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Denmark phasing out COVID-19 relief packages amid looming economic crisis

15 June 2020 13:21 (UTC +04:00)

The Danish government and a large majority of the parliamentary parties have agreed to phase out the successful relief packages and replace them with a comprehensive recovery package aimed at boosting the Danish economy after the corona crisis, APA reports citing Sputnik.

“With today's agreement, we are taking an important step forward and beyond the crisis. We put a responsible end to the temporary relief packages. And at the same time, we are giving a significant saline injection the Danish economy and launching several initiatives to help Danish export companies through the crisis in the global markets,” Finance Minister Nicolai Wammen said in a statement.

Since the coronavirus outbreak began, Denmark has injected over DKK 300 billion ($45 billion) into the economy in the form of aid packages, including tax and VAT payment extensions and direct subsidies.

The new cash payout will be financed by the Danes' own holiday allowance, which had been frozen over a revamp of the holiday pay system, originally meant to be paid out as an additional pension when people retire. Three out of five of the frozen weeks, which Danes have earned themselves, will be paid out before October, amounting to roughly 60 billion Danish crowns (about $9 billion).

The deal, which the government reached with a majority in parliament, also includes a separate 1,000 crowns one-off payment to citizens on public benefits and a DKK 10 billion fund to support struggling companies.

The national-conservative Danish People's Party and the New Right and the Liberal Alliance were the only parties that did not support the measures.

The Nordic country of 5.8 million was among the first in Europe to both shut down in March to curb the coronavirus epidemic and has been among of the first to re-open following a weeks-long lockdown that allowed it to stifle the spread.

Nevertheless, according to previous forecasts, the Danish economy is facing its biggest contraction since World War II this year as a result of global coronavirus lockdown measures.

According to the Danish Finance Ministry, an economic downturn worse than the financial crisis of 2007-08 is in store for Denmark in 2020. All in all, the nation's GDP is expected to fall by an estimated 5.3 percent, leading to a spike in unemployment, especially within the hotel and restaurant sector. Housing prices are also plummeting.