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14 Dec 2018 – Insights

What can the Danes expect in 2019?

2018 has been another good year for the Danish economy with jobs growth, rising house prices and general income gains. And the positive development looks set to continue into 2019. For example, we expect more than 35,000 new jobs to be created next year. True, this is slightly less than this year but it is still a solid improvement testifying to the good health of the Danish economy, says our private Economist Louise Aggerstrøm Hansen. 

There are also income gains in store for individual Danes – both before and after taxes. Overall, we expect income to grow just over 2.5% in 2019, following income gains of around 2.3% in 2018. This would translate into an income increase of more than DKK10,000 before taxes and DKK6,000 post taxes for a Dane earning DKK400,000 a year. 

Significant tax reductions coming up

Danes earning DKK700,000 a year would be likely to increase their income by DKK18,000 before taxes and around DKK10,000 post taxes. Although these figures are average estimates and tax deductions, tax payments and pay increases vary from one individual to the other, many Danes are set for significant income gains next year.

Not least, Danes in the top tax bracket are likely to benefit from tax reductions, as the top tax threshold will probably increase more than wages and salaries. A downside is that personal tax allowances will rise only modestly next year, as the TV licence fee will gradually change from a direct charge to being paid via taxes. 

Higher inflation in 2019

Meanwhile, prices are set to increase at a slightly faster rate in 2019 than in 2018. We expect the Danish inflation rate to be just under 1% for 2018 and just under 1.5% next year. As such, real income will probably increase at a slightly slower rate next year than this year, though most Danes are set to see a healthy increase in disposable income.

Louise Aggerstrøm Hansen

Private Economist, Danske Bank

Expensive gasoline despite cheaper oil

Petrol prices have increased rapidly in 2018, with a typical household spending an extra DKK1,300 on petrol this year compared with 2017. Although oil prices have fallen recently, we expect the cost of petrol to increase again in 2019, so Danish families will probably be spending around DKK400 more on petrol next year.

Household balance sheets look set to improve in 2019. We expect house prices to increase by around 3% by the end of next year compared with end-2018. In other words, the price of a house worth DKK2m is likely to increase by around DKK60,000.