.  A  greater 
mobilisation of household and institutional savings into equity investments, including 
by addressing shortcomings related to Danish investment and savings accounts, would 
help  deepen  domestic  capital  markets  even  further  and  increase  the  supply  of  long-
term financing. 

through  relocation 

to 

(22) 

In 2025, 92.4% of Denmark's net electricity generation came from renewable sources, 
which  was  the  highest  percentage  in  the  EU  that  year,  as  well  as  the  highest  in 
Denmark's history. After facing setbacks in its offshore wind development plan, new 
tenders  for  offshore  wind  farms  were  announced  at  the  end  of  2025,  offering  state 
support  to  potential  developers  under  a  two-way  contract-for-difference  model. 
Denmark  made  use  of  the  Clean  Industrial  Deal  State  Aid  Framework  (CISAF). 
Further measures to accelerate the deployment of home-grown renewable energy have 
been  either  adopted  or  credibly  announced  in  2025,  including  in  response  to  the 
recommendations by the National Energy Crisis Team (NEKST). 

(23)  The high proportion of renewables in Denmark's electricity generation mix means that 
further  electrification  across  sectors  could  be  a  powerful  decarbonisation  and  energy 
affordability  lever,  particularly  in  a  context  of  volatile  fossil  fuel  markets.  A 
significant step was taken on 1 January 2026, when the electricity tax for households 
was  cut  from  72.7  øre  to  just  0.8  øre  per  kilowatt-hour.  This  is  a  welcome 
development  also  from  an  energy  affordability  perspective,  considering  that  the 
electricity  bill  for  Danish  households  in  2025  was  amongst  the  highest  in  the  EU, 
largely due to taxation. However, the reduction of the electricity tax for households is 
only temporary (for two years). For industrial consumers, electricity taxes are already 

EN 

5 

  EN 

largely  recoverable.  To  realise  its  full  potential,  Denmark  would  benefit  from 
including  by  adopting  a  comprehensive 
promoting 
electrification  strategy  setting  out  more  structural  measures  and  time-bound  sectoral 
targets. 

further  electrification, 

(24)  Despite  substantial  investments  in  the  electricity  grid  in  recent  years,  Denmark’s 
network  is  under  severe  strain  due  to  unprecedented  demand  for  new  connections, 
particularly  from  data  centres,  Power-to-X  projects  and  battery  energy  storage 
systems.  This  has  forced  the  national  electricity  transmission  system  operator  to 
temporarily  suspend  the  conclusion  of  new  grid  connection  agreements  and  extend 
processing  times  for  projects  in  the  screening  and  maturity  phases.  Although  some 
measures have been implemented or credibly announced to address this situation and 
accelerate  the  network  expansion,  grid  capacity  is  likely  to  remain  scarce  in  the 
medium  term.  Against this  context, Denmark could  act  to  reduce average processing 
times  for  environmental  approvals  by  competent  agencies,  including  by  ensuring 
adequate  staffing  levels.  Denmark  could  also  consider  measures  to  further  improve 
grid  queue  management  and  grid  flexibility,  in  a  view  to  optimise  the  use  of  the 
existing  grid  infrastructure.  Furthermore,  Denmark’s  electricity  consumers  remain 
exposed to  volatile prices, with  spikes during periods  of low renewable output when 
costly  fossil-fuel  generation  is  more  likely  to  set  marginal  prices,  highlighting  the 
continued  importance  of  non-fossil  flexibility  solutions,  such  as  energy  storage  and 
demand-response  tools,  to  balance  supply  and  demand  across  all  relevant  timescales 
and improve overall system flexibility. 

