Brussels, 21/02/2002 (Agence Europe) - On a proposal by Commissioner Pedro Solbes, the European Commission adopted its recommendation on Thursday to the EcoFin Council on the update, in 2001, of Denmark's convergence programme for the period 2001/2005. The Commission considers that Denmark, last country to have submitted its programme this year, continues to meet the convergence criteria relating to inflation, long-term interest rates and exchange rates. The EcoFin Council should adopt an opinion on this programme at its meeting on 5 March.
Here are the main conclusions of the Commission on the Danish programme: - the Danish economy has experienced sound development, notably through low unemployment and inflation falling to 2%. GDP growth should move from 1.1% in 2001 to 1.4% in 2002 and 2.4% in 2003, before remaining at 1.9% in 2004 and 2005. The Commission acknowledges that growth in 2001 was at a level a little lower that expected, due to the weakening in external and domestic demand, especially regarding investment; - public finances "should also remain healthy", says the Commission, although the 2001 surplus was not as high as expected (due to the lack of gain in revenue). Denmark is counting of surpluses in the region of 2% of GDP each year and a public debt of 35% of GDP only by 2005. Denmark will be able to face a normal downturn in the economy without recording a deficit higher than the reference value of 3% of GDP, Solbes' services also state. The Commission points out that the Danish Convergence Programme maintains the medium-term strategy of "keeping high surpluses on the public finances in order to prepare for the impact of ageing of the population, along with a reduction in revenue and expenditure ratios. These aims have been strengthened by a "tax freeze" to stop the upward drift in the tax burden and help curb the tendency for a rise in real expenditure", which the Commission welcomed. Copenhagen is enjoined to continue in the same direction by controlling local government expenditure. The Commission concludes that Denmark's public finances are "sustainable and in a good position to handle the projected expenditure rises due to the ageing of the population and continue to be in compliance with the Stability and Growth Pact".