Europaudvalget 2011-12
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EUROPEAN COMMISSION
Brussels, 30.5.2012
COM(2012) 304 final
Recommendation for a
COUNCIL RECOMMENDATION
on Denmark’s 2012 national reform programme
and delivering a Council opinion on Denmark’s convergence programme for 2012-2015
{SWD(2012) 304 final}
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Recommendation for a
COUNCIL RECOMMENDATION
on Denmark’s 2012 national reform programme
and delivering a Council opinion on Denmark’s convergence programme for 2012-2015
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the Functioning of the European Union, and in particular
Articles 121(2) and 148(4) thereof,
Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of
the surveillance of budgetary positions and the surveillance and coordination of economic
policies
1
, and in particular Article 5(2) thereof,
Having regard to Regulation (EU) No 1176/2011 of the European Parliament and of the
Council of 16 November on the prevention and correction of macroeconomic imbalances
2
,
and in particular Article 6(1) thereof,
Having regard to the recommendation of the European Commission
3
,
Having regard to the resolutions of the European Parliament,
4
Having regard to the conclusions of the European Council,
Having regard to the opinion of the Employment Committee,
After consulting the Economic and Financial Committee,
Whereas:
(1)
On 26 March 2010, the European Council agreed to the European Commission’s
proposal to launch a new strategy for jobs and growth, Europe 2020, based on
enhanced coordination of economic policies, which will focus on the key areas where
action is needed to boost Europe’s potential for sustainable growth and
competitiveness.
On 13 July 2010, the Council adopted a recommendation on the broad guidelines for
the economic policies of the Member States and the Union (2010 to 2014) and, on 21
October 2010, adopted a decision on guidelines for the employment policies of the
(2)
1
2
3
4
OJ L 209, 02.08.1997, p. 1
OJ L 306, 23.11.2011, p. 25
COM(2012)304 final
P7_TA(2012)0048 and P7_TA(2012)0047
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Member States
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, which together form the ‘integrated guidelines’. Member States were
invited to take the integrated guidelines into account in their national economic and
employment policies.
(3)
On 12 July 2011, the Council adopted a recommendation on Denmark’s national
reform programme for 2011 and delivered its opinion on Denmark’s updated
convergence programme for 2011-2014.
On 23 November 2011, the Commission adopted the second Annual Growth Survey,
marking the start of the second European Semester of ex-ante and integrated policy
coordination, which is anchored in the Europe 2020 strategy. On 14 February 2012,
the Commission, on the basis of Regulation (EU) No 1176/2011, adopted the Alert
Mechanism Report
6
, in which it identified Denmark as one of the Member States for
which an in-depth review would be carried out.
On 2 March 2012, the European Council endorsed the priorities for ensuring financial
stability, fiscal consolidation and action to foster growth. It underscored the need to
pursue differentiated, growth-friendly fiscal consolidation, to restore normal lending
conditions to the economy, to promote growth and competitiveness, to tackle
unemployment and the social consequences of the crisis, and to modernise public
administration.
On 2 March 2012, the European Council also invited the Member States participating
in the Euro Plus Pact to present their commitments in time for inclusion in their
stability or convergence programmes and their national reform programmes.
On 30 April 2012, Denmark submitted its convergence programme for the period
2012-2015 and its 2012 national reform programme. In order to take account of their
interlinkages, the two programmes have been assessed at the same time. The
Commission concluded in its in-depth review
7
, under Article 5 of Regulation (EU) No
1176/2011, that Denmark is experiencing an internal and external imbalance, although
not excessive.
Based on the assessment of the 2012 convergence programme pursuant to Council
Regulation (EC) No 1466/97, the Council is of the opinion that the macroeconomic
scenario underpinning the budgetary projections in the programme is plausible. The
scenario projecting GDP growth at 1.2 and 1.5% in 2012 and 2013 is broadly in line
with the Commission's 2012 spring forecast of 1.1 and 1.4%. Accordingly, the
government deficits are slightly smaller in the convergence programme (4.0 and 1.8%
of GDP in 2012 and 2013 respectively, compared with 4.1 and 2.0% of GDP in the
Commission's 2012 spring forecast). The objective of the budgetary strategy outlined
in the programme is to correct the excessive deficit by 2013 and achieving the medium
term budgetary objective (MTO) of
a structural deficit of no more than 0.5 percent of
GDP and
at least a structurally balanced budget in 2020. The programme thereby
confirms the previous MTO, which adequately reflects the requirements of the
Stability and Growth Pact. The planned headline deficit in 2013 is consistent with a
timely correction of the excessive government deficit and, based on the (recalculated)
Council Decision 2012/238/EU of 26 April 2012
COM(2012) 68 final
SWD(2012)153 final
(4)
(5)
(6)
(7)
(8)
Kommentar [twa1]:
DK: This is to reflect the Danish
MTO, which was not clearly
specified in the convergence
programme.