(25)  The agricultural sector is the main source of Denmark's greenhouse gas emissions that 
are covered by the Effort Sharing Regulation (16). Intensive agricultural practices are 
also  causing  excessive  nutrient  leaching  and  runoff  from  fields,  with  serious 
repercussions  on soil health, nature, and aquatic and marine ecosystems.  Making  the 
agri-food sector more sustainable is key to achieving climate objectives and ensuring 
sustainable  prosperity.  The  political  agreement  on  a  ‘Green  Denmark’,  reached  on 
18 November 2024, remains the key national policy framework guiding efforts in this 
area.  In  2025,  each  of  the  23  local  tripartite  configurations  established  under  the 
agreement  adopted  a  plan  to  convert  agricultural  areas  into  nature.  Furthermore,  an 
agreement has been reached on a new nitrogen regulation, which stipulates that, from 
2027  onwards,  capped  nitrogen  discharge  quotas  will  be  allocated  to  farmers 
nationwide. This new model is expected to reduce nitrogen emissions by 7 900 tonnes. 
Building on these positive steps, swift implementation of the agreed measures remains 
crucial  to  ensure  that  the  climate  and  environmental  targets  set  out  in  the  ‘Green 
Denmark’  agreement  are  met  by  2030.  Denmark  would  also  benefit  from  exploring 
synergies with the actions to be included in the national nature and biodiversity act and 
several obligations in the nature restoration plan. 

(26)  Despite  recent  efforts,  Denmark  continues  to  face  challenges  in  transitioning  to  a 
stronger circular economy and improving its waste management policies. The Danish 
economy  remains  heavily  reliant  on  primary  resources  and  imported  materials. 
According  to  the  latest  Eurostat  data,  Denmark  has  some  of  the  highest  per  capita 
volumes of food waste (2023), municipal waste (2024), and packaging waste (2023) in 

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  (EU) 
2018/1999 (OJ L 111, 26.4.2023, p. 1−14), ELI: http://data.europa.eu/eli/reg/2023/857/oj). 

EN 

6 

  EN 

 
the  EU  (17).  Also,  Denmark  incinerates  (energy  recovery)  the  highest  per  capita 
volume of municipal waste in the EU, the circular material use rate remains below the 
EU  average,  and  there  is  no  clear  upward  trend  in  the  share  of  recycled  municipal 
waste. The establishment  of separate  collection system for all waste streams  in  most 
municipalities, stricter commercial waste management rules,  reforms to liberalise the 
waste  incineration  market,  and  a  new  Extender  Producer  Responsibility  scheme  for 
packaging are positive steps but additional action is needed to prevent municipal and 
packaging  waste,  increase  the  reuse  and  recycling  of  municipal  waste,  and  shift 
reusable  and  recyclable  municipal  waste  away  from  incineration.  The  upcoming 
reassessment  and  revision  of  the  national  action  plan  for  the  circular  economy 
provides an opportunity to  identify new initiatives. This  could  include incentives for 
more  circular  packaging  and  product  design  and  for  increased  use  of  secondary 
materials. 

(27) 

In light of the crucial role of human capital in enhancing the Union’s competitiveness 
and  strategic  autonomy,  in  2026  the  Council  recommended  that  Member  States  take 
action  to  urgently  address  human  capital-related  structural  challenges  in  the  areas  of 
skills  and  education,  which  hamper  competitiveness.  The  2026  country-specific 
recommendations  addressed to  Denmark can contribute to  the implementation of the 
Council Recommendation on human capital in the Union. 

(28)  The  Danish  labour  market  remains  tight,  with  low  unemployment  figures  and  a 
growing labour force; however, a tendency towards slightly increasing unemployment 
can be noted. The growing number of workers is mainly  supplied by foreign  labour, 
older, and very young workers; at the same time skills shortages and mismatches could 
hold  back  employment and growth.  Skills  shortages are widespread in  certain  health 
and  care  professions,  but  more  prominently  in  sectors  that  support  the  green  and 
digital  transitions.  For  the  digital  transition,  this  concerns  in  particular  ICT 
professionals,  but  also  digital  skills  required  across  most  sectors.  For  the  green 
transition, it concerns the construction and civil engineering industry at large including 
skills needed for building and renovating houses i.e. heating, insulation etc but also in 
relation to building large-scale energy projects. While some action has been taken with 
reforms to ensure a relevant uptake of new students to vocational schools, the high and 
rising number of early school leavers augments the number of people who are likely to 
lack  basic  skills.  Skills  shortages  are  further  aggravated  by  persistent  attainment 
inequalities in education and training at regional level as evidenced by results obtained 
in  final  exams  completing compulsory schooling, notably for literacy  and numeracy. 
To  address  these  challenges,  Denmark  should  furthermore  aim  to  attract  a  larger 
number  of  qualified  teachers  to  municipal  primary  and  lower  secondary  schools 
(folkeskole). 

