With one of the highest standards of living in the world, Danish economy is continuously growing. The average annual growth of 2-3 % is a relatively high figure considering the state of developed economy. Here, domestic demand made the largest contribution to this economic growth. Private consumption was driven by higher disposable incomes, low interest rates, new loan products and accelerating housing prices. As a result of the consumption growth, the private-sector savings ratio fell. Biggest upswing was seen in residential investments, which grew by 13.7 % in 2005.

The outlook for 2007 growth in private consumption will probably be high and if property prices continue to rise, consumption will be stimulated further. The level of residential and business investments will be high, and exports will be stimulated by sound expansion on export markets.

During the governments of Poul Nyrup Rasmussen, there was a drastic fall in official unemployment, which peaked at 12.4 % in 1993- and now is at only 4.2 % (September 2006). This is the lowest level in 30 years. Unemployment, being at its lowest level, is expected to decline further. In the construction industry and the financial sector there is already a considerable shortage of labour, and the labour market councils expect more bottlenecks in 2006. The strong economy gives scope to get more people into employment, but without labour market reforms it will be hard to achieve a sustained increase in employment. A solution would be to employ labour from e.g. Eastern Europe and Germany.