Danish municipalities can save between 5.6 and 8.4 billion kroner annually on administration and management, according to a new CEPOS analysis—a figure 20 to 30 times larger than the government’s 250 million kroner target for 2027.
The gap between what Denmark’s municipalities could save and what they’re being asked to save is staggering. CEPOS, the liberal think tank, has released yet another analysis showing massive potential for cuts. This time, the numbers are hard to ignore.
The analysis compares administrative spending across all 98 municipalities, adjusting for differences like population structure and local conditions. It uses two separate methods, both pointing to the same conclusion: there’s a lot of fat to trim. Between 5.6 and 8.4 billion kroner could be freed up each year if municipalities operated as efficiently as their best performing peers.
CEPOS research chief Karsten Bo Larsen puts it bluntly: “The potential for streamlining municipal management and administration is significantly greater than the ambition level set by the government and KL.” That’s the municipal association that negotiates with Copenhagen on behalf of local governments.
The Government’s Modest Ask
The government and KL agreed that municipalities should save 250 million kroner on administration in 2027. That sounds like real money until you compare it to what CEPOS says is possible. We’re talking about a difference of billions, not millions.
Over a longer timeline, the government has set a target of 2.1 billion kroner in municipal administrative savings by 2030. That’s still less than half of what CEPOS says could be saved annually right now. For 2024, municipalities were told to cut 700 million kroner from administration. Unions warned it would cost jobs. The government said there was too much bureaucracy.
I’ve watched this debate play out for years. The numbers keep getting bigger, but the actual cuts stay small. There’s always a reason: local conditions, demographic pressures, political priorities. And there’s always pushback from the unions.
What the Money Could Mean
CEPOS frames the savings as between 950 and 1,400 kroner per resident annually. That’s not pocket change. For someone living in Denmark, that could mean lower municipal taxes or better services without higher costs.
The think tank is careful to say it’s not trying to shame individual municipalities. The point, they argue, is to identify best practices. If some municipalities can deliver the same services for significantly less money, others should learn from them.
The Union View
HK Kommunal and other public sector unions see this differently. They estimate the government’s existing savings targets will eliminate thousands of jobs. By their math, the 700 million kroner cut in 2024 meant roughly 1,100 fewer municipal employees. Scale that up to CEPOS levels, and you’re talking about massive job losses.
The unions argue that administrative staff aren’t dead weight. They process applications, answer phones, manage IT systems, and keep services running. Cut too deep, and you’ll have longer wait times, more errors, and frustrated citizens. That’s the trade off nobody wants to talk about openly.
A Familiar Pattern
This isn’t CEPOS’s first rodeo. They’ve published multiple analyses showing huge efficiency gaps between Danish municipalities. One earlier report claimed municipalities could save 32.8 billion kroner across all operations if they matched top performers. That’s about 8 percent of total municipal spending.
The methodology is always the same: find the most efficient municipality in each category, then assume everyone else can reach that level. It’s logical on paper. In reality, it’s complicated. Local politics matter. Geography matters. Some municipalities have made deliberate choices to spend more because residents want better services.
The Political Middle Ground
The government walks a careful line. It wants to show fiscal discipline and free up money for wages and welfare priorities. But it can’t alienate municipal workers or risk service quality collapse right before an election.
KL, the municipal association, has accepted the savings targets but warns that budgets are already tight. Demographic changes mean more elderly residents and more children in schools. The money has to come from somewhere. Cutting administration sounds painless until you try to do it.
The government has also promised 56 specific initiatives to reduce administrative burdens through digitalization and rule simplification. Finance Minister Nicolai Wammen says these will save a “three digit million amount.” CEPOS would call that a good start and nothing more.
After living here for years, I’ve learned that Danish policy moves slowly and carefully. Big, sudden changes are rare. So while CEPOS keeps publishing billion kroner estimates, the actual savings will likely arrive in smaller, steadier increments. Whether that’s prudent caution or wasted opportunity depends on who you ask.
Sources and References
Ritzau: Ny CEPOS-analyse: Kommunerne kan spare langt mere end regeringen lægger op til
The Danish Dream: Denmark’s 3x culture spending gap by municipality
The Danish Dream: Danish municipalities boosts crisis plans for vulnerable citizens
The Danish Dream: Income taxes in Denmark