5
6
7
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structural budget balance
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, the planned fiscal effort in that year complies with the
Council recommendation issued under the Excessive Deficit Procedure in July 2010.
From a bottom-up perspective, net discretionary measures are estimated to yield a
consolidation of around 1.5% of GDP over the period 2011-13.
The consolidation path
has become more back-loaded than previously planned and a sizeable effort is needed
in 2013 to ensure the required structural adjustment. Risks of falling short of the 3% of
GDP reference value in 2013 are limited; the Commission's 2012 spring forecast sees
the government deficit at 2.0% of GDP.
Denmark is expected to reach its MTO in
2013. However, based exclusively
on the (recalculated) structural budget balance,
this
is not the case
from 2013 onwards,
and
the estimated budgetary improvement in the
structural budget balance falls short of the 0.5% of GDP required by the Stability and
Growth Pact. At the same time, the growth rate of government expenditure, taking into
account discretionary revenue measures, is expected to be in line with the expenditure
benchmark of the Stability and Growth Pact. Part of the budget deficits will be
financed by reducing the government's account with Denmark's Nationalbank.
Denmark's gross public debt is projected to fall from 46.5% of GDP in 2011 to
42.1%
in 2015, well below 60% of GDP.
(9)
Increasing labour supply is a key priority for Denmark in order to ensure future
welfare and fiscal sustainability. In 2011, Denmark concluded an ambitious reform of
the voluntary early retirement pension scheme and brought forward the previously
planned increase in the statutory retirement age and its link to life expectancy. The
focus now needs to shift to reforming the disability pension and subsidised
employment (flex-job) schemes. The government has presented a proposal for reform
in this area, which should be implemented without delay. The widening gap in
employment outcomes between people with a migrant background and the rest of the
working population also needs to be addressed.
Labour productivity growth in Denmark has slowed down over the last decades, one of
the causes being a relatively weak education performance. Despite a high level of
spending on education, the quality of Danish school education — as measured by the
OECD’s PISA survey — is only average. Furthermore, students generally finish their
studies at a later age than in other Member States and the drop-out rates from
vocational education institutions are relatively high. To respond to the challenges in
this field, the government has announced a number of new measures for both
compulsory and secondary education. The 2012 budget also supports the introduction
of social clauses in public procurement calls and measures to make it financially
beneficial for private companies to offer apprenticeships, in order to increase the
number of available places. Increasing the provision of apprenticeships will also be
addressed in tripartite negotiations and in the work of an inter-ministerial Committee.
Another potential reason for slow productivity growth is the relatively weak degree of
competition in Denmark. In 2011, a competition package was adopted, mainly
targeting the construction sector, the retail sector, and health and public sector
services. Competition for taxis and transportation services as well as the liberalisation
of pharmacies are under investigation, in view of possible new measures. The issue of
Kommentar [twa2]:
DK: The opinion has to mention a
bottom-up measures of fiscal
policy, notably consolidation over
the EDP recommendation period
2011-2013 (either the total in or
the average annual improvement),
in line with previous years’
opinions, the Commission’s staff
working document, and the
Commission’s 2012 spring
forecast (the suggested amendment
is the exact quote from the spring
forecast).
Slettet:
Based
Kommentar [twa3]:
DK:
Concerning the suggested
amendment “exclusively”:
A conclusion that the structural
improvement falls short of the
requirements would need to be
based on an overall assessment,
not only the recalculated structural
budget balance.
Kommentar [twa4]:
DK: These amendments reflects
the clearer statement of Denmark’s
MTO i.e. -0.5 and balance in 2020,
cf. above.
Denmark reaches a structural
deficit of 0.3% of GDP in 2013
according to the (recalculated)
structural balance, thus complying
with the MTO.
Slettet:
..
Kommentar [twa5]:
DK: The figure now reflects the
information in the Staff Working
Document as well.
Slettet:
41
(10)
(11)
8
Cyclically adjusted balance net of one-off and temporary measures, recalculated by the Commission
services on the basis of the information provided in the programme, using the commonly agreed
methodology.
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increasing public procurement in municipalities and regions is currently being
negotiated with regional and local governments. In this context, a government
committee recently concluded that the Danish competition law is in need of
reinforcement, and that sanctions for infringements are currently too low to serve as a
deterrent. Given that only limited concrete initiatives have been taken in this area over
the past year, further steps are needed to adequately address this challenge.
