which is all the more difficult because action was not taken at an earlier stage. this shows what may happen if economic policy is not sufficiently responsible. to a large extent, the description of the heavily indebted countries in the lead - up to the financial crisis also describes developments in denmark – but with the opposite sign. history shows that when it comes to fiscal policy, credibility or lack of credibility is what really separates the wheat from the chaff in terms of the countries seen as safe havens. for many years, denmark pursued fiscal policy that dampened cyclical fluctuations. but in the period before and during the most recent upswing, fiscal policy became procyclical. that was unfortunate, and it has contributed to prolonging the adjustment of the economy after the downturn. nevertheless, there were sizeable government surpluses and government debt was reduced in the years leading up to the financial crisis. so denmark ’ s point of departure was more favourable when the crisis hit. unlike most other eu member states, denmark had scope to let public finances cushion the impact of the strong setback without jeopardising basic confidence in the fiscal policy pursued. in response to the lessons learned from the financial crisis, a set of framework conditions for responsible fiscal policy have been laid down. this has been done at eu level via the fiscal bis central bankers ’ speeches compact, which forms the basis for the danish budget act. from 2014, the act lays down 4 - year current spending ceilings for central, regional and local government. it is hoped that the budget act will help to ensure that the many years of systematic budget overruns are now a thing of the past. even before the act comes into force, discipline has been strengthened, in that spending has been within budget in recent years. pursing responsible fiscal policy requires a constant effort. in the current debate on the 2014 finance act, there have been proposals to ease fiscal policy more than the government plans to do. danmarks nationalbank takes a clear stand on that issue. there is neither a need for nor scope for further expansionary measures. fiscal policy is already very close to the limits of the framework adopted. moreover, although we have a negative output gap – and consequently spare resources in the economy – the gap is not tremendously large, and danmarks nationalbank expects it to narrow gradually towards 2015. unemployment is not far from its structural level and is actually 30, 000 lower than when the whitsun package of austerity measures

’ day 2013. on 6 july 2012, danmarks nationalbank reduced the rate of interest on certificates of deposit to minus 0. 2 per. in other words, banks and mortgage banks must pay to hold liquidity at danmarks nationalbank ; a situation that is unique in both a historical and an international context. subsequently the rate of interest on certificates of deposit has been raised to the current level of minus 0. 1 per cent. in recent years, pressure on the krone has entailed preventing it from strengthening. that is, undeniably, more pleasant than having to support a weakening currency. in the last few months, long - term interest rates in particular have begun to rise again, and the danish yield spread to the euro area is no longer negative. we have known all along that interest rates would normalise at some point, but as long as this simply means that our neighbouring economies are recovering, it is not a problem. i have talked about the importance of credible economic policy. this crisis has emphasised the need for credibility – at both macro and micro level. in denmark, several banks had managements who were over - optimistic when it came to calculating the need for loan impairment charges. roskilde bank and tønder bank are sad examples. both of these banks are history now. i realise that the concept of credibility is not unknown to auditors. the whole purpose of audits is to ensure confidence in the information provided in the financial statements, so that investors and other stakeholders may trust the information – and make informed decisions. the auditors perform an important task as the trusted representatives of society. this task is also of significance to the macroeconomy as it helps to reduce uncertainty about the figures, thereby facilitating capital and credit flows. but trust in auditors has also been shaken a little by the financial crisis. several legal investigations of the banks that have been wound up question the quality of the audits performed. and in several cases the government - owned winding - up company, the financial stability company, has raised claims against the external auditors for non - compliance with bis central bankers ’ speeches good audit practice. i am not going to anticipate the outcome of these cases, but – even if they relate to only a few black sheep – they have a negative impact on the general reputation and credibility of auditors. as a result, confidence in the financial statements may be eroded. as always, the authorities respond by introducing more regulation. in denmark