Denmark

2025 should see the end of hesitant consumers in spite of strong growth

The Danish economy is poised for steady growth in 2025, underpinned by the robust pharmaceutical sector that continues to support exports and shield the economy from many of the broader global weaknesses. While household consumption remained subdued in 2024, a more favourable economic environment is expected to drive a recovery. Rising real wages, supported by solid nominal wage growth and moderating inflation, will boost disposable incomes, while higher employment levels and increasing house prices will strengthen consumer confidence through wealth effects.

Monetary policy will also play a key role, as Nationalbanken, the Danish central bank, is set to follow the ECB in lowering interest rates, making borrowing more attractive for both households and businesses. This, combined with an uptick in government spending, will provide additional support to domestic demand, helping to sustain economic activity. Overall, with a strong external sector and improving domestic conditions, the Danish economy is expected to remain resilient in 2025.

Corporate insolvencies are expected to remain relatively stable in 2025, following a period of easing in the past two years after an uptick. While an improving domestic demand and lower interest rates provide support the private sector, the landscape remains challenging due to still high gas and electricity prices and a fragile export environment, weighed down by geopolitical tensions and tariffs.

Positive balances despite rising public spending

The 2025 outlook reflects a continued robust fiscal stance; however, higher public spending, including increased defence expenditures, is expected to lead to a narrowing of the public balance but it should remain positive as tax revenue are expected to rise due to higher wages and strong corporate sector. Despite this, Denmark's public debt level is projected to remain low by international standards, reinforcing the country’s strong debt sustainability.

Denmark's current account balance in 2025 is expected to remain positive, supported by strong goods and services exports. However, after a particularly strong 2024, the surplus is likely to narrow slightly due to a more moderate external demand environment and ongoing global uncertainties. While large domestic companies continue to contribute to periodic fluctuations, Denmark’s structurally competitive export sector (pharmaceutical, food, energy etc.) ensures that the current account remains in a solid position overall.

Global tensions are affecting Denmark

The political landscape in Denmark remains relatively stable under the centrist government, comprised of the Prime Minister’s Mette Frederiksen’s centre-left Social Democrats, centre-right Liberal Party, and centrist Moderates with the next election having to be held before October 2026. Despite internal disagreement about pension and economic policies, an early election seems unlikely given the government's current unpopularity (polling at around 35%. The municipal and regional elections in November 2025 will be a good indicator of the popularity of the current government, especially as healthcare and the climate are back as the most important issues followed by defence.

The renewed interest from Donald Trump in Greenland has spurred further discussions in Denmark on the future of the Kingdom of Denmark (Denmark, Faroe Islands, and Greenland), especially with the Greenlandic election in 2025. Increased public spending, especially on defence (aiming to reach 3% of GDP by 2033 from around 2% in 2024 with DKK 15 billion, around EUR 2 billion, specifically going to the defence of Greenland), is resulting in more discussion around how to finance this rise which is resulting in both reforming aspects of the public sector and potentially higher taxes.

Payment

Denmark is in the process of becoming a cashless society. Bank transfers are the most commonly used means of payment. All major Danish banks use the SWIFT network, as it is a rapid and efficient solution for the payment of domestic and international transactions. Denmark has also implemented the Single Euro Payments Area (SEPA) in order to simplify bank transfers in euros.

Cheques and bills of exchange are now seldom used in Denmark. Both are seen as an acknowledgement of debt.

Unpaid bills of exchange and cheques that have been accepted are legally enforceable instruments that mean that creditors do not need to obtain a court judgement. In cases such as these, a judge-bailiff (Fogedret) is appointed to oversee the enforcement of the attachment. Prior to this, the debtor is summonsed to declare his financial situation, in order to establish his ability to repay the debt. It is a criminal offence to make a false statement of insolvency.

Debt Collection

Amicable phase

Unpaid bills of exchange and cheques that have been accepted are legally enforceable instruments that mean that creditors do not need to obtain a court judgement. In cases such as these, a judge-bailiff (Fogedret) is appointed to oversee the enforcement of the attachment. Prior to this, the debtor is summonsed to declare his financial situation, in order to establish his ability to repay the debt. It is a criminal offence to make a false statement of insolvency.

