On the first of may, 2004, 10 new states joined the European Union. Get down 2007, 2 more states joined. Finally all these new EU members are forced to fall in the EMU ( Economic and Monetary Union ) , by utilizing the euro as official currency. The euro has already been introduced in Slovenia, Slovakia, Malta and Cyprus. Denmark, Sweden and the United Kingdom still have their ain currency. Before a state may present the euro, it has to run into the so called convergence standards. In this essay, we will unknot if Denmark meets these standards and if it is capable of presenting the euro. So, does Denmark carry through the European convergence standards? This is the chief inquiry we will be replying. Before we can reply it, we will hold to analyze the Danish economic system.
First of all we will analyze several facets of the Danish economic system. For case the Danish export, societal safety and unemployment.
After giving information about these subjects, we will see if Denmark really meet these standards:
Requirement of monetary value stableness:
This demand means that a Member State ‘s rate of rising prices ( consumer monetary value addition ) must non transcend the rising prices rate in the three Member States which have the lowest rising prices by more than 1.5 per centum points.
2. Requirement of sustainable public fundss:
There must non be an inordinate shortage in the public budget. This means that as a general regulation the one-year public shortage must non transcend 3 % of gross domestic merchandise. Exceptionally, this may be accepted if the shortage has been reduced well and continuously and has reached a degree that is near to 3 % , or if a little breach of the 3 % degree is exceeding and impermanent.
3. Requirement with respect to public debt:
The ratio of gross public debt to gross domestic merchandise must as a general regulation non transcend 60 % at the terminal of the predating fiscal twelvemonth. An exclusion may be made if the shortage has diminished sufficiently and is nearing 60 % at a satisfactory gait.
4. Engagement in ERM II in the predating two old ages:
The Member State must hold participated in the European Monetary System ‘s exchange rate mechanism ( ERM II ) for the predating two old ages without terrible fluctuations and must besides non hold devalued its currency in that period.
5. Requirement with respect to the long-run involvement rates
The Member State ‘s nominal long-run involvement rates must non transcend the corresponding involvement rates in the three Member States which have achieved the best consequences with respect to monetary value stableness by more than two per centum points.
Beginning: hypertext transfer protocol: //www.eu-oplysningen.dk/euo_en/spsv/all/75/
If Denmark meet all these standards, we can reason that Denmark can present the euro. However will Denmark still run into all the standards after the recent economic crisis?
General Information
Denmark is a state from the sum of eight states of Northern-Europe. Its capital metropolis is Copenhagen, a metropolis with more than 1.1 million dwellers. The entire figure of dwellers in Denmark is 5.515.575 million people. Around 33.3 % of these people live in the five biggest metropoliss of Denmark ; Copenhagen, & A ; Aring ; Rhus, Odense, Aalborg and Esbjerg.
Denmark is an international comfortable state. Most of the people are international oriented, nevertheless the most spoken linguistic communication is Danish. The 2nd linguistic communication of Denmark is Faroese: a Western-Scandinavian linguistic communication which is spoken by merely 48.000 people. The state is divided into different parts. The most of import part is the Jutland. It is non merely the biggest part, but besides the lone part of Denmark which is a peninsula, whereby it is joined to the European continent. A batch of people in Denmark are spiritual. 89 % of the Danish dwellers are Lutherans. The other 11 % are Catholic or are non-religious.
Denmark is portion of the European Union since 1973, nevertheless there is some euro-scepticism in the state. An of import exclusion is the existent currency of the state ; The Danish Krone is the national currency of Denmark at the minute. They still do non hold the Euro as their national currency, since the dwellers of the state determined to keep the Krone during a referendum. During this referendum, 87.6 % of the people voted against the Euro. Originally, this was non aloud. The so called Maastricht Treaty wanted all the members of the European Union to alter their currency to the Euro, one time their economical state of affairs sufficed to the standards. The add-on of another pact, named the Edinburgh Treaty, made it possible for Denmark to keep their currency. This pact excepts states to keep their ain currency when these states are non interested in the Euro.
At the minute, Denmark had a population growing of 0,285 % in 2009. However, the per centum is cut downing, as the state had a population growing of 0,34 % in 2005.
