Denmark - Defense Budget

The defense budget is negotiated every five years and the budget parameters are set during those negotiations.

Denmark’s government announed plans 30 May 2023 to invest 143 billion Danish crowns ($21bn) in defence over the next 10 years, with an aim to meet its military and security goals as a founding NATO member. The Nordic nation currently spends around 27 billion Danish crowns per year ($3.89bn) on defence, and the government had said it will progressively increase this by up to 19.2 billion Danish crowns ($2.8bn) by 2033, beginning with an increase of 6.9 billion Danish crowns ($995m) next year. “We must, to a greater extent, be able to live up to the demands and expectations that NATO and its allies have for Denmark,” Troels Lund Poulsen, acting defence minister, told reporters. “This requires large investments in our armed forces to lift our share of the responsibility,” he added.

On 06 March 2022 The Danish Prime Minister and a coalition of parties announced that: Defence spendings will be increased to 2 % of GDP; The country will make itself independent from Russian gas; and on June 1 2022, a referendum will be held to abolish the Danish opt-out from EU defence.

Under the 2018-2023 Danish Defence Agreement, the announced increase of increase of DKK 12,800.00 million in defence spending out to 2023 was intended to enable the investment in the capabilities identified in the Defence Agreement which is a positive step to meeting some of the priority capabilities requested by Allied Defence Ministers. The proportion of gross domestic product devoted to defence decreased from 1.35% in 2009 to an estimated 1.16% in 2017, and is projected to rise to 1.21% in 2018, 1.23% in 2019, and 1.27% in 2020, which is well below the NATO guideline of 2% set out in the Defence Investment Pledge (DIP). Expenditure on major equipment was 13.68% of total defence expenditure in 2016 and is forecast to be 10.39% in 2017, 13.43% in 2018, 18.55% in 2019, and 20.95% in 2020, thereby exceeding the NATO guideline of 20% as set out in the DIP.

The Danish government aimed to increase its military spending to counter an alleged security threat from Russia in Eastern Europe. During a visit to the Danish Air Force team in Lithuania on 15 January 2018, Danish Prime Minister Lars Lokke Rasmussen said his center-right minority government needed to persuade the Danish parliament in February 2018 to back a proposed, whopping 20-percent hike in Denmark's military budget over a five-year period. "We want to look at ourselves as a core NATO member. And in order to behave like such a member, we need to increase our expenditures," Rasmussen said.

An agreement made in 2006 called on NATO member countries to have a military spending of at least two percent of their GDP. While many members of the military alliance have refused to allocate that percentage of their GDP to the military, some have recently been invoking the agreement in an ostensible attempt to deter Russia. The Danish prime minister said his country's military budget needed a "substantial increase."

"Five years ago we thought that the defense line, so to speak, would not be in Europe, but would be international operations. Now we realize that we need to have the capability to do both," he added.

The proportion of GDP devoted to defence has increased slightly from 1.3% in 2007 to 1.4% in 2014. Compared to 2008, defence expenditure in 2014 is expected to be 2.2% lower in real terms. For 2014, a real increase of 2.7% in defence expenditure is projected. Thereafter, as the effects of the current Defence Agreement are felt, real decreases of 11.6% and 0.6% are projected for 2015 and 2016, respectively. Defence expenditure is expected to be stable in 2017. Spending an malor equipment is estimated to have been 9.9% in 2013 and is forecastto rise to 11.3% in 2014 and 12.2% iii 2015. Thereafter, itis projected to be around 11% in 2016-18.

Additional spending by NATO member Denmark had been expected to remain at modest levels – given the tight budget constraints imposed on public spending after the 2008 financial crisis. The Conservative Party-led government of Prime Minister Lars Løkke Rasmussen was elected in June 2015 on a strong commitment to implement fiscally sound public finance policies. Danish defense spending has declined steadily since 1990 and by 2015 stood at 1.2 to 1.37 percent of GDP [depending on the method of calculation]. There would be more cuts through 2017, when the five-year defense agreement expired. A number of Danish opposition parties, including Venstre, Konservative and Dansk Folkeparti, supported an increased defence budget.

General Knud Bartels, who was also Denmark's former defense minister, warned the Danish government that the country's standing and influence in NATO was questioned due to budget cuts and what he believes to be "a growing discrepancy between [Denmark's] ambition level and [its] ability to contribute" to the military alliance. Danish newspaper Berlingske published the letter 11 August 2015, which was sent by Bartels to current Defense Minister, Carl Holst, just before the former's term at NATO finished in June 2015. Bartels warned Holst that he was concerned Denmark wasn't keeping up to speed with the changing security situation in Europe, warning that changes to NATO's structure could leave Denmark as a minor player in the alliance.

In a sign that NATO officials are actively pushing member states to contribute more towards defense spending, Bartels added that "Denmark's military level could come under pressure from the alliance's expectations," given NATO's concern over what it perceives to be Russian aggression in eastern Europe. The letter also served a warning to Copenhagen that officials would be under pressure to a plan outlining an increase to military contributions at next year's top meeting in Warsaw.

The sum of appropriations in the Finance Act for 2016 of the Ministry of Defence amounted to abt. 21.0 billion DKK. The appropriations are primarily based on the Agreement on the Defence 2013-2017 of 30 November 2012 with subsequent additional agreements, and on a preliminary technical continuation in 2016 of the Agreement on the Emergency Management 2013-2014 of 12 November 2012. As a part of the reorganisation of the management of the Defence, and in order to further render visible the application of the appropriations, three new main accounts in the Finance Act for 2016 were established regarding the Danish Defence Personnel Organisation. Furthermore, a new main account regarding the Defence Workshops was established.

The appropriations of the Ministry of Defence in the Finance Act for 2016 (Section 12.ministry of defence) are distributed into three main areas: joint expenses, military defence and emergency management. The appropriations for some agencies, such as the Department of the Ministry of Defence, the Defence Intelligence Service and the Emergency Management Agency, are cost-based, while others are expense-based, which is the case for the Joint Services Defence Command, the Danish Defence Acquisition and Logistics Organisation, and the Home Guard.

Overview of the appropriations of the Ministry of Defence
Finance Act for 2016

Year (million DKK)	2016	2017	2018	2019
12.1. JOINT EXPENSES	11.840,4	12.228,1	11.786,9	11.563,9
12.11. Central management
Department of the Ministry of Defence	355.1	320.4	315.5	311.2
Centrally managed initiatives *)	693