Denmark Faces Budget Deficit of 6.5% Under Optimistic Scenario

(Bloomberg) -- Denmark faces a budget deficit of 6.5% of gross domestic product this year under the most optimistic scenario provided by the Danish Economic Councils, an independent government adviser.

Under that scenario, GDP would fall by 3.5% this year as the economy quickly returns to normal activity, the advisory, known as the Wise Men, said in a statement on Monday.

Under a pessimistic scenario, where a second wave of the coronavirus leads to another shutdown later this year, GDP would contract about 5.5%, leading to a public deficit of 9%.

The Danish government has so far pledged to spend about 280 billion kroner ($41 billion) in aid packages as the country enters the fourth week of lockdown to prevent the virus from spreading. Danish Prime Minister Mette Frederiksen may announce a partial roll-back of the lockdown as early as Monday. Still, she’s made clear that any slight uptick in the number of cases would be followed by an instant return to tight restrictions.

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