Digital and green transitions require reducing barriers to mobility, such as inefficiencies in the housing market and weak competitive pressures in some markets. Improving education and integration of minorities would increase inclusion and the capacity of migrants to make the most of labour market opportunities.
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2021 Structural Reform Priorities
The economy is projected to contract by around 4% in 2020, followed by a gradual recovery of nearly 2% in 2021 and 2½ per cent in 2022. Domestic demand is underpinned by a strong rebound in consumption and employment, following a smaller initial hit from the COVID-19 containment measures than elsewhere. Nevertheless, tightened restrictions during autumn and the weak external environment will hold back the recovery.
Targeted fiscal measures remain in place to support firms and workers facing restrictions. A welcome withdrawal of broad support schemes combined with strong institutions for re-skilling should push and pull the reallocation of resources forward. The release of special mandatory holiday savings to households and elevated public investment will provide ample stimulus to domestic demand. Further advancement on structural reforms, notably the envisaged greener tax mix, could serve both short and long-term goals with well-designed implementation.
Denmark has traditionally delivered high living standards to its citizens and left few behind. High and equally-distributed incomes translate into strong feelings of wellbeing according to a range of measures. What is more, there is equality of opportunities across generations in terms of income, education and health. Commitment to addressing environmental challenges has made Denmark a frontrunner in green growth.