Denmark: Higher government spending – Nordea

The Danish government Debt Management Office has decided to revise its strategy for 2020 in light of the coronavirus, economists at Nordea apprise. EUR/DKK is trading at 7.473.

Key quotes

“The Danish central bank will increase the target for government bond issuance by DKK 50bn to DKK 125bn.”

“According to our forecast made before the outbreak of coronavirus Danish public balances would end 2020 with a small surplus. However if revenue shrinks and expenditure increases by a total of DKK 50bn this would ‘only’ imply a EMU-deficit of around 2.1% of GDP – well within the Maastricht criteria.”

“For now, the main focus has been on supporting companies with liquidity but if the downturn continues, this could soon be turned in to a broader fiscal easing.”