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Denmark in the EU

Copenhagen - Denmark

Copenhagen - Denmark

For years, Denmark was held out as a model to countries with high unemployment and as a progressive touchstone to liberals in the United States. The Danes, despite their lavish social welfare state, managed to keep joblessness remarkably low.

But in 2011, Denmark, a nation of 5.5 million people, struggles with the same issues as many other Western nations — low growth, large government deficits, historic levels of national debt and internal divisions over immigration and other social policies. Elections have hinged on what mix of government spending and tax policies to adopt to restore economic health and avoid slipping further toward Greek-style debt crisis.

In September, a closely contested election resulted in victory for a center-left coalition led by the Social Democratic Party, ending a 10-year run in power for a center-right coalition that had adopted some of Europe’s toughest immigration controls. The results set the country on course to having its first female prime minister, Helle Thorning-Schmidt, whose party led an alliance known as the red bloc.

The Social Democrats’ campaign was based on Ms. Thorning-Schmidt’s promises to raise taxes on Denmark’s banks and its wealthiest citizens to pay for better schools and hospitals, and to finance a $4 billion expansion of what was already one of Europe’s most generous welfare systems. Her most headline-catching nod to austerity came with her proposal to add 12 minutes to the average Dane’s working day. She also acknowledged the need to take action on the deficit, which was projected to rise to 4.6 percent of gross domestic product in 2012, well above the European average.

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