Denmark sees soaring deficit in 2012 budget

The Danish government said last Wednesday it expected the public deficit to widen sharply next year, reflecting recent global economic turmoil, with 2011 growth to be slower than expected.

The finance ministry said Denmark’s 2012 public deficit – the shortfall in revenue compared with spending – would widen to nearly 85 billion kroner (€11.4 billion), or 4.6 per cent of GDP.

That is almost five billion kroner more than the government’s May estimate and much more than the 68-billion-kroner deficit, or 3.8 per cent of GDP, expected this year.

The Scandinavian country posted a deficit last year of just 2.8 per cent of GDP and five years ago, before the global financial crisis kicked off, it posted a budgetsurplus of more than 80 billion kroner.

“Weak private consumption, the slowdown in the international growth outlook and the fall in stock prices have increased the pressure on public finances,” the ministry said in a statement, explaining the anticipated deficit hike, which remains well above the three-per cent ceiling permitted within the EU.