What Does the New Danish Government Mean for Denmark’s Welfare State?

Background Leading Up to the New Government

When I studied abroad in Denmark for the Fall 2016 semester, many Danes, from my host parents to my professors to Danish university students, told me that they might have an election during the semester. According to the Danish Constitution, which establishes Denmark as a parliamentary democracy, no government can remain in office with a majority against it. At the time, the government solely consisted of minority party Venstre, also known as the Liberal Party in English. They relied on support from the larger Dansk Folkeparti, or the Danish People’s Party, the Liberal Alliance, and the Conservative People’s Party in order to form a majority in their favor. However, some of the supporting parties disagreed with Venstre’s proposed budget for 2017-2025, making it seem like they could not hold this majority for long. If the budget did not pass, it would have indicated that they no longer had a majority in their favor, making them call an election. The Danes with whom I spoke thought this could be possible.

The last election had occurred on June 18, 2015, resulting in the “blue bloc,” the right-wing political parties, winning a majority in Folketinget, the Danish parliament, over the left-wing “red bloc.” However, no individual blue bloc party held a majority on their own, requiring that the leaders of all parties submit their recommendations for Prime Minister to Queen Margarethe II the following day. Upon these recommendations, the queen mandated Lars Løcke Rasmussen, leader of Venstre, to form a government. However, policy disagreements amongst the other blue bloc parties proved that forming a majority coalition government would not be possible, forcing Rasmussen to form a government with Venstre alone.

Some of these differences would reappear in the 2017-2025 budget proposal. Dansk Folkeparti are a right-wing populist party, in favor of strict border controls, strict immigration policies, and minimal acceptance of refugees. Yet they also prefer a large welfare state and high taxation in order to provide benefits for less fortunate Danes, not unlike their colleagues in the red bloc. They use their preferences for a large welfare state and high taxation to argue against immigration and asylum, stating that immigrants take too much from the welfare state without paying enough back into it. Dansk Folkeparti are the largest party in the blue bloc and second-largest party in Folketinget at 37 members.

Venstre are a moderate classical liberal party, in favor of free markets and low taxation, yet have also recently become more in favor of strict immigration and asylum policies. They are the second-largest party in the blue bloc and third-largest party in Folketinget at 34 members. The Liberal Alliance are a stricter classical liberal party, favoring large tax cuts for both individuals and corporations, free markets, and open borders. They currently have 13 members in Folketinget. The Conservative People’s Party operate from a socially conservative perspective, showing pride for their Christian heritage and state church while still respecting freedom of religion. Economically, they are center-right, believing the government should provide welfare to those in need, free education for all, and a strong national defense, but still keep taxes as low as possible within those constraints. They have six members in Folketinget.

These economic differences led to tensions for the previous government’s budget proposal. Intent on cutting taxes, the Liberal Alliance petitioned the government to reduce the topskat, the tax on those earning 500,000 or more Danish kroner (70,000 USD) per year, by at least 5% for their 2017 to 2025 budget plan. They threatened to withdraw support from the government if Venstre did not meet this demand. However, the Danish People’s Party made a reverse threat, claiming that they would withdraw support from the Venstre government if they cut taxes on the top earners in Denmark.


The New Government

Danish Prime Minister Lars Løkke Rasmussen (center) with leader of the Conservative People’s Party Søren Pape Poulsen (left) and leader of the Liberal Alliance Anders Samuelsen (right) in an image tweeted by the Prime Minister announcing the new “three-leaf clover” government (Image credit: twitter.com/larsloekke)

The politically savvy Danes with whom I spoke took both of these threats with a grain of salt. Annette Rahbek, a 46 year-old and former city official for Venstre, said that without support from either of these two parties, the blue bloc would likely have lost the resulting election. In order to prevent this from happening, Venstre opted to form a new coalition government on November 28, 2016 with the Liberal Alliance and the Conservative People’s Party. By inviting the Liberal Alliance into the government, Venstre was able to talk them out of their proposed 5% tax cut for higher incomes. Venstre was also able to reach a compromise with the Danish People’s Party by proposing tax cuts for lower incomes. This was a much more favorable condition for the Danish People’s Party, since it benefitted lower-earning Danes, a demographic for which they are concerned, while still allowing the fiscally conservative blue bloc parties to lower taxes.

The Danish People’s Party, although not part of the new government, have still pledged to support it. The new government also won their favor by increasing funding for the elderly, another demographic for whom they are concerned, as well as tightening their immigration policy. However, Annette predicts the new government will still have to struggle with them given their major economic differences. She says “there is an ideological big difference” between the Danish People’s Party and the parties in the new government, noting that the Danish People’s Party “is in many ways a workers party. Sometimes it seems closer to the Social Democratic Party (the largest and most powerful party in the red bloc)…The government wants less public support for people and lower taxes. DF [Danish People’s Party] wants the state to take better care of everyone.” Although the Danish People’s Party have a few similarities with the parties in the government on social issues, sharing anti-immigration sentiment with Venstre and patriotism with the Conservative People’s Party, the new government formed on account of economic policy as opposed to social policy, leaving the Danish People’s Party out of the loop.

The Future

So far, the new government seems to have been able to quell the Danish People’s Party’s fears that they would cut welfare benefits too much. Their new budget appeals to DF’s platform by pledging 3.4 billion kronor (476 million USD) for the elderly, a 100 million kronor (14 million USD) welfare pool, tougher restrictions on permanent residence for immigrants, and an “emergency brake” policy to deny all asylum seekers at the Danish border in an emergency situation. However, this alliance could start to show hiccups, as the Liberal Alliance and the Conservative People’s Party just announced that they intend to cut social welfare payments in order to better incentivize unemployed people to get jobs. This has not yet translated to policy, but it may act as a preview of future internal conflict within the blue bloc.

Works Cited

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“Social Welfare Cuts for Young Unemployed ‘Creates Incentive’: Danish Parties.” The Local, Apr 4, 2017, https://www.thelocal.dk/jobs/article/social-welfare-cuts-for-young-unemployed-creates-incentive-danish-parties.

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