(12)
As confirmed in the in-depth review under Article 5 of Regulation (EU) No
1176/2011, while the high household gross debt to some extent is a structural feature
of the Danish economy, with household assets considerably exceeding liabilities,
concerns regarding high household debt arise as developments in the housing market
seem to have caused the debt to move beyond levels explained by
house prices in the
years before the crisis.
Furthermore, the composition of mortgage loans has changed
since 2003, with instalment-free and variable-rate loans gaining in popularity over
fixed-rate loans with instalment. For a given debt level, households are therefore more
sensitive to interest rates hikes and fluctuations in property prices now than they were
a decade ago. This poses higher potential risks in terms of financial and economic
stability. Relevant measures have been taken in Denmark to address vulnerabilities in
the mortgage system.
The
Ministry of Business and Growth is currently analysing the
composition
of
mortgage loans
across households
in light of income, labour market
history and other socieconomic variables. The aim is to determine households’
potential vulnerability in the event of different economic shocks,
including interest
rate fluctuations.
However, measures should also be considered to prevent pro-cyclical
developments in the housing market in the medium term, preferably by realigning the
property value tax with actual market values. Removing the ceiling of the annual
increase of the municipal land value tax could also prevent future pro-cyclical effects.
Such measures should be introduced gradually, taking into account the current need
for stabilisation in the housing market.
Denmark has made a number of commitments under the Euro Plus Pact. These
commitments, and the implementation of the commitments presented in 2011, relate to
fostering employment, improving competitiveness, enhancing sustainability of public
finances and reinforcing financial stability. The Commission has assessed the
implementation of the Euro Plus Pact commitments. The results of this assessment
have been taken into account in the recommendations.
In the context of the European Semester, the Commission has carried out a
comprehensive analysis of Denmark’s economic policy. It has assessed the
convergence programme and national reform programme, and presented an in-depth
review. It has taken into account not only their relevance for sustainable fiscal and
socio-economic policy in Denmark but also their compliance with EU rules and
guidance, given the need to reinforce the overall economic governance of the
European Union by providing EU-level input into future national decisions. Its
recommendations under the European Semester are reflected in recommendations (1)
to (5) below.
In the light of this assessment, the Council has examined Denmark’s convergence
programme, and its opinion
9
is reflected in particular in recommendation (1) below.
Slettet:
structural factors
Kommentar [twa6]:
DK: This
aims for a more clear explanation
of what is concluded in the in-
depth-review.
Slettet:
Moreover, t
Slettet:
distribution
Slettet:
assets and liabilities
Slettet:
and their
Kommentar [twa7]:
DK: This
description of the analysis is more
precise.
(13)
(14)
(15)
9
Under Article 9 (2) of Council Regulation (EC) No 1466/97.
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(16)
In the light of the results of the Commission’s in-depth review and this assessment, the
Council has examined Denmark’s 2012 national reform programme and Denmark’s
convergence programme. Its recommendations under Article 6 of Regulation (EU) No
1176/2011 are reflected in particular in recommendations (3), (4) and (5) below,
HEREBY RECOMMENDS that Denmark should take action within the period 2012-2013 to:
1.
Implement the budgetary strategy as envisaged, to ensure a correction of the
excessive deficit by 2013 and achieve the annual average structural adjustment effort
specified in the Council recommendations under the Excessive Deficit Procedure.
Thereafter, ensure an adequate structural adjustment effort to make sufficient
progress towards the medium-term budgetary objective (MTO), including meeting
the expenditure benchmark.
Take further steps to enhance long-term labour supply by reforming the disability
pension, better targeting subsidised employment schemes (the ‘flex-job’ system)
towards people with reduced work capacity, and improving the employability of
people with migrant background.
Implement announced measures, without delay, to improve the cost-effectiveness of
the education system, reduce drop-out rates, in particular within vocational
education, and increase the number of apprenticeships.
Continue efforts to remove obstacles to competition, in particular in local services,
the retail and construction sector, including by further opening the municipal and
regional procurement of services to competition and ensuring that competition law
sanctions are sufficiently deterrent.
Consider further preventive measures to strengthen the stability of the housing
market and financial system in the medium-term, including by taking account of the
results of the ongoing study by the Ministry of Business and Growth on the
distribution of assets and liabilities across households and by reviewing the property
value and municipal land value tax system.
2.
3.
4.
5.
Done at Brussels,
For the Council
The President
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