The new national government is looking to introduce a fiscal stimulus package of 11 billion kroner or 2 billion dollars. It is expected that for 2012 the budgetary deficit will go up to 95 billion kroner.
Highlights of Denmark Budget 2012:
As per the draft budget for the 2012 fiscal the speed at which the planned public works projects are being done will be increased. It is expected that this will generate 9000 new jobs in that period.
Taxes applicable for cigarettes, sweets and soft drinks will be increased.
The allotment for the educational sector will increase by 1 billion kroner or $185 million.
High taxes are expected to be in effect in 2012 in order to provide funds necessary for operating the country s welfare system. The political parties, though, have accepted that some tax cuts will be necessary so that Denmark can properly cope with the effects of uncertainty in the global economy.
Custom checks at Denmark s borders with Sweden and Germany will be back in operation from 2012 onwards. The national government has stated that it is looking to deploy more customs officers at different areas across the country rather than at some fixed locations.
The estimated budgetary deficit for Denmark in 2012 is 17.5 billion US dollars.
The national government estimates that in 2012 the GDP will increase by 1.3 percent; as per its previous forecast the expected GDP growth rate for the same period was 1.8 percent.
But these factors have not stopped the government from creating a bigger budget compared to 2011.
10.75 billion kroner will be invested in 2012 followed by a further 8 billion kroner in 2013 fiscal. This money will be used to upgrade infrastructure in the roads, hospitals and railways.
Public housing facilities and schools will also be renovated with these investments.
In the green technology sector several public-private partnerships are expected in the 2012 fiscal. Buildings will be restructured as well in order to make them better from the perspective of energy efficiency.
In 2012 the government will make sustained efforts to collect more tax revenues from the multinational organizations operating in Denmark. But most of the tax reforms suggested for both 2012 and 2013 fiscals are regarding the individual taxes.
From 2012 onwards Danish enterprises, specializing in research and development can make applications to recover 25 percent of the expenses incurred in specified projects.
It is expected that this decision will encourage more companies to invest in R&D across the country. But the companies will be eligible for a maximum cash payment of DKK1.25 million per year, which implies that the total cost of the projects in question should not exceed 5 million Danish kroner.
The budgetary deficit for 2012 fiscal will be equivalent of 4.6% of the Gross Domestic Product and this will be more than the projected figure for 2011 fiscal. Previous forecasts had pegged this rate at 3.8 percent and 4.1 percent.
Expectations from Denmark Budget 2012:
Bjarne Corydon, the Social Democratic Finance Minister, has stated that the national economy is facing several challenges but things are far from worst. Helle Thorning-Schmidt, the prime minister and the first ever woman leader of Denmark, has said that several sacrifices will be needed if the government has to achieve its fiscal targets for the upcoming fiscal and increase economic growth.
The Finance Ministry of Denmark has stated that it is facing a critical situation owing to the present condition of the global economy. So far exports have been a major contributor to the Danish economy but they have been going down of late, and this according to the finance minister, has been affecting overall economic growth and performance negatively.
Corydon has also reasoned that domestic consumption in Denmark is presently stagnant and the measures taken by the previous government to foster economic growth have not been successful. All these factors have affected the way the 2012 Denmark budget was created.
The new government, which came to power in mid-September 2011, has revealed that it will boost economic growth by using the money allocated in previously approved public investment projects in the next couple of years.
The proposed investment plans of the national government are expected to create 12 thousand jobs in 2013 fiscal along with a 0.5% increase in GDP from 2012 to 2013. The Danish government has made it clear that by opting to spend in priority sectors like education and infrastructure development it has taken the right path.
It has stated that the world economic indicators are presently weak and this can create complications for the national economy if proper steps are not taken in time.