Danish firms are entreating banks in the Nordic country to step up their efforts to find funds that can be channeled into corporate lending as a lack of credit threatens to choke business, kill jobs and trigger a recession.
Denmark’s two biggest opposition parties want to raise public spending and offer incentives for companies to invest more in research and development as the bloc prepares for elections due to take place by November.
Denmark’s economy unexpectedly contracted for a second quarter, joining bail-out-reliant Portugal as the only other European nation in a recession, after consumers in the Nordic nation reduced spending.
Denmark is shelving indefinitely its euro adoption goal as Prime Minister Helle Thorning-Schmidt says an exchange rate peg without full European monetary membership is proving the best currency regime for the Nordic nation.
Denmark’s home-loan industry, the world’s biggest issuer of mortgage-backed covered bonds, is looking to Germany to avoid a repeat of the housing bubble that sent Scandinavia’s weakest economy to the brink of a recession.