Declining corona crisis provides tight finance law

– It sounds very violent, but it is against the background of a very violent expansive fiscal policy last year.

– You actually go back a bit to the fiscal policy you would have made in the absence of corona.

– If you look at it in relation to the Finance Act for 2020, then it will not be drastically different, says Michael Svarer with reference to the Finance Act that was entered into at the end of 2019, before the corona came on everyone’s lips.

In the Finance Act, which was entered into in December last year between the government, the Radicals, the Socialist People’s Party, the Unity List and the Alternative, Nicolai Wammen was pulled into the Santa Claus costume and handed out gifts.

It was simply necessary to boost Denmark’s economy after a year in which shutdowns, travel restrictions and much more meant that the economy had to be stimulated.

– Now we are in the opposite situation. The economy is booming from there. Therefore, our answer must fit the situation we are in, the Minister of Finance told Børsen.

In its budget bill last year, the government set aside as much as DKK 9.2 billion for special initiatives during the corona crisis. In this year’s proposal, it will be different.

The so-called construction ceiling was also suspended for this year, so that the municipalities could spend more money on building roads and facilities.

Other initiatives include the housing job scheme, also called the craftsmen’s deduction. It was greatly boosted this year to encourage people to get crafts and services done in their homes and thus boost the economy.

The government has already announced that it intends to bring housing benefits back to the level it had last year.

Nicolai Wammen has said several times during the corona crisis that Denmark’s economy is healthy.

And he can say that with good reason, says Professor Michael Svarer from Aarhus University.

– There is high employment, low unemployment, sound public finances and high productivity.

– So on the core parameters, it looks good for the Danish economy, he says.

To ordinary people, it may seem like a paradoxical statement after a year in which the state has spent several hundred billion dollars because of corona.

But it may well be connected, points out Michael Svarer.

– Because there was nothing in the economic engine room that broke under the corona.

– It was a health crisis, it was not an economic crisis. The economy turned out to be pretty much as strong as before the corona, he says, citing tourism, nightclubs and hotels as exceptions.

– There are some areas that have not come up on the dots yet, and it may be that some time passes before they come, he says.

Source: The Nordic Page





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