Defense Budget, Combat Against Racial Discrimination & GDP Growth: LWID S3E5

Denmark is prioritising national security with a 50B DKK increase in defense spending, the government unveils a 36-point action plan to combat racism and Novo Nordisk continues to drive Denmark's GDP contributing to the majority of the 3.6% growth we experienced last year. Please welcome back Fionn and Kalpita as this week’s co-hosts discussing these top news.

Dive right in: 

1. Top 3 news intro (01:03)
2. Denmark's GDP growth in 2024 (01:49)
3. The 36-point anti-racism action plan... starting with nightclubs (12:48)
4. 50B DKK acceleration fund for Danish rearmament (23:50)

In this episode:

Cohosts: 

• Fionn - https://www.linkedin.com/in/fionn-o-toole/
• Kalpita - https://www.linkedin.com/in/kalpitabhosale/

Audio Editor: 

• Cecilia: https://www.linkedin.com/in/ceciliagfoster/

Transcript Editor:

• Taiana - https://www.linkedin.com/in/melotaiana/

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Chapters

• 1:03 Top 3 news intro
• 1:49 3.6% growth in Danish GDP in 2024
• 13:39 Anti-racism in Danish nightlife venues
• 24:41 50B DKK acceleration fund for Danish rearmament

Transcript

SPEAKER 1

Hello and welcome to the Last Week in Denmark podcast. This is season three, episode five. My name is Fionn O'Toole and together with me as your co-hosts for this week is Kalpita Bhosale. Hi, Kalpita, how are you doing?

SPEAKER 2

Hi, Fionn. I'm doing very well, how about you?

SPEAKER 1

You know what? I'm actually doing great. The sun is finally shining after what felt like maybe it was only 24 hours, but felt like a whole week yesterday of dripping, slushy snow and fog and just general misery. So my mood has just absolutely boosted now that I can see the sun is out and not everything is.

SPEAKER 2

The beauty of living in the north.

SPEAKER 1

Yeah, absolutely right. Why do we do this to ourselves? But I'm really glad to hear you're doing well. And as always this week we're going to dig into the three big things that happened last week in Denmark. Just to very quickly go through them, Denmark's economy is booming, so it grew by about 3.6% last year, which is its highest rate outside of a kind of post-Covid boom since 2006. Then we also have a story about. It's a kind of broader story about anti racism laws that are being introduced. But the kind of headline is one of these where venues that are discriminating against people based on ethnicity or skin color can actually lose their alcohol license. And then at the end, we're going to take maybe the big beast, which is that Denmark is really ramping up its military and military spending with an extra 50 billion Danish kroner in defense spending over the next few years. So big topics, I think this week. Let's dive into it. And we have, yeah, what is on a headline, quite a positive headline, that Denmark's economy has ended 2024 with, according to the chief economist at New Credit, tremendous growth of 3.6%. And everything I've seen about this, all the economists who are kind of mentioning this or talking about it from the various financial institutions are really insisting or very confident in their assessment of this being tremendous growth. And what I found actually really interesting is when I started looking into this, even back in November, the European Commission was expecting Denmark's GDP to expand, but only by about 2.4%. So it seems like it's been a bumper year last year and really smashed kind of all the expectations.

SPEAKER 2

Thank you, Novo Nordisk.

SPEAKER 1

Exactly, right?

SPEAKER 2

Yeah. I mean, they've done really well and not just in their local markets, but also in bigger markets like the US and others. Having said that, we can also see how the GDP is getting better and better and supporting the economy given that a lot of salary increases have been announced and regulations around that have also showing support in the, in the labor market especially, as you know, there's been a news about teens age 13 to 15 getting more tasks in their part-time jobs, which lends businesses like McDonald's and similar to hire younger workers and also ease the labor shortage. At the same time there's been news about bank workers and retail workers getting an increase in their pay of between 7 to 8% which is, which is considerable comparatively. And it's also giving them these flexible benefits as well, so they can take more holidays, they can look after their children or grandparents and so on.

