October 3rd, 2014

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The GDP growth forecast from the Danish Central Bank has now been reduced to 0.8 percent from the June forecast of 1.5 percent. Additionally, for only the second time in history, the bank set a negative deposit rate earlier this September at -0.5 percent.

However, consumer confidence has reportedly grown, EBIT margins have on the whole increased and unemployment rates have fallen. The red-hot political issue, the rules on unemployment benefits, has received less public attention as people adjust to it, obtain jobs or advance their education.

Meanwhile, amongst these changes, the citizens of Denmark continue to await a sustained level of economic growth.  
The negotiations over the state budget will start when parliament convenes next Tuesday. The minister of finance, Bjarne Corydon, has placed the bait on the table. The government support parties can split 1.5 billion kroner between them – there’s not an øre more if EU and national budget standards are to be met.

Corydon put it politely when he said he expects a commonsense budget law, but simultaneously he warned that he will negotiate with an open mind, suggesting he will make a deal with the opposition if so needed.
Dansk Industri held its summit on Tuesday (see page 1) to find ways to supply the Danish workforce with qualified minds and hands. More than 135,000 foreigners are currently employed through the organisation. More than 10-15 percent extra input per year will be necessary to sufficiently support the economy.

The aforementioned foreigners do not come from Syria, although Denmark will soon accommodate 15-20,000 of the poor victims of civil war. The pendulum for outsourced production is swinging back. Even the Syrians can be put to work – if they can do it in Sweden, why not here?

Several prominent Danish business figures are adjusting their strategies to fit the slowed economy.
Mr Gustafsson, the CEO of SAS, is realising that short haul passengers – which constitute 70 percent of his customers – do not want to pay for luxury, but instead want timely and cheap seats. SAS is working on readjusting itself in the market to accommodate the demand for lower fares. SAS’s cost reduction programme has helped to ease some of its financial pressures, but the firm still reported a loss of 9 million in Q3 of 2014.

Mr Borgen, the CEO of Danske Bank, knows that digital banking is coming faster than he can reduce his cost base –his mobile banking endeavours indicate the bank’s future direction. However, he has an abundance of funds with nowhere to put them to work because the no-growth scenarios make daring expansions rare. His nightmare scenario might question whether we really need large banks in the long run?

Mr Fredriksen, the CEO of Matas, the pharmacy chain, sees zero growth in its shops’ turnover but amazing potential in e-trade.  Matas’s predictive advertising encourages consumers to purchase more products online. For example, Matas might know you are in the market for aftershave before you do. The benefit of this technology is that it creates a tailored shopping experience.

So while we wait for growth to pick up again, we observe a world with more structural changes than previously imagined. Will the future bring a dynamic, competitive, international and peaceful world – or is that too much to hope for?

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