#16 - #17 - Business news from the Economic Mission of the French Embassy in Denmark [fr]

#16 - #17 - Business news from the Economic Mission – 15.07.2021

Disclaimer - The Economic Mission strives to provide accurate and up-to-date information and will correct, to the extent possible, any errors that are brought to our attention. However, it cannot be held responsible for the use and interpretation of the information contained in this publication.

Economy

New economic forecasts raise fears of overheating in the Danish economy
The Danish economy, currently marked by rising private consumption and falling unemployment, seems to have recovered from the coronavirus crisis. However, signs of shortages of raw materials and labour are raising concerns about the risk of overheating. Danske Bank continues to predict GDP growth of 3.0% this year, and has increased its growth forecast to 3.5% for 2022 (from 3.4%). In addition, Danske Bank expects inflation to be 1.2% this year (previously 0.9%), and the same in 2022. Similarly, the National Bank has updated its growth forecast for 2021, and now expects Denmark’s GDP to grow by 3.3% in 2021, up from 1.4% three months ago. The National Bank’s governor and chairman of the Systemic Risk Council, Lars Rohde, pointed out that it is rare for the National Bank to change one of its forecasts so significantly in such a short time. In its latest report, the National Bank writes that the "government should be prepared to tighten fiscal policy more than expected". Finance Minister Nicolai Wammen responded to this statement by saying that the government would already be implementing a sufficiently tight fiscal policy to prevent the economy from overheating. Finans, Børsen, Børsen, Finans

Small increase in Danish disposable income in 2021
According to Danske Bank, Danish wages are expected to rise by 2.7% in 2021. However, household disposable income is expected to grow more moderately: according to the bank’s forecasts, it is expected to grow at its slowest pace in nine years. For a family consisting of a couple and two children, disposable income is expected to increase by only DKK 241 (€32) per month in 2021, compared with DKK 1 000 (€135) in 2020. This is due to rising energy prices and inflation: it will be more expensive for Danish families to shop, heat their homes and fill up with petrol.Berlingske

Danish fishermen seek €160m in compensation following Brexit
The total landed value of Danish fisheries is over DKK 3 billion (€ 400 million) annually. Traditionally, Danish fishermen’s catches in UK waters have accounted for around 30% of the total value of Danish landings, and 40% of the catch by weight. The Trade and Cooperation Agreement, signed by the EU and the UK at the end of 2020, resulted in a loss of Danish quotas worth DKK 1.2 billion (€160m), and Danish fishermen are now demanding compensation for this loss from the state. They consider this to be a case of expropriation of fishing quotas. Both the fishermen and the banks that provided the loans for the purchase of the quotas are surprised by the Commission’s recent statement that compensation from the Brexit adjustment reserve cannot be used as direct compensation for fishermen who have lost quotas.
Finans

Denmark has the second highest house price growth in the EU in 2021
According to Eurostat data, only in Luxembourg were house prices higher than in Denmark in the first quarter of 2021. Over this period, prices were 15.3% higher than in the first quarter of 2020 in Denmark, and 17% higher in Luxembourg. The third place in the ranking goes to Lithuania, where prices increased by 12% in the first quarter of 2021, compared to a year earlier. Compared to the fourth quarter of 2020, house prices in Denmark rose by 5.8%, again ranking second behind Estonia, where prices rose by 6.6% in the same period. By comparison, house prices in the first quarter of 2021 in France rose by 5.5% compared to the first quarter of 2020, and by 0.7% compared to the fourth quarter of 2020. Eurostat data show that price increases in the housing market in 2021 were widespread across most EU countries, with prices rising by an average of 6.1% year-on-year, the highest increase since 2007. Finans, Eurostat

Lack of skilled and unskilled labour
While employment is increasing and unemployment is decreasing, there is a lack of skilled labour in Denmark, especially in rural municipalities. According to the Confederation of Danish Industries (DI), as many as 34.6% of recruitment attempts for skilled jobs are unsuccessful in the municipality of Ringkøbing-Skjern (in the Central Jutland region), compared to only 7.3% in Copenhagen (and a national average of 19.2%). According to the DI report, this contrast between large cities and rural areas is found throughout the country. Another recent DI study shows that about 18,000 more people could be employed by Danish companies if candidates were available, which represents a loss of DKK 13.5 billion (€1.8 billion) to Danish GDP. The survey shows that it is mainly service companies (cleaning, construction, etc.) that have had to give up filling vacancies over the past three months. To help companies, DI proposes that more unskilled young people who receive educational assistance should be declared fit for work. Finans, Berlingske, Berlingske