SPEAKER 1

Yeah, so I think good times maybe over the next few years if you work in retail and you're seeing your base salary popping up. And of course, if you're working in a bank as well, that's jumping up. I would suspect, as you mentioned, it's also quite good times if you're working for Novo Nordisk. Of the 3.6%, a whole half of that was driven by the pharmaceutical sector. And it really seems that that is, yeah, full speed ahead. It would still be good growth without it. But I think, you know, the fact that you have one sector of the economy driving fully half of the economic growth is both, I don't know, very impressive. And maybe the little voice in my head also gets a little bit worried about that, right? When you think of just, well, how dependent is, is our economy on, on one sector. And I was actually reminded of May of last year, where Danish GDP actually dropped by nearly 2% for the, like, the previous three months at that point. And it was mostly due to production setbacks at Novo Nordisk. There were a couple of other factors as well, but that was a major one. And so I think it is wonderful, right, that we're having this growth. It's wonderful that it's been driven by part of what you could really say is the knowledge economy. And not solely, you know, there, there are strong exports and shipping is still a huge part of the Danish economy as well. But I think there's always that little fear, if you ask me anyway, of having all your eggs in one basket. And I think, you know, given some of the maybe headwinds we kind of see in the future, you might wonder, well, what happens when the rug is slightly pulled out of Novo Nordisk's exports to the US or you know, the exports to Germany, what's the effect going to be on the wider economy then?

SPEAKER 2

Yeah, absolutely. And to also think of, you know, the job market in general. Well, coming back to Novo Nordisk for a second, they are building a manufacturing facility in Odense. And that should bolster their production as well. And it's great that they choose Denmark to do that, because that will continue supporting the economy. But as you said, we also have Mærsk, we have Ørsted, we have Danfoss and similar companies that could also, in the coming years, bolster the economy, considering now that we are also investing in a lot of renewable energy and so on. Having said that, coming back to the job market and it's great that everyone's getting a pay rise at some point, and all those feedback sessions with managers are going to go really well, because now there's a bit of liquidity. And we, right now, we do need the liquidity because of course we have a lot of pressure on the tax, and especially now that we're in a crisis situation already, there is no second footing that at all if this is crisis or not. Having said that, I do have my reservations on how much of the labor market is actually creating jobs to bolster the economy than actually pumping money into the economy. There are still many, many students and spouses, for example, who are still out of jobs. And they are not just EU, but they're also mainly coming from non-EU countries. And there are these very, very controversial pyramid schemes for getting labourers into the Danish market and almost exploiting them. So, I would really love to see some rules, some regulations, some kind of intentional work going into making that better, because that's obviously, and we spoke about this last time as well, of giving, not giving, but creating more jobs. Because there are still people out there in big numbers, even if the GDP is getting better, I think, and to avoid inflation in the long run, because there are a lot of people who are still jobless, and the GDP is growing. So. And given that we are in a crisis situation, it's only better to create more jobs and do away with this non-Danish job applicants and all that's going, not in a nice way in that direction.

SPEAKER 1

Yeah, and I think, you know, some of the things you touched on there maybe ties in with something else, which is, yes, GDP is flying up at 3.6%, right? That's great. But the actual consumer confidence in Denmark has hit its lowest level in 18 months. And a lot of that is driven by concerns over the economy. There is also, of course, concerns about, you know, geopolitical instability, which is fair enough. But I would say maybe a lot of that then ties in with the economy as well if a lot of the geopolitical instability is related to trade wars or things there. And so even though we've had these wage rises and I saw somebody from Danske Bank mentioning that, you know, individually, people have seen that their finances are doing a little bit better than they are before and they are starting to spend that little bit more than they were previously. I mean, that's helping kind of keep domestic consumption afloat. But eventually, if that consumer confidence continues to decline, you're going to start seeing people spending less on big purchases. And, you know, is it the right time to buy a house? Is it the right time to buy a car? And that, of course will have a negative knock-on effect for the economy as a whole.