Denmark belongs to the top 10 of the richest and most economic developed states in the universe. Besides, the prosperity of the state is good developed. This is an of import ground why the state has a comparative low unemployment rate. From the 5.51 million people in Denmark, the labour force exists out of 3.47 million people, which is 63 % . In 2010, merely 4,2 % of the labour force was unemployed. The per centum was significantly lower in 2007, when it was merely 2,8 % , so the state has an increasing unemployment. Chiefly because of the economical crisis in 2009.
Social Security
Denmark has one of the most extended societal securities of the OESO-countries. However, it is questionable if the extended cyberspace is a good or a bad thing. Because of the capacious societal security, Denmark has to write off twice every bit much on it than the OESO norm. Since the societal security is a cause for the high revenue enhancement degree in Denmark, the Danish authorities introduced an extra revenue enhancement. Even with this new revenue enhancement, there are uncertainties if the current societal security can be maintained.
The chief ground for these uncertainties is the shrinking of the labour force. It has been estimated that more people will retire than fall in the labour force, doing the working population to shrivel. This decreasing population may consequence the societal security premium. Less people have to pay for the same sum of people, doing the revenue enhancement monetary value per individual higher. This job is besides happening in the Netherlands at the minute. However the Dutch authorities is already taking measurings by raising the retirement age. Denmark is seeking to utilize the same measuring in an attempt to better the supply of labor and to guarantee it ‘s budget excess in the coming decennaries.
Social Security: Premiums
Having such an extended societal security causes high disbursals on it. These security disbursals were chiefly being funded from regular revenue enhancements. However in 1994 Denmark introduced an extra premium, the so called ‘labour part ‘ . This premium is introduced chiefly to finance care for unwellness, unemployment and retirement. The premium is 8 % of the gross wage of employees.
Social Security: Unemployment Allowance
The unemployment security is the lone societal security which is non compulsory. The unemployment financess are connected to the labour brotherhoods and are organized per sector. Denmark has 35 of these financess, of which two are for enterprisers. To be able to fall in a fund, an employee has to be able to show before the inclusion that:
– He or she was in the industry of the financess.
Or – He or she was an enterpriser.
Or – He or she helped with the enterpriser activities of his/her wife/man.
Or – He or she the military muster.
Or – He or she was city manager, alderman, member of the Danish parliament,
authorities or European parliament.
The unemployment benefit is 90 % of the last earned wage, with a upper limit of 570DKK per twenty-four hours. For entrepreneurs the benefit is calculated by taking the mean income of the last five old ages.
To derive an unemployment benefit person has to be unemployed and has to be registered at an employment office. Normally the right for an unemployment benefit arises after one twelvemonth of subscription at a recognized labor financess. The employee besides has to worked an full twelvemonth with a lower limit of 37 hours a hebdomad. If person meets all these standards, he or she can derive a benefit for 2 old ages.
Social Security: Retirement pension
The general retirement pension consist of a basic sum and a pension fillip. The basic sum depends on the incomes of labor of person. To derive a full retirement pension, a individual has to be populating and working for 40 old ages in Denmark.
Each dweller of Denmark between 16 and 67 is covered by the so called ATP-system. This is a system to guarantee the extra retirement pension for employees. The premiums for this pension are being paid by the employee ( 1/3 of the premium ) and his/her employer ( 2/3 of the premium ) . The portion of the premium of the employee is restrained from his/her salary by the employer, since the employer is responsible for the payment of the premium. The ATP-system besides works for enterprisers, nevertheless they have to pay the full premium their ego. After paying premiums for old ages, the ATP-bureau will pay retirement pension for the remainder of the retired individual his/her life, largely from the age of 65. However it is possible, under certain conditions, to hold an early pension. Not merely an earlier pension is possible, when an employee delaies with his pension till the age of 67 the sum of it will be raised with 10 % . It is possible to wait longer, raising his/her pension with 10 % per twelvemonth ( till the age of 70 ) .
Convergence Standards
Convergence Standards: Requirement of monetary value stableness
This demand means that a Member State ‘s rate of rising prices ( consumer monetary value addition ) must non transcend the rising prices rate in the three Member States which have the lowest rising prices by more than 1.5 per centum points. This means Denmark must hold an rising prices per centum of less than 1.5 per centum.
The graph to the right shows that Denmark has a higher per centum of rising prices. However this does non straight say that Denmark does non run into the convergence standards. If the rising prices can be reduced to 1.5 per centum in a short sum of clip, Denmark still meets the standards.
The Danish rising prices has been increasing the last old ages. There are assorted grounds for the addition of rising prices. For case the