Denmark, the sixth largest maritime nation in the world
According to the trade organisation Danish Shipping, Denmark is in 6th place in the ranking of maritime nations, down from 5th place last year. This drop of one place is not due to a decrease in the size of the Danish fleet, but to a more rapid expansion of other countries’ fleets. The top five places in the ranking are occupied by Greece, China, Singapore, Japan and Hong Kong. On 1 July 2021, the Danish shipping flag consisted of 774 ships, and Danish shipping companies had a capacity of 63.4 million gross registered tonnes (GRT) (a unit of measurement for the internal volume of ships). In comparison, the companies of Hong Kong, which this year moved up to fifth place, accounted for 64.6 million GRT. Børsen

Green transition

Power-to-X investments and strategy
In response to the DKK 850m (€114m) political agreement reached at the end of June to support six Power-to-X projects at European level, the trade organisation Forsikring & Pension (F&P) said that DKK 25-35bn (€3.4-4.7bn) was still needed to develop the green fuels of the future. According to Tom Vile Jensen, vice-president of F&P, Danish pension funds are ready to fill this funding gap, if the right framework is put in place at political level. In anticipation of the government’s Power-to-X strategy, which is expected to be unveiled by the end of the year, F&P has published six recommendations that they believe would encourage investors to bet on Power-to-X. F&P calls on politicians to put in place an ambitious Power-to-X strategy as soon as possible, which would establish long-term framework conditions and a green certification system, and remove barriers to Power-to-X (such as the current electricity pricing system or outdated EU regulations). Finans

New government strategy for electrification of Denmark
Climate Minister Dan Jørgensen has unveiled Denmark’s electrification strategy, a key instrument in the country’s green transition. The government’s plan provides a general framework for future business projects and policy initiatives. The strategy contains eight development areas: cost effectiveness and social balance, further development of renewable energy, intelligent integration of the energy system, involvement of concerned citizens, maintaining high security of supply, growth and employment, technological development, and harmonisation of European electricity systems. Investments in electrification of between DKK 3.5 and 30 billion (€0.47 and 4 billion) by 2030 are estimated to be necessary in order to meet Denmark’s emission reduction targets. Although industry organisations such as Forsikring & Pension and Dansk Industri welcome the government’s strategy, they also call for more specific plans and roadmaps to be put in place. Børsen, Finans, Finans

Copenhagen Infrastructure Partners (CIP) launches new green technology investment fund
Danish fund manager CIP is opening up a new and riskier investment avenue with the launch of a fund that will invest in so-called ’next generation’ renewable energy infrastructure, such as Power-to-X. The aim is to enable the decarbonisation of industries such as shipping, steel production and agriculture through the use of green fuels and raw materials. In addition to Power-to-X, the fund could also invest in biofuels or carbon capture and storage. It will focus on new projects in Western Europe, North America, Australia and developed Asia. It has already raised €800m after the first closing and is targeting a total of €25bn. Investors include PensionDanmark, PFA and Vestas, among others.Finans, CIP

Industry

New FLSmidth partnerships for the decarbonisation of the cement industry
FLSmidth has partnered with UK-based Carbon8 Systems (C8S) to reduce the climate impact of the cement industry, which accounts for 7-8% of global CO2 emissions. This new partnership between FLS and C8S will enable the development and sale of equipment for CO2 capture and conversion of carbon into building materials. FLSmidth’s contribution is the technology that allows the CO2 (captured in flue gases) to be bundled with the substances in which the carbon will be sequestered. In the spring of 2021, FLS already had a key role as technology provider for a DKK 10bn (€1.3bn) carbon capture project in Porsgrunn, Norway, at a factory of the German Heidelberg Group. In addition, FLSmidth aims to develop a technology to produce CO2-free cement by 2030, using clay as a replacement for limestone in the production process. The Danish group has reached a first agreement on this technology with French cement producer Vicat, to whom FLSmidth will deliver equipment worth DKK 200m (€27m). The new large-scale clay calcination plant, which is expected to be the first in Europe, will be operational by 2023 and will reduce Vicat’s CO2 emissions by 16%.Børsen, Finans

