ECONOMIC RECOVERY

The Danish coalition government led by Helle Thorning-Schmidt has taken to saying that growth has returned to the economy. Well, it would, wouldn't it? A new general election is due by September next year, and the state of the economy is often the determining factor in how people vote.

Even if there is an upswing, it is weak. Denmark's economy is highly dependent on those of its bigger neighbours, notably Germany, and that doesn't seem to be going as well as it once did. Sanctions against Russia are an attempt to influence events in Ukraine; but they also affect Danish business, both directly (butter and pork exports) and indirectly (German exports of machine tools).

It's too early to tell how these measures will pan out over the next twelve months. However, one thing is crystal clear; even if economic activity is increasing, it is still well below that which existed before the financial crisis. Nominal GDP in 2007-8 was around Dkr.410 billion; the latest figures, for January 2014, put it at Dkr.393 billion. That is above the low point in early 2009 of around Dkr.376 billion but is still some 4% or so below the previous peak.

Likewise with employment. Total employment was over 2,950,000 before the financial crisis struck on 15 September 2008, and there was virtually no unemployment; in January this year, it was 2,786,300, marginally up from the low point of the cycle, but again some way under the previous peak. Some 60,000 people have been unemployed for so long that they no longer have the right to unemployment benefit.

Given Denmark's extremely generous welfare state, relatively small changes in employment and unemployment have big impacts on the state's finances. The government is putting a brave face on things, but the mood in the country seems to be more one of sullen resentment and acceptance than optimism. The odds are still on Ms. Thorning-Schmidt's not being Prime Minister in a year's time.

Walter Blotscher