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Economic growth is projected to gradually strengthen to 1.9% in 2018 fuelled by investment and exports. Household consumption growth will remain robust, backed by employment growth, higher real wages and rising property prices. Both residential and business investment will pick up due to low interest rates and increasing capacity utilisation. The current account surplus will remain sizeable.

Implementation of a proposed comprehensive package of reforms addressing a number of structural challenges, such as strengthening work incentives, fostering medium-term fiscal sustainability and boosting productivity, would improve economic performance and raise incomes. Frontloading property tax reform would help to rein-in an increasingly buoyant housing market and make the tax mix more growth friendly.

The fiscal stance remains broadly neutral with strong public investment declining only gradually. Against the backdrop of the package of reforms, the government has proposed to postpone the return to a balanced budget to 2025. Given the moderate public debt level, the authorities are right to use fiscal space and to push for structural reforms.

 

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Other information

Economic Survey of Denmark (survey page)