The Danish EU presidency will be focusing all its efforts on tackling the looming economic crisis to avoid a possible recession.

Danish Prime Minister Helle Thorning-Schmidt said the developing circumstances required the presidency to concentrate on the financial and economic crisis.

“Europe is facing one of the worst economic crises since its inception and we are prepared to do whatever is possible to put the European project once again on the right track,” she said.

The official start of the Danish EU presidency last week, its seventh since joining the EU in 1973, could not have come at a worst day. One of the biggest “green tech” companies in this rich country, wind-turbine manufacturer Vestos, announced it would be shedding 2,300 workers as a result of a lack of orders due to the global slowdown.

Flanked by Commission president José Manuel Barroso, Ms Thorning-Schmidt admitted this was “terrible news in a sector considered to be one of the most promising in the Danish economy and another wake-up call that 2012 is going to be very tough”.

For the Commission’s chief, 2012 will be difficult but challenging. Emphasising the need that member states would reach, as soon as possible, an agreement on the fine details of the Fiscal Pact – a new EU intergovernmental treaty – he said the Commission was also expecting its rapid ratification.

“The ratification process doesn’t depend on us but on member states. This should be done as speedily as possible once the new treaty is signed next March,” Mr Barroso said.

At their last EU summit in Brussels in December, all member states, with the exception of the UK, agreed on the basics of a new treaty aimed at consolidating public finances.

The treaty will oblige member states to cut deficits by at least 0.5 per cent of GDP each year, move towards balanced budgets, reduce debt levels and introduce constitutional safeguards towards balancing their books. The treaty, which is being discussed by member states at a technical level, will include an automatic sanctions regime against defaulting member states.

The EU has called for a summit for the end of this month so that EU leaders can proceed with the final text of the treaty with an aim of signing it on March 1.

Mr Barroso said that apart from fiscal discipline, the EU would be discussing a strategy for growth to boost confidence in the European economy.

Sanctions against defaulting members

Apart from the treaty, the coming six months are expected to be crucial for Malta to strike a new deal on the Multiannual Financial Framework (MFF), or, rather, the new seven-year EU budget covering 2014 to 2020.

Senior Danish officials said Denmark was expected to register significant progress on this issue and prepare the groundwork for the final decisions to be taken by the end of this year under a Cypriot presidency.

“If Malta wants to secure the right deal, these coming weeks will be crucial and Malta needs to focus on its priorities,” the officials said.

In the current financial framework (2007-2013), Malta negotiated a favourable financial envelope amounting to some €1 billion of EU funds invested directly into the Maltese economy. However, the ongoing discussions are not straightforward and while Malta is insisting on its eligibility to keep the same amount of funding, many member states, including Denmark, are arguing in favour of cuts and austerity measures.