Denmark has stolen children from their foreigner parents

Wednesday, August 13, 2008

Danish recession warns of tough times

It is hard not to notice the many cars with Swedish number plates driving around Copenhagen.

The Danish capital is connected to Malmo, the Swedish port, by a 16 kilometre bridge-tunnel link, making it easy for Swedes to commute here for work.

And many do.

Denmark may have registered two consecutive quarters of falling economic output - technically putting the country in recession - but there is no shortage of jobs.

"The Dane on the street does not feel this recession severely yet due to the fact that we have a very tight labour market and unemployment is still at a 30-year low," says Jes Asmussen, chief economist at Handelsbanken Capital Markets in Copenhagen.

Costly food

But Mr Asmussen believes Danes are going to feel this recession bite a lot more in the coming year.

The country's low unemployment rate of just 1.8% - compared with a eurozone average of 7.2% - is both a blessing and a curse.

Labour shortages mean firms have long struggled to find personnel. Consequently, labour productivity fell during the last three months of 2007, contributing to a revised 0.2% decline in economic output in that quarter.

Moreover, employers are having to compete on wages to attract good candidates.

Higher wages have added to inflation and pushed up interest rates at a time when Danes are feeling the pinch of rising world food and petrol prices.

"Groceries, vegetables, meat, everything has gone up," says Isabelle Zumot, who lives her partner Martin Camara and two young daughters in north Copenhagen.

"My friends all talk about how food prices are rising."

Falling property prices

As is the case across Europe, rising food prices are stretching the budgets of many Danish households, and this may explain why the average Dane has started to rein in spending, a factor that contributed to a fall in economic output of 0.6% in the first three months of 2008.

Read more at BBC

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