The picture was completely different in 1993, when fiscal policy was relaxed, popularly described as a kick-start of the economy. In 1993 Denmark had undergone 7 years with by and large zero growth in GDP. This stagnation was necessary to correct the imbalances of the economy, especially the current account deficit, in the mid-1980s.
During this restoration period unemployment had risen to 12 per cent by 1993, i.e. more than twice today’s level. Danish wage increases in 1993 were furthermore lower than among our trading partners. The relaxation of fiscal policy achieved in 1993 had an effect concurrently with a considerable stimulus to demand as a consequence of the extensive wave of mortgage conversions.