Expansion of the Danish car fleet
Between 2010 and 2020, the number of passenger cars in Denmark has increased by 550,000, an increase of 26%: today there are approximately 2.7 million cars on Danish roads. Over the last 10 years, the Danish car fleet has grown by an average of 151 cars per day. This is partly due to population growth (+5.5% since 2010), and partly due to the increased prosperity of Danes, who are more likely to be able to afford a car or more. Indeed, the number of vehicles per 1,000 inhabitants in Denmark has increased from 423 in 2015 to 456 in 2019. However, cars are now used less than in 2010: back then, each car travelled an average of 15,488 km per year, compared to 15,296 km in 2020. In addition, petrol and diesel cars continue to dominate the fleet as a whole, although there is a gradual shift towards electric and hybrid cars.Finans

Increase in the number of Tesla cars on Danish roads
In four years, the turnover of Tesla’s Danish subsidiary has risen from DKK 245 million (€33 million) to almost DKK 2 billion (€270 million). In 2020, 4,700 Teslas were sold in Denmark, representing a 2% share of the total car market, and over 30% of the electric car market. By 2019, Tesla had sold 2,737 cars, representing an overall market share of 1.1%. This increase in sales has led to an increase in the company’s operating profit in Denmark. Tesla’s Danish subsidiary, which has 97 employees, is based in Hillerød.Børsen

SaxoBank opens up to cryptocurrency trading
Saxo Bank customers can now trade bitcoin, ethereum and litecoin currencies for euros, dollars and yen. The transaction can be done directly through Saxo Bank’s trading platform, without the need for a personal wallet. In contrast, Danske Bank has announced that it is not ready to offer bitcoin and other crypto-currencies to its customers: the bank points out, among other things, the lack of transparency (and the risk of financial crime), the lack of regulation, and the opacity of the pricing of these digital assets. Finans, Børsen, Berlingske

Jysk’s international expansion
The Danish bedding and home furnishings group Jysk currently has more than 3,000 shops in 51 countries, and its goal is now to open around 150 shops a year. In 2020, Jysk moved into Russia, and by 2023, the group also plans to expand into Turkey, which will become the group’s 52nd market. Israel was also mentioned by Jan Bøgh, CEO of Jysk, as a potential expansion opportunity in the coming years. In addition to its own shops in the main markets, Jysk has a franchise part, with more than 200 shops operated by local partners, in countries such as Indonesia, Vietnam, Georgia and Canada. Finans

Energy

Denmark to host IEA ministerial conference in June 2022
The seventh annual ministerial conference of the International Energy Agency (IEA) will take place in Denmark in June 2022. Ministers from the 30 IEA member countries will come to Copenhagen to discuss how best to reduce GHG emissions from the energy sector. This is only the second time the IEA’s annual conference has been held outside Paris, where its headquarters are located: in 2019 it was hosted by Ireland. Katrine Bjerre M. Eriksen, CEO of Synergi (the energy efficiency organisation set up by Danfoss, Grundfos, Rockwool and Velux), sees the organisation of the conference as a great opportunity for Danish companies. Indeed, the changing global targets in terms of energy efficiency could boost growth, employment and exports from Denmark. Børsen

TDC Net and Better Energy partner to build solar farms
By 2028, all of the electricity consumption of the incumbent operator TDC Net, which is responsible for the telecommunications group’s networks, will be provided by green energy. To achieve this goal, TDC Net has signed an agreement with the Danish company Better Energy to build four new solar parks in Jutland and Fionia. These will start supplying green energy from the beginning of 2022 and will provide 60% of TDC Net’s electricity consumption. In addition, the group is seeking similar agreements for wind farms. TDC Net’s goal is to reduce its CO2 emissions by 50% by 2023 and to be carbon neutral by 2028. However, its electricity consumption is expected to increase by 2.5% by 2028, due to the rapid growth of Danish data consumption (which is growing by about 40% per year) Berlingske

Ørsted to build new offshore wind farm in the US
The US authorities have chosen two developers for the expansion of New Jersey’s offshore wind capacity: Ørsted and the Altantic Shores consortium of Shell and EDF Renewables. It has been almost two years since Ørsted won a global offshore wind tender. This is an important victory for Ørsted and its ambition to strengthen its position in the US, where it is already behind the Ocean Wind 1 project, also in New Jersey. The construction of the new wind farm, Ocean Wind 2, which will be operational by 2029, will increase Ørsted’s capacity in the US from 2.9 to 4.1 GW. This will give Ørsted the largest offshore wind capacity in the US among energy developers: by comparison, Shell’s capacity is 2.26 GW and Copenhagen Infrastructure Partners’ capacity is 1.6 GW. Børsen

Dernière modification : 15/07/2021

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