This shows what may happen if economic policy is not sufficiently responsible. To a large extent, the description of the heavily indebted countries in the lead-up to the financial crisis also describes developments in Denmark – but with the opposite sign.
History shows that when it comes to fiscal policy, credibility or lack of credibility is what really separates the wheat from the chaff in terms of the countries seen as safe havens. For many years, Denmark pursued fiscal policy that dampened cyclical fluctuations. But in the period before and during the most recent upswing, fiscal policy became procyclical.