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Danish Households Seeking to Pay Off Debts Reducing Household Expenditure

Industry Sector

Consumer Goods


27 October 2011


Mike King

Type of News


Prior to the economic downturn, Danish consumers were particularly upbeat about their economic prospects. This attitude measured as a 10 on the consumer confidence index maintained by Statistics Denmark. This early optimism was based in part on rising disposable incomes. Indeed, between 2006 and 2007 per capita annual disposable income increased by 2% (in real terms) and consumer expenditure increased by 2.3%. As well, many consumers borrowed money at relatively low rates of interest using equity withdrawal loans to fuel household and other purchases. When the global recession hit the country, however, per capita disposable income declined, forcing many nervous consumers to curb their spending. Indeed, between 2008 and 2009 per capita annual disposable income declined by 5.6% while spending declined by 4.5%.

Rising interest rates on mortgages made it impossible for an increasing number of people to remain in their homes. The combination of high interest rates, rising unemployment and repossession rates created a vicious circle that drove reductions in the level of economic activity which, in turn, resulted in significant declines in housing values.

By October 2008, the Statistics Denmark consumer confidence index reached negative 16, the lowest measured in 18 years. In 2008, Denmark became the first European country to enter into recession. Since 2008, however, the Danish economy has slowly recovered from the worst of the downturn and this has led to increased consumer confidence, reflected by growth in spending. Indeed, between 2009 and 2010 consumer expenditure increased by nearly 2%.

In line with the recovery in the global economy, the Danish economy is expected to continue to recover over the forecast period, at least moderately. Annual per capita disposable income is projected to rise by 19.4% over the forecast period to reach DKr176,685 in 2020.

As a result of the economic downturn, consumer expenditure declined. In particular, spending on items considered non-essential saw significant declines. For example, spending on leisure and recreation products and services saw a spending drop of nearly 10% between 2007 and 2009. In other cases, consumers decided to postpone ‘big-ticket‘ purchases of such items as in-home consumer electronics products, appliances and white goods.

While many consumers are expected to adhere to aspects of their new frugality as the Danish economy recovers over the forecast period, spending levels are nevertheless expected to rise, buoyed by increased consumer confidence, rising disposable incomes and pent-up consumer demand. On the other hand, over the forecast period a relatively large number of households will be seeking to pay off the debt they accumulated prior to the economic downturn, and this will influence demand and spending in these households, at least in the short term.

This Consumer Lifestyles in Denmark report analyses factors influencing national consumer expenditure. Consumer lifestyles reports include coverage of: population, urban development, home ownership, household profiles, labour, income, consumer and family expenditure, health, education, eating habits, drinking habits, shopping habits, personal grooming, clothing, leisure habits, savings and investments, media, communication, transport and travel and tourism. Use this report to understand the factors influencing a nation's lifestyle choices.

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