Nationalbanken governor Christian Kettel Thomsen says he is increasingly worried that Danish politicians are spending the state’s projected economic headroom too freely.
In an interview published on September 27, Thomsen told DR that he has grown more concerned about fiscal decisions made over the past year. He said the concern is not based on hard data, but on a mood in society that things can only go upward.
Thomsen, 67, is a former permanent secretary in both the Prime Minister’s Office and the Ministry of Finance. He told DR that every time a single krone appears in the fiscal headroom, it seems it absolutely has to be spent.
Seven upgrades to the fiscal headroom since 2022
The Danish term is “råderummet”, the fiscal headroom. As DR explains, it is not money the state already has, but money the state expects to have in future if growth, exports, employment and tax revenue develop roughly as forecast.
According to DR, the headroom has been revised upward seven times since the 2022 general election. Employment is now above 3 million people, helped by more seniors staying in work and by large numbers of foreigners taking jobs in Denmark.
Thomsen said the repeated upgrades have created an impression that the money is unlimited and falls from the sky. He noted that the headroom is an economic estimate, not an exact science, and that the trend could also reverse, for example if foreign labor starts leaving the country instead of arriving.
Strong growth, but a deficit expected next year
The interview follows Nationalbanken’s latest outlook, presented on September 23. Reuters reported a forecast of 4.0 percent Danish growth in 2026, followed by 2.3 percent in 2027 and 2.0 percent in 2028.
As noted by CPH Post, that is a sharp increase from the bank’s March 2026 projection of 1.8 percent for the year. In its statement, Nationalbanken recommended that the government not stimulate demand beyond the measures already announced in August.
The central bank said Denmark has very limited spare capacity to raise production without creating pressure on wages and inflation. It also said further government measures could strain public finances if they are not financed by offsetting measures, especially if the headroom turns out to be smaller than calculated.
Public budgets are already turning. The Ministry of Finance expects the first state deficits next year since the difficult years after the financial crisis, approaching the budget law limit of 1 percent, DR reports. Thomsen said a public surplus of more than 100 billion kroner a couple of years ago now looks set to disappear.
What the warning means for foreign residents in Denmark
The headroom is the source politicians point to when financing long term agreements. DR lists recent and proposed measures including more military spending, lower taxes, a food check, the removal of the electricity duty and a VAT reduction. All of these are booked against money the state expects to collect in future, not money already in the treasury.
For internationals, two points in the reporting are direct. Thomsen named the inflow of foreign workers as one reason the headroom kept growing, and said the flow could turn the other way, which would shrink the estimate. He also said careless handling of public finances could weaken international market confidence in Denmark, which he described as decisive for keeping interest rates and the krone stable in a small open economy.
Nothing has changed in tax rules, benefits or residence rules as a result of the interview. Nationalbanken’s position is a recommendation to the government, not a decision, and it is not yet known which measures, if any, politicians will adjust in response. Denmark’s tax and spending decisions are made by the Folketing, not the central bank.
