Denmark Economy

Denmark has a very modern and efficient market economy. It features a high dependence on foreign trade, a high-tech agricultural industry, and high standards of living as well as being able to support an enviable system of social welfare. Despite the apparent market-driven economy, Denmark combines this successfully with a high degree of unionisation amongst the workforce. Although the level of membership has declined in recent years it still remains around 75% of the total working population. The relationship between employers and unions is generally a cooperative one such that serious disputes are rare.

Today's export industry in Denmark is focussed on agriculture and industrial machinery, teak and oak furniture, meat, fish, and poultry and metal manufacturing. The primary export partners are the EU (foremost Germany with approx 19% of all exports) and thereafter the US with approx 7% of all Danish exports.

Significant products imported are machinery, metals, motor vehicles and fuels. Again, Germany is the primary source of Danish imports counter-balancing the exports to Germany, with the remainder of the EU also being significant.

Following an economic downturn in the 1980s and 1990s when high unemployment, significant public-sector expenditure and foreign debt as well as high tax rates dominated, the Danish economy has now been turned around. Tight fiscal and monetary policies along with an increasing export market brought about a reduction in unemployment to approx 3.7% (May 2007), a balanced budget and a strong export market. Tax rates remain high with 38% the minimum income tax rate for adults and VAT at 25%, however this appears not to have halted the economic growth of recent years.

Concerns have been raised recently that future economic growth could be stifled by a lack of skilled labour. The fear is that on the one hand there will be insufficient to fill the increasing numbers of skilled jobs being created in Denmark. The other consequence is that for skilled persons that are in the workplace, wages will be pushed up leading to inflationary pressures. Whether Denmark's decision (despite meeting convergence criteria) not to join the Eurozone will have long-term effects on its economy is also still open to debate.

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