Colliers Denmark Market Report 2024

92

COLLIERS MARKET REPORT 2024

Unemployment rate edging up from historical low

Tight monetary policy has driven up interest rates

-1.0% -0.5% 0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

10% 12% 14%

0% 2% 4% 6% 8%

15 16 17 18 19 20 21 22 23

15 16 17 18 19 20 21 22 E23 E24 Eurozone Denmark

Eurozone (3M) Denmark (3M)

Eurozone (10-year gov. bond) Denmark (10-year gov. bond)

Note: Total unemployment rate, % of workforce. Source: Eurostat, Statistics Denmark, Danske Bank, Colliers

Note: CIBOR, short-term (3M) interest rates and 10-year government yields. Source: Eurostat, Colliers

Rising interest rates to fight inflation The ECB recently made efforts to rein in high inflation by means of monetary tightening. Since July 2022, the central bank has raised the key interest rate ten times by between 0.25 and 0.75 ppts. Due to Denmark’s fixed exchange rate policy, Danmarks Nationalbank has also raised interest rates. As of December 2023, CIBOR (3M) is at 3.91%, while the 10-year Danish government bond has a yield of 2.28%. High employment has peaked Danish employment has seen massive growth in recent years. Since the end of 2019, around 200,000 more workers have entered employment, with foreign nation als, including refugees from Ukraine, contributing to almost half of this increase. However, indications are that this increase will not carry over into 2024 and beyond, as the implemented inter est rate hikes will have a detrimental impact on Danish economy and employment in the years ahead. Fewer job vacancies are already being advertised per unem ployed person and the unemployment rate is edg ing up slightly. According to Danmarks Nationalbank, the Danish employment level was 3,205,000 in 2023, expected to drop by around 40,000 between year-end 2023 and year-end 2025.