Once the 10 days from the date of the letter of demand have expired, the creditor’s legal counsel can charge the debtor for out of court collection costs (based on an official tariff) and present the debtor with a debt collection letter which gives them 10 further days to pay. If this payment deadline is not respected, the debtor can be sent a warning notice which sets out the date and time of a visit. A third reminder can be sent and calls can be made.

When no specific interest rate clauses have been agreed by the parties (maximum of 2% per month), the rate of interest applicable to commercial agreements contracted after 1 August 2002 is either the Danish National Bank’s benchmark, or the lending rate (udlånsrente) in force on 1 January or 1 July of the year in question, plus an additional 8%.

Legal proceedings

Fast-track proceedings

Since January 1, 2008, overdue payments which do not exceed DKK 50,000 or EUR 6,723 and are uncontested are handled via a simplified collection procedure (forenklet inkassoprocedure), whereby the creditor submits an injunction form directly to the judge-bailiff for service on the debtor. If there is no response within 14 days, an enforcement order is issued.

Ordinary proceedings

If a debtor fails to respond to a demand for payment, or if the dispute is not severe, creditors can obtain a judgement following an adversarial hearing or a judgement by default ordering the debtor to pay. This usually takes three months.

In the case of a judgement by default, the debtor can be ordered to pay the principal amount plus interest and expenses (including court fees and, where applicable, a contribution to the creditor’s legal costs) within 14 days.

All cases, whatever the size of the claim and level of complexity, disputed or not, are heard by the court of first instance (Byret). The court is presided over by a panel of three judges, or one judge assisted by experts, who consider both written and orally-presented evidence.

Appeals on claims which exceed DKK 10,000 are heard by one of two regional courts ? either the Vestre Landsret in Viborg (for the Jutland area) or the Østre Landsret in Copenhagen (for the rest of the country). Exceptional cases that involve questions of principle can be submitted directly to the appropriate regional court.

These proceedings involve a series of preliminary hearings, during which the parties present written submissions and evidence, and a plenary hearing, in which the court hears witness testimonies and arguments from both parties. Court costs depend on the value of the claim. The losing party generally bears the legal costs.

Denmark only has commercial courts in the Copenhagen area. These comprise a maritime and a commercial court (Sø-og Handelsretten), which are presided over by a panel of professional and non-professional judges. These judges are competent to hear cases involving commercial and maritime disputes, competition law, insolvency proceedings and cases involving international trade.

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Enforcement of a Legal Decision

Domestic judgements become enforceable when all appeal venues have been exhausted. If the debtor fails to comply with the judgment within two weeks, the creditor can have it enforced through the bailiff’s Court. Enforcement can take the form of a payment arrangement, or a seizure of the debtor’s assets. Payment plans are normally agreed in court and the debtor’s assets that can be seized are normally agreed at the same time. Courts normally accept payment plans of up to ten to twelve months depending on the amount.

As concerns foreign awards, the scenario can be more difficult if the decision is issued by an EU member, as Denmark does not adhere to the EU regulations on European Payment Order procedures. Decisions issued by non-EU members can be recognised and enforced, provided that the issuing country is part of a bilateral or multilateral agreement with Denmark.

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Insolvency Proceedings

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OUT-OF-COURT PROCEEDINGS

Non-judicial restructuring can take place through formal composition agreements, whereby the debts owed to the creditors are acknowledged and payment instalment agreed upon, without having recourse to a judge. Nevertheless, the efficiency of the Danish court system means that out-of-court proceedings tend to be used as informal negotiation tools.

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RESTRUCTURING PROCEEDINGS

Restructuring procedures are based on decisions handed down by the bankruptcy court. The court examines the possibility of a compulsory composition and/or a business transfer. These proceedings can be initiated by the debtor, in cases of insolvency, or by the creditor (but only with respect to legal entities). The court then appoints a restructuring administrator. The debtor maintains control of his assets during the procedure but is not allowed to enter into transactions of material significance without the consent of the restructuring administrator. The outcome of the procedure depends on the administrator’s proposal.

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LIQUIDATION

Liquidation procedures are based on bankruptcy orders issued by the Court, either at the request of the debtor or a creditor. The debtor must be insolvent. The Court appoints a trustee who is authorised to act in all matters on behalf of the bankrupt estate. His primary objectives are to liquidate the debtor’s assets and distribute the proceeds between the creditors. Creditors need to file their claims with the trustee for assessment.

Last updated: March 2025