Last Week in Denmark (17.07 - 24.07) Episode 24 Year 2
Higher interest rates; Low trust in the economy; Record employment
Ukraine HQ
Ukrainian soldiers in Denmark: The minister of defense, Morten Bødskov announced that he is open to the idea of training Ukrainian soldiers on Danish soil. The ministry has sent people to the United Kingdom, where thousands of Ukrainian soldiers are training over the summer to see how the idea can be implemented. Why? Ukrainian troops need to learn how to use the latest military technology donated by NATO.
Danish Politics HQ
The political game
Arne’s pension: or the right to early retirement for people that had tough physical work for 42, 43, or 44 years. They can retire at least one year before and at most three years before the others. The social-democrats passed this law last year with support from other red parties and DF. Now, Venstre (Liberals) also changed their position. From being against it and promising to abolish it, to deciding to leave it as it is if they win the elections.
The other blue parties (minus DF) are still against “Arne’s pension” with the Conservatives being really angry at the decision of Venstre to change position on the topic.
The youth wing of the Liberals (Venstre Ungdom) has also criticized the mother party for “selling out on values and principles”.
Why did Venstre change position? Because the idea of abolishing the pension scheme that allows people working on farms and factories from an early age to retire faster is very unpopular among the people in Denmark.
One billion DKK for SAS: The airline company (co-owned by Denmark) has losses amounting to one billion DKK after the two-week long strike. Losses will most likely have to be covered from the taxpayer’s pocket.
Venstre supports the idea of giving SAS more money. Why? Copenhagen Airport is an important regional traffic hub thanks to SAS. They say that if the cost-reduction plan SAS Forward will be implemented then the company can become sustainable.
According to the Radikale Venstre (Social Liberals), SAS is part of the critical infrastructure in Denmark and therefore needs to be saved.
Although DF initially supported helping SAS, after the strike they changed their position saying that SAS has become a “black hole” for the taxpayers’ money.
New laws and strategies
15% reduction in gas consumption: The Danish government decided to support the proposal from the European Commission that will lead to a 15% reduction in gas consumption in every EU member state. The reduction will be implemented in the period 1st August - 23rd March. Why? The European Union is preparing for a winter without Russian gas.
Until we find a way to replace the Russian gas, the houses that rely on gas for warmth will have a colder winter than usual.
The most impacted will be the industry, as 50 large Danish companies will be the first to be affected if the gas pipeline is closed.
Law proposals
Legal Council: DF (Nationalists) proposed an independent legal council formed by university teachers to advise the Parliament on matters regarding ministers breaking the law. Most political parties (Conservatives, Liberals, Social Liberals, Socialists, Red-Green Alliance) are supporting the idea and want to discuss it further. Why? The idea appeared because of the Parliament voting to not prosecute Mette Frederiksen after the mink scandal.
Body image: The minister of business, Simon Kollerup wants to propose a law that will make it mandatory for advertisers and influencers to put a state label on photos or videos that have been modified. Why? Because those perfect body images you see in photos and videos are not real and lead to a distorted view for young people over their own bodies.
There is a new trend among bloggers and influencers to show the real, unedited version of themselves. This new trend shows that people prefer the natural over the perfect.
Danish Economy HQ
Interest rates: The European Central Bank raised the interest rates by 0,5% which led to the Danish National Bank doing the same thing. The EU interest rate is at 0% now, and the Danish interest rate is at -0,1%.
The interest rate is the price for borrowing money. When the interest rates rise, your loan becomes more expensive. This would lead to a lower consumption that should tame inflation.
The interest rate will be further raised in the near future to deal with the high inflation. As a side effect, house prices are expected to drop soon.
If you have a variable loan you will end up paying a lot more than you do today.
Negative interest rates: As the interest rates are rising, soon the negative interest rates will become history. Good news for people with a lot of money on their account. Some banks like Nykredit and Arbejdernes Landsbank have announced that they will remove the negative interest rates from September. Others like Jyske Bank, Nordea and Danske Bank are still thinking about it.
Forbrugerrådet Tænk, Ældre Sagen and Danske Seniorer are asking all the banks to remove the negative interest rates.
Loan refinancing: A lot of people in Denmark with mortgage loans are looking now to refinance them. While you can reduce your debt that way, it comes with risks.
When you get a mortgage loan, you look at the interest rate (the cost of having the loan) and the exchange rate (how many DKK you get for a 100 DKK debt). To get a favorable loan you need an interest rate that is as low as possible (under 2%) and an exchange rate that is as close to 100 as possible.
The rise in interest rates has pushed the exchange rate to nearly 100. For people that got a mortgage loan with a low exchange rate (f.ex. 92) it can make sense to refinance their loan to reduce their total debt. However, this also means a higher cost for having the loan. So, this only works, if you have enough available income. Check out this Facebook group where people share tips on mortgage loans refinancing.
Employment: The number of employed people in Denmark continues to rise for 16th months in a row. The latest increase was with 8,000 employees. The total number now is at 2,956,000, the highest in history. However, economists warn that once the Danish economy cools down (it’s overheating right now) the number of people employed will drop again.
Consumer trust in the economy has reached an all-time low. According to Statistics Denmark, the consumer's trust is at -25,6%. This means that there is little appetite to spend money when there is so much uncertainty about the future.
Consumption represents almost 50% of the Danish economy. If we buy less groceries, stop eating out and buying clothes for example, the economy will be impacted, and jobs will be lost.
Daily Life in Denmark HQ
Climate with Amina McCauley
A maximum temperature of 35,6 degrees Celsius was measured in West Jylland on Wednesday afternoon, marking the hottest July day since 1941. According to the Danish Meteorological Institute’s (DMI) Klimaatlas-rapport 2021, the number of heatwave days in Denmark will increase from two to nine days per year by 2071, and the average temperature will rise by 3,4 degrees Celsius.
Meanwhile, a recent study of “small” glaciers in North Greenland has found that smaller masses of melting ice contribute to as much as 11% of the total melted ice in Greenland, while only making up 4% of Greenland’s ice-covered areas. From 2018 to 2021, an average of 42,3 gigatonnes of ice has melted from the glaciers per year.
While we were away, it was reported that pesticide residues were found in more than half (56,5%) of active waterworks boreholes (drilled wells used to extract drinking water in Denmark) in 2021. In 2016, pesticide residues were found in 25,2% of active boreholes. Danmarks Naturfredningsforening, who conducted the survey, predict it will be even worse in 2022.
Our community
Project
Speak at the Festival of Europe: When? 25-28 August Where? Mariager (North Denmark). There are seven themes covered by the festival. There must be one, in which you excel. Take this opportunity to be on a stage where thousands of people will be able to listen to your words. Sign up here.