COPENHAGEN (Reuters) - Denmark’s Social Democratic minority government has secured the backing of its left-wing allies for a 2020 budget that would pour more money into healthcare, education and the welfare system, it said late on Monday.
The government of Prime Minister Mette Frederiksen said it would fund some of the initiatives by imposing higher duties on cigarettes, tripling taxes on shopping bags and disposable tableware and reducing the state’s use of external consultants.
It will also investigate the possibility of issuing green bonds to finance environmental projects.
The impact on next year’s economic activity will be broadly neutral, said Danske Bank’s economist Las Olsen.
Denmark’s economy grew by 1.5% last year and the government expects growth of 1.7% this year and 1.6% in 2020.
“A more or less neutral fiscal policy fits very well with the Danish economy as it looks now, with low unemployment on one hand and small signs of a slowdown on the other,” Olsen wrote in a research note.
The Social Democratic Party, the main architect of Denmark’s 20th century cradle-to-grave welfare state, won power in a June 5 election as voters rebelled against austerity.
Reporting by Stine Jacobsen; Editing by Catherine Evans