SPEAKER 2

Precisely. I mean, everyone right now is, especially everyone I know right now is keeping the pockets zipped up. No one wants to really spend or do anything that's really big in terms of, like you said, buying houses or cars or making big investments right now. But it's also tying up with the other news we spoke about, about social dumping and how Denmark is tightening EU rules. Would you like to dive in a bit into that?

SPEAKER 1

Yes. So Denmark is alongside some other EU countries. I believe it's six other EU countries. Denmark is putting pressure on the European Commission specifically to, as you said, tighten rules around social dumping. And if you are not familiar with the term social dumping, it is essentially the practice of companies trying to circumvent rules or kind of work around the system, so to speak, and bring typically third country nationals to a country, in this case Denmark. But under poor working conditions and low pay. There is kind of a broader context, you could say, of bringing in lower paid workers, which will undercut Danish people's ability, or not just Danish people, but people who are residents here, who are settled here, their ability to, you know, negotiate for higher salaries or compete against salaries. But of course, it also is not necessarily, you know, people will search for a better life. And that is absolutely their right, I believe, to do so. But it's not necessarily doing that with that in mind. Right. It is more for companies to try and benefit from paying low wages as opposed to bringing people for a better life and better conditions. And so Denmark, the Netherlands, Belgium, Germany, Luxembourg, Italy and Latvia, if I remember that correctly, they have addressed the commission really stressing the need for very clear EU rules on the posting of third country nationals. And they're calling on the commission to essentially submit a proposal for a directive on this, making sure, as an idea or one of the proposed ideas, that third country nationals would have to have a minimum level of employment in the country from which they are being posted. So it couldn't be somebody, and this is an oversimplification, but it couldn't just be somebody taken off the street and then sent over and exploited, so to speak. But it would need to be more skilled workers, experienced workers that can be brought over and of course paid adequately and receive proper working conditions. I think this maybe ties in a little bit with our next topic in, in a very broad way, which is that Denmark or the Danish government has launched a 36-point anti-racism action plan. And you could say that's very broad in one sense, but there is a specific one which is kind of making some of the headlines, which is the fact that nightclubs or venues, so bars for example, who are discriminating against clientele based on their ethnicity or skin color, could actually lose their license. I don't know. Have you any thoughts about that?

SPEAKER 2

So I'm a brown person and I have experienced hosts of things related to where I come from and my skin color and so on. I do not have a direct experience of being in a nightclub specifically, but I do know of friends who have had trouble. One incident that comes to mind is some of my colleagues went out clubbing and they had a friend tag along who is you. I mean, you cannot miss that guy. He's about, I don't know, 7ft tall, black, extremely stylish, obviously. But he was rejected from entering a club and there was absolutely no reason because they had everything they needed to be in that club. They were in a group, but they were rejected just because, or he specifically was rejected from entering the club because of the way he looks and, but the guy is perfectly Danish. He was born here, went to Danish school here, speaks Danish. He's. But just because he's black, he was not allowed to enter. And the stories I heard the next day about how they tried to convince this bouncer to let them in was just. I mean, how can you not. It's. It's a club. Everyone's there to have a good time. It doesn't matter who you are, where you're from. You've got money in your pocket to spend, buy the alcohol, have a good time, but it was just not allowed. So everybody walked away. Because it makes no sense if one of your friends is not allowed to enter a club, then it's not fun anymore.

SPEAKER 1

Yeah, I mean, absolutely. I think, you know, obviously a private business will always and should always have the right to be able to refuse somebody business under legitimate grounds, right?

SPEAKER 2

Right, but like, not wearing high heels or having polished shoes on.

SPEAKER 1

Yeah, I was gonna say, you know, being abusive or, you know, standing outside with the absolutely awful, I don't know, slogan on a placard or something like that.

SPEAKER 2

Yeah.

