The agreement means that new initiatives worth DKK 16 billion will be implemented over the next four years.
According to Las Olsen, who is chief economist at Danske Bank, the state can still afford to continue spending money.
– When there are good years, we save up, and when there are bad years, we spend. The deficit that will come on the state’s finances this year will be the same size as the surplus that was last year. So it evens out.
– It is of course money we have lost, but we have also made sure that it can be done without tipping the load. That is also why, after the corona crisis, we should not cut and raise taxes, he explains.
At the same time, there is no large interest expense when the state borrows money because the interest rate is very low.
Still, one might ask if it was not a good idea to hold back a bit.
– No, it is not a good idea to correct too quickly. That would be financially viable. If the roof is blown off your house, so you have to spend a lot of money on it, then it is probably a good idea to save the following year.
– But this is not the case in the state’s economy. It is hard to starve yourself healthy when you are in the state. There it is better to tighten up in the good times, but not in the bad times, if one can, he says.
In the proposal for the Finance Act, the government calculated a deficit of DKK 56 billion next year.
It is fine with a deficit both this year and also next, says Las Olsen. But it is a political question how the deficit should arise.
– To what extent should we arrange public finances according to the consideration that states that the economy must be able to run well, in relation to other considerations that must also be taken into account?
– Spending a lot of money on the elderly does not create real growth, but most people agree that money should be spent there, he explains.
Las Olsen believes that it makes good sense to continue to ensure financial support.
– The risk of doing too little is greater than the risk of doing too much, so I think it is a good idea to support the economy.
– How is a political choice. There are pros and cons to it all, but I think it’s a good idea to do something because we can afford it.
Source: The Nordic Page