Written by Nina Tophoff, European Horizons
Although Denmark joined the European Communities in 1973 and has been an integral member of the European Union since its founding in 1993, the country still uses krone as its currency, rather than the euro. As a country with good economic performance, it has much to gain from joining the eurozone and becoming a more integrated member of the EU, and it is likely to be successful in doing so. The European Union and eurozone are currently experiencing a crisis of integration and would benefit politically from the successful integration of Denmark into the eurozone, in addition to benefiting economically. Integration into the eurozone would benefit both Denmark and the European Union.
The last referendum that Denmark had on joining the eurozone took place in 2000, when 53% of voters rejected the euro compared to 47% in favor. This referendum was held nearly 20 years ago and within this time, the euro has become a much more established currency throughout the European Union. Public opinion in Denmark has also become increasingly favorable toward the European Union and further integration. Most major Danish political parties favor joining the eurozone and the idea of a second referendum has been proposed many times since 2000. Joining the eurozone is politically popular throughout Denmark, and a second referendum would be likely to pass.
Joining the eurozone would also further integrate Denmark into the European Union, which would bring immense political benefits. For instance, it would encourage better relations among Denmark and proximate countries that already use the euro. According to former Danish prime minister Helle Thorning-Schmidt, the move would also allow Denmark to have more of a say in issues within the European Union. Considering Denmark’s comparatively small size and influence, it is clear that any additional clout would help the country tremendously.
Having Denmark join the eurozone would also be politically beneficial for the European Union itself. Over the last couple of years, there has been a massive rise in euro-skepticism throughout the Union, exemplified by the rise of populist, anti-European parties in countries like Italy and France and by the 2016 referendum in which the United Kingdom voted to leave the European Union. The successful further integration of an important member state could provide a positive example for the future, both for current and potential member states.
Denmark’s strong economic performance also indicates that it would be a perfect candidate for joining the eurozone. Denmark is one of a few candidates for joining the eurozone that meet all four criteria for joining, including a government deficit that does not exceed more than 3% of GDP, debt that does not exceed more than 60% of GDP, exchange-rate stability, and low, stable interest rates. In addition, Denmark has other excellent economic indicators that would make it a strong member of the eurozone. It has one of the highest GDPs per capita in Europe, a strong trade surplus of DKK 6 billion, and a stable currency. Economically, Denmark is doing much better than many current members of the eurozone, such as Greece, and adding Denmark to the eurozone could improve its overall performance.
Joining the eurozone would also be economically beneficial for Denmark itself. Denmark’s current currency is already subject to European Exchange Rate Mechanism, which means that its exchange rate is essentially pegged to the euro; switching to the euro would further simplify exchange with other eurozone member states. In addition, as previous eurozone entrances have demonstrated, joining the eurozone would boost trade with other eurozone members. Lastly, Denmark’s eurozone integration would allow for greater economic stability and improved growth, and would allow Danish businesses easier access to other eurozone markets.
Joining the eurozone would be politically and economically beneficial for both Denmark and the European Union. Additionally, Denmark’s optimal economic conditions should allow the transition to integration to be fairly smooth. The political will is present; therefore, another referendum should be held soon to give the Danish people the opportunity to act on the widespread desire to join the Eurozone and become a fuller member of the European Union.