Danish Opposition Leader Presents Economic Reform Proposal

May 16 (Bloomberg) -- 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.

The Social Democrats and the Socialist People’s Party want to raise public spending by 10 billion kroner in their 2020 plan as part of a plan to generate economic growth before raising the retirement age, according to a joint statement presented in Copenhagen today.

“As expenditure will grow more in the Social Democrat/Social People’s Party’s plan than in the government’s, there’s naturally also a need for more financing,” said Steen Bocian, chief economist at Danske Bank A/S, in a note. “But the financing continues to be very uncertain.”

The proposals risk creating higher so-called structural unemployment in part because the opposition wants to increase access to jobless benefits to four years from two, Bocian said. The opposition’s reform proposal comes as a response to the government’s plan, which targets a higher retirement age.

The Social Democrats and Socialist People’s Party, which walked out of talks to raise the retirement age, saw their support slip to 39.8 percent in a May 15 Gallup Denmark poll published by newspaper Berlingske today. That compares with 41.1 percent in a May 11 poll. The Liberal-Conservative coalition, the Danish People’s Party and the Social Liberals saw their joint backing rise to 52 percent from 49.3 percent, the poll showed.

The Social Liberals signed the accord with the government bloc even though the party says it will support Social Democrats leader Helle Thorning-Schmidt as prime minister.

To contact the reporter on this story: Tasneem Brogger in London at tbrogger@bloomberg.net

To contact the editor responsible for this story: Tasneem Brogger at tbrogger@bloomberg.net