June 15, 2020 / 6:38 AM / 24 days ago

Denmark agrees cash injection to boost virus-hit economy

A German tourist is seen at the vacation center Sol og Strand, after Denmark opened its borders to Germany following lockdowns related to the coronavirus disease (COVID-19), in Blokhus, Denmark June 15, 2020. Ritzau Scanpix/Henning Bagger via REUTERS

COPENHAGEN (Reuters) - Denmark on Monday announced a string of initiatives to stimulate the economy including cash handouts and a fund to support struggling companies as it starts to phase out generous aid packages introduced at the beginning of the coronavirus crisis.

The Nordic country was among the first in Europe to shut down in March to curb the coronavirus epidemic and has been one of the first to reopen after successfully stifling the outbreak.

It has injected more than 300 billion crowns into the economy in aid packages including tax and VAT payment extensions and direct subsidies but the majority of the aid will now be phased out, said the Finance Ministry.

“We put a responsible end date to the temporary aid packages and at the same time we are giving a significant saline injection to the Danish economy,” said Finance Minister Nicolai Wammen in a statement.

The cash payout will be financed by Danes’ own holiday allowance, which had been frozen over a revamp of the holiday pay system, originally meant to be paid out as an additional pension when people retire.

Three out of five of the frozen weeks, which Danes have earned themselves, will be paid out before October, amounting to roughly 60 billion Danish crowns (7.26 billion pounds).

The deal, which the government reached with a majority in parliament, also includes a separate 1,000 crowns one-off payment to citizens on public benefits and a 10 billion crowns fund to support struggling companies.

Denmark’s economy is facing its biggest contraction since World War Two this year as a result of global coronavirus lockdown measures.

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