SPEAKER 1

But, you know, I think here. I think this is a really important step, and it's one of 36 steps, as I mentioned, or 36 points in an action plan. Essentially, how it works is today, the licenses are basically granted by the municipalities, and there is something called the Equal Treatment Board. So if a venue is getting complaints to the Equal Treatment Board, they can basically inform the municipality about that. And that can be. Yeah. Used in the decision making in terms of granting or taking away an alcohol license, which for a pub or a nightclub or bodega, you know, that would be kind of the death of it, so to speak. And to be honest, I think fair enough. I like. I don't think there's a place for racism in Denmark or anywhere, but I think it just, to me, it really just boggles the mind that it's still an issue. Of course it is still an issue, but, you know, there's. There's no logic to it. There's no nothing except for discrimination in some of these decisions. And again, you know, if. If you or I or anybody was at the door of a nightclub and we were absolutely drunk or being abusive or clearly high on drugs, sure. You know, then we should be refused. But not based on the color of our skin or our creed or anything there.

SPEAKER 2

Yeah, I mean, I like that. It’s.. this is the first step in a very long list of things that the government should take a stand on and have some, some really solid rules on. Although it also makes me sad because it's 2025. And I mean, not letting somebody into a nightclub based on racism is just...I don't even have words to say and describe how that that should even play out and why that should even play out. But it’s also very political when I think of it, because a lot of Greenlanders have come forward and spoken about their experiences and how Denmark has been racist. And it only makes Denmark weaker in, in the global picture of things, especially when they're trying to keep their claim on Greenland and the weaker their hand is, and that could be absolutely anything, whether it's racism, whether it's not bolstering Greenland's economy, which we spoke about last time as well, that they're making investments in it as well. But it doesn't only extend to Greenlanders, right? It extends to the entire international community.

SPEAKER 1

Yeah, exactly. So of the 36- points, the majority of them about 24 are, you could say, more general, right? And they're also, you know, this isn't nightclub specific. I think that's maybe just the most eye catching of the headlines. But it covers everything from digital democratic education as a protection against racism, combating racism in international forums, hate crimes, trying to root out discrimination in the housing market, in the job market and nightlife is one of the things that they mentioned. But there are 12 points that are specifically aimed at Greenlandic people, which also includes the, for example, the right to a Greenlandic passport, which I think is cool in terms of helping people show their identity and their heritage. But I think you had a very, very good point about how does this reflect Denmark in the eyes of the wider world. And the thing is, with this action plan, the idea behind it is not new. It was decided back in January 2022, actually under the previous government that this action plan should be created. And it's been basically postponed repeatedly with much criticism for the last three years. And so I was kind of thinking, well, why now? And this is purely my own opinion, so feel free to, I don't know, call me a conspiracy theorist or whatever. But back in 2022, you had the rise of more far right parties. I mean, obviously you still have that in a wider context today, but you had parties like Denmark's Democratic coming about in 2022 who made a point of engaging in a lot of issues that you could call culture war issues. And you know, you would absolutely place anti-racism laws within that. And you know, well, where does that infringe on freedom of speech or the rights of a business to refuse, refuse somebody. Well, now in 2025, there has been a lot of criticism internationally or a lot of eyes on Denmark, about how Denmark has treated Greenland specifically. And I just wonder, I mean, I'm happy that this action plan has been published, but I also wonder, is it, you know, now more politically expedient for the, you know, the people in power to say, yes, look, here's what we're doing and we think this is worth the international acclaim versus you know, maybe potentially and I don't know, giving some fuel for parties on the right to confront us and say, oh, you know, you're limiting the rights of Danes to express their freedom of opinion.