(29)  While  Denmark  has  taken  steps  to  foster  affordability  through  non-profit  housing, 
overall  housing  construction  needs  to  be  scaled  up  to  meet  the  high  demand,  in 
particular in the Capital area. High prices for owner-occupied housing, lengthy waiting 
times for non-profit housing and complicated planning procedures and land-use rules 
for new constructions have led to persistent shortages in dwellings that are affordable 
to  households with  lower incomes.  Partly  as  a result, low-income households,  single 
earners and many young people living alone, face a housing cost overburden. With a 

17 
reported 2023 data on packaging waste. 

Seven Member States have not reported 2024 data on municipal waste and four Member States have not 

EN 

7 

  EN 

 
view  to  increasing  housing  supply  at  the  lower  price  range  and  thus  to  ensure 
affordability for lower income households, it will be important that steps already taken 
to  better  align  the  price  ceilings  for  construction  of  non-profit  housing  with  market 
prices be supplemented with action to foster construction of housing more generally, 
notably  through  simplifying  planning  procedures  and  reviewing  land-use  planning 
rules. 

HEREBY RECOMMENDS that Denmark take action in 2026 and 2027 to:  

1. 

2. 

3. 

4. 

5. 

6. 

Continue adhering to the maximum growth rates of net expenditure recommended by 
the  Council  on  21 January 2025,  while  making  use  of  the  flexibility  under  the 
national  escape  clause  for  higher  defence  expenditure.  Reinforce  defence  spending 
and readiness while ensuring spending efficiency and gradually adapting the budget 
to  sustain  structurally  higher  defence  spending.  Ensure  that  any  measures  taken  to 
mitigate the impact of the hike in energy prices are temporary, targeted at protecting 
vulnerable households or at addressing the needs of energy-intensive firms, preserve 
incentives for energy savings while ensuring that their fiscal cost is compatible with 
the commitments under the EU fiscal framework. 

Ensure continuity of reforms and investments implemented under the Recovery and 
Resilience  Facility.  Sustain  implementation  momentum  under  cohesion  policy 
programmes  building,  where  appropriate,  on  the  reallocation  to  strategic  priorities 
and flexibilities in the mid-term review of the cohesion policy framework.  

Support  SMEs  to  innovate  and  adopt  new  technologies  by  improving  access  to 
innovation financing instruments, promoting knowledge diffusion and strengthening 
the  national  innovation  procurement  framework.  Improve  access  to  scale-up 
financing  through  growth  equity  and  public  equity  markets,  and  further  mobilise 
domestic savings through household and institutional equity investment. 

Accelerate  the  pace  of  electrification.  Support  the  electricity  network  upgrades 
needed  at  transmission  and  distribution  level  and  the  optimisation  of  existing 
infrastructure.  Promote  demand  response,  energy  storage,  and  other  non-fossil 
flexibility  solutions.  Continue  to  implement  measures  to  reduce  the  intensity  of 
agricultural  and  farming  activities.  Strengthen  the  circular  economy  and  waste 
management  policies  by  further  promoting  prevention,  reuse  and  recycling  of 
municipal and other waste. 

Address the skills shortages to meet labour market needs. Step up action to improve 
basic  skills,  address  attainment  inequalities  in  education  and  training,  tackle 
shortages of qualified teachers, and address early school leaving. 

Increase  housing  supply,  particularly  in  major  cities,  by  simplifying  planning 
procedures  and  reviewing  land-use  planning  rules  to  facilitate  the  construction  of 
new dwellings.  

Done at Brussels, 

For the Council 
The President 

EN 

8 

  EN