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Internal Market, Industry, Entrepreneurship and SMEs
Denmark - ECSO country fact sheet
English
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Lejupielādēt

The Danish Gross Domestic Product (GDP), after having reported consistent growth in the last decade, experienced a 2.7% decline in 2020, reaching DKK 2.2 trillion (EUR 300.0 billion).

The Danish broad construction sector exhibited positive trends in 2020, as compared to 2010. The number of enterprises in the broad construction sector stood at 71,924 in 2020, representing a growth of 13.7% since 2010. The number of enterprises in narrow construction sub sector was the highest amongst the sub sectors with 32,742 enterprises, thus accounting for 45.5% of the total number of enterprise in the sector.

Similarly, the volume index of production in the narrow construction sub-sector increased by 17.8% during the 2015 2020 period. This was driven by the growth in the volume index of production in construction of buildings (+20.0%) over the same period. On the other hand, the volume index of production in construction of civil engineering slightly declined by 0.6%.

The turnover of the Danish broad construction sector reached EUR 71.2 billion in 2018, representing a 60.5% growth over the period 2010 2018. It further increased to EUR 72.9 billion in 2020 , representing a 64.3% and 2.4% growth from the 2010 and 2018 respectively. The gross operating surplus of the broad construction sector totalled EUR 21.5 billion in 2018, increasing by 158.2% from 2010. The gross operating rate of the broad construction sector , an indicator of the sector’s profitability, stood at 30.2% in 2018, 11.4 percentage points (pps) higher than the 2010 level and 13.5 higher than the EU 27’s 2018 average (16.7%).

In 2020, the number of persons employed in the broad construction sector reached 322,456, which represents a 24.8% growth from 2010. Amongst the sub sectors, the architectural and engineering activities sub sector experienced the highest growth (+47.9%), followed by the narrow construction (+22.1%), real estate activities (+20.0%) and manufacturing (+18.5%) sub-sectors, over the 2010 2020 period.

The Danish housing market is characterised by a continuous rise in prices. In 2020, the house price index for dwellings increased by 23.2% above the 2015 level, being largely driven by price increases in the existing dwellings. According to the government, the housing prices rose by 4.7% in 2020 alone – despite the negative impact from the COVID-19 pandemic (such as the rise of unemployment). The prices kept increasing in 2021 as well, driven by low interest rates (which in turn fostered the housing demand) and limited supply of homes. In fact, the number of building permits issued in Denmark reduced by 40.8% in 2020 in comparison to 2019.

23.2%
House price index for total dwellings between 2015 and 2020

To address the shortage of homes in the country, the government proposed a project of an artificial island named Lynetteholm, to be constructed on the harbour waters just north of Copenhagen city. Upon completion in 2050, the island is expected to accommodate around 35,000 people. Moreover, the government also announced its plans to build 24 new homes for young people with disabilities in Copenhagen. It is expected to welcome new residents by 2023.

In relation to the civil engineering and infrastructure, an amount of EUR 2.0 billion had been allotted to increase public investments in the 2021-2025 period.

In 2021, the Danish government has also introduced a new EUR 21.5 billion plan – the ‘Denmark Forward for infrastructure looking ahead to 2035’.

It aims to improve national road and railway systems. It also contains plans for the implementation of initiatives to support the green transition in the transportation sector.

Presently, the Danish construction sector faces three major challenges. The foremost being the late payments, which affects half of the total value of B2B (business to business) invoices in 2020, 28.0% higher than 2019. Secondly, the construction sector faces an acute shortage of skilled workers. Around 75.0% of construction firms have reported this issue to be the most important one in the context of their activities. Lastly, the limited level of innovation activity in the construction sector is a major challenge, with around 72.0% of the firms reporting that they are least likely to innovate in 2020, which is well above other economic sectors such as manufacturing (42.0%) and infrastructure (59.0%) sectors .

The COVID-19 pandemic had impacted almost all facets of the Danish construction sector, such as access to finance and entrepreneurship, shortage of skills and employment, payment duration, company demography, investment volumes and innovation. However, the government recently introduced recovery schemes and measures in 2020 and 2021 supporting economic operators. This is expected to also benefit the construction sector. For example, the government’s scheme – Match financing (Matchfinansieringen) introduced by the Danish Growth Fund (Vækstfonden), aims to fund those projects based on innovation whose financing has been suffering from lack of funds due to COVID-19.

In June 2021, Denmark’s Recovery and Resilience Plan (RRP) was adopted wherein it was allocated EUR 1.5 billion in grants under the Recovery and Resilience Facility (RRF) over the 2021-2026 period. 

This includes various investment measures such as EUR 259.0 million for supporting green transportation, EUR 242.0 million for green research and development, EUR 89.0 million for digitalisation initiatives, EUR 63.0 million for energy efficiency in households as well as EUR 40.0 million for energy renovations in public buildings. This financing is expected to support the green and digital growth of the construction sector.

Given the COVID-19 pandemic’s rather limited impact on the Danish construction sector along with government’s prompt recovery measures, the sector is set to achieve the pre pandemic levels by end 2021.