World

Danes Increasingly Less Confident in Their Economy

Despite lower unemployment, only 48% see standard of living improving

WASHINGTON, D.C. -- In 2007, the same year that Denmark achieved its lowest unemployment rate in decades, the Danish economy also saw domestic consumption fall, interest rates increase, and the housing prices drop. Gallup Polls in Denmark find Danes are less optimistic about their living standards now than they have been in the past several years; less than half of residents (48%) in 2008 say their standard of living is getting better, compared with about two-thirds who said the same in 2007 and 2005.

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Economic downturn in Denmark is currently a salient national issue. Reducing the income tax burden and addressing skilled labor shortages are two issues that could dominate the domestic policy agenda. The Economist expects wage growth will remain high in Denmark because of a pinched labor market, but inflation will exceed the European Union (EU) average because of rising food and fuel prices. The Economist also forecasts that Danish economic growth will stay below 1% for the coming year. This comes at a time when the global financial markets are in turmoil. In fact, national accounts data suggest Denmark was experiencing an economic recession as early as January 2008 (after two successive quarterly declines in real GDP growth).

Gallup Polls conducted in Denmark suggest that Danes are starting to feel the pinch. When polled in May 2008, Danes' outlook toward the national economy had grown more pessimistic, compared with sentiment in 2007 and 2005.

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Further, only 41% of Danes say economic conditions in their area were getting better, down from 56% who said the same in May 2007.

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Outside of Europe, Denmark exports the highest percentage of its goods to the United States, including furniture, pharmaceuticals, canned ham and pork, and plastic toy blocks (Lego). If global demand for consumer goods continues to slow, this could negatively affect the Danish economy.

Eurobarometer polling conducted in Denmark during about the same period of the 2008 Gallup Poll found that Danish respondents expressed far less concern about unemployment than did their EU counterparts. The poll also found that Danes had less concern about rising prices and inflation. While those two concerns topped the EU list, the Danes surveyed had more fear of crime and concerns about maintaining the healthcare system.

Public services, and the costs involved with them, are a concern for the Danish government. The country currently uses a "flexicurity model" of employment, which combines few restrictions on hiring and firing with high unemployment benefits. This means a high tax burden for Danes and a potentially large unemployment roster for the government. As of May 2008, the number of Danes living on mostly government transfer payments was roughly 680,000, or 20% of the working-age population.

Torben Andersen, a professor at Aarhus University in Denmark, speculates that the true test for Denmark is not avoiding recession, but instead attracting workers back into the workforce once the economy recovers. Governments across northern Europe have a similar concern. For instance, the Finnish labor ministry recently released a promotion video that it hopes will attract skilled foreign labor by branding the country as the "cool attic of Europe." Denmark is similarly hoping to entice engineers and software programmers using a new points-based green-card program.

Bottom Line

Gallup finds that, despite low unemployment levels, Danes are less optimistic about their standard of living now than in years past. The possible factors are numerous, but no matter the causes, the data indicate the impact that the global financial slowdown has had on Danes' perceptions of their economic future. To put these attitudes in proper perspective, Gallup finds that 92% of Danes still feel that the economic conditions in their country are good. But declining attitudes could signal an impact on future consumption levels. As Lone Bak Nielsen explains in her interview with Gallup News, Danes are still buying daily necessities, but less luxury goods (such as automobiles and motorcycles).

To learn more about Danes' views, please click to watch an interview with Lone Bak Nielsen, a resident of Aarhus, Denmark, on current economic conditions in her country.

Survey Methods

Results are based on telephone interviews with 1,001 adults in Denmark, aged 15 and older, conducted between July 2005 and April 2008. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ±3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

Gallup http://www.gallup.com/poll/110803/Danes-Increasingly-Less-Confident-Their-Economy.aspx Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A +1 202.715.3030