SPEAKER 2

Now that we keep talking about it, I remember that a couple of times the Copenhagen municipality, the København kommune, did send out surveys to people. And I know they say it was a random survey and it was done for research, but I know that it was intentionally sent and targeted to someone like me, because I'm brown and I live in a certain area and I have a certain fall in a certain age group of people who get discriminated. And the survey was about if I have had any racist experiences, if I have had any attacks, whether it's racial, physical or whatever, and if there was anyone who used any slurs, eve teasing and hackling and stuff like that, which of course I replied to and participated in, although I have never once seen any results of it or been contacted to be informed that, hey, you participated in this research and this is what we have found out, and these are the inferences, this is what has been advised to the authorities, police or whoever should be responsible for it, that they should take measures against so and so, because this was a common thing that we found in our so-called random research.

SPEAKER 1

Yeah, I mean, I think when you look at the 36 points, there are quite a number of them that maybe echo a little bit what you're, you're talking about there, that they are explorations into things or not necessarily surveys, but I'll use the word survey in terms of describing it, of people's experiences with racism in or just discrimination across various points. And you would like to see maybe concrete things coming out of them. But on the whole, I would say that this is a good step forward and I just hope that, you know, it continues to be not just something that is held up and used as an example of, oh, well, here's what we're doing, but actually, you know, taken seriously and acted upon by this government and public bodies and subsequent governments as well.

SPEAKER 2

Oh yeah, absolutely. I Mean, it's high time and like they say, better late than never. But I'm very glad that it is happening now and especially from the Greenlandic point of view, given that we are already in a crisis situation and there's more and more defence investments going into that as well.

SPEAKER 1

Absolutely. And, well, what a natural segue for our final topic which is the 50 billion Danish kroner Acceleration Fund for rearmament in Denmark. And this I think you could say, at least I would read it as maybe somewhat of a reaction to the Munich Security Conference where US Vice President JD Vance pretty blatantly had a direct attack on European democracy and met with, you know, far right anti-European political forces. And it seems like this has been a bit of a wake up call. Obviously I wasn't super thrilled to hear those words about Europe from somebody who's meant to be an ally, right? But there's been a lot of talk over the last few years about how Europe needs to stand together and stand more on its own. And this maybe seemed to be quite a wake-up call. And so the Danish Intelligence Services has kind of assessed that over the course of the next two years, once or two years when the war in Ukraine ends, that Russia will be able to build up its military power to a level that would allow it to wage war against one or a few NATO countries. And I think this then kind of taken together with the lack of trust maybe in some of our NATO allies, America specifically is leading Denmark to establish this acceleration fund. And it is 50 billion kroner, and it is 50 billion kroner not in 10 years, but in 2025 and 2026. So really rapid investments. I don't know what your thoughts on that.

SPEAKER 2

I did watch a feature on some Europe and Russia experts talking about ,actually warning that if for any reason Putin is able to continue the war with Ukraine and not come to a settlement, he will attack a EU country. And that puts the entire Europe into jeopardy. Which means that this investment, which is significant and there is also an EU directive on defence expenditure as well, because the EU does not have the capacity to defend itself. Take Denmark, for example. We spent 2% of our GDP and with this announcement it'll exceed more than 3% of our GDP. But let's not forget Denmark has been the biggest contributors of military aid to an equipment to Ukraine relative to the size of our economy, of course. And that aid has depleted our own ground forces, which lack in hardware, ammunition and staff, of course. So the long term, long period of downsizing of domestic forces means that we have none to very little air defense, significant shortcomings in naval capabilities. And the military experts and government officials have agreed to this, which means that this investment could go into ramping up naval defenses, and putting more feet on the ground.

SPEAKER 1

Yeah, absolutely. So the number one priority is, as you mentioned, air defenses. And I think that's been a very maybe hard learned lesson, you could say from the war in Ukraine that it's really been seen the importance of air defense systems. The other kind of priorities. Yeah, bolstering the navy with missiles for frigates, more drones, new radar systems as well, I think really, really important. And you can broadly categorize these in kind of a terms of building up the combat power of the armed forces, their ability to actually respond to threats. What I found quite interesting is the fund can also be used for additional military and support to Ukraine and it entails an reorganization of different authorities within the Danish Ministry for Defence and Defence Command to really ensure rapid implementation of decision making processes. And it feels quite similar maybe to when we had like a Covid response where task forces were set up to make decisions rapidly somewhat maybe outside of the normal, you know, process making or. Yeah, the normal process. And I think the, you know, the message that was quite clear was, you know, buy, buy, buy. What I think is quite interesting as well, where will Denmark buy from? Because there of course is a European defense manufacturing market, but there's a lot of challenges in that market. Primarily there's been decades of underinvestment within European defence. But there's also a huge amount of fragmentation, if we put it that way, where there's maybe duplication of effort between different countries making different developments. I know there's like two major fighter jet programs running simultaneously within Europe at the same time. And this also, you know, coupled with the underinvestment means there is a lack of manufacturing capability. And I think that could be form a challenge because this comes at a time when I think the will, the political will to focus on investing within European partners. But also you see maybe a cooling off of Danish U.S. relations. And just to quickly wrap that point, within the last year there's been a huge drop in Danish opinion of like what is the US to the EU? Going from 54% of people who thought that it is an ally who shares our interests and values all the way down to 30%, which is a massive drop. And I think that really tells us something about Denmark might have to make some difficult choices in where it buys and where it invests its military funds from.

SPEAKER 2

Oh, absolutely. I mean, just to talk about what kind of manufacturing capabilities we have. Our neighbors Germany and Sweden have ramped up their respective defense companies in terms of production and also drawing investors. Because in general, the EU defense stocks have fueled. And you can see that there's a big boom in manufacturing, especially defense manufacturing and weapons manufacturing as well. While they were controversial stocks couple of months ago even, or a year ago even, now it's become the most lucrative, one of the most lucrative after pharma to have investments in. And there is also reports and signals showing that there's been a major shift of private investors as well, and investing trends in these particular stocks as well. So that is a good thing, I think, because we not only obviously need to ramp up the production, but we also need to have that business becoming a lucrative one and gaining liquidity as fast as possible. Which brings me to some EU defense expenditure statistics that I pulled out just to put the EU perspective into what's going on in Denmark and the investment that Denmark is making. 88.2% of defense investments have been allocated to the procurement of new defense products only in 2024. So that is most certainly going to increase in 2025 and in the coming years. There's a euro 326 billion spent by member states on defense in 2024, which obviously we can see is now only growing and growing. This, which means that there's been a 30% rise in member states expenditure between 2021 and 2024, obviously giving credit to the Ukrainian war and Russia's involvement and US's stringent support. Which is also, out of all of that expenditure in 2024, 13 billion euros have been spent on defense research, which is very interesting, as you also mentioned, that that's also one of the things that countries have been, and even Denmark has been investing in in the past. But the other thing, the EU has said that all of this cash and this liquidity is not only to allow countries to, to spend on defense products because it is relaxing borrowing costs as well to give more power to individual countries. But this cash can be used for projects that would be used for something like shelters for civilians, strengthening roads and bridges to allow passage of tanks and stuff, which is tying very, very well with our crisis preparedness as well. So we, I think we will see a lot more information coming out on where and how this investment is going and how that's going to affect citizens directly.

SPEAKER 1

Yeah. And I think, you know, there's definitely a part of me that in one way feels sad that all this money is going into defense and weaponry and as opposed to things like schools and education and maybe nicer things, right? But there is an old saying that if you want peace, you must prepare for war. Or as the long time ago US President Teddy Roosevelt once put it, speak softly and carry a big stick and you'll go far. And I think on that note, we need to wrap up that final segment, but it is definitely a very interesting time and we are really seeing a race for rearmament in Denmark, and I suspect we'll see it across more European countries as well. But that's all that we have time for this week. So thank you so much for listening to episode five of season three. It's been an absolute pleasure being here with you and our colleagues will be back again with you next week. In the meantime, please check out our socials and check out the Last Week in Denmark newsletter as well. From my side, thank you so much. 

SPEAKER 2

Thank you.

SPEAKER 1

And have a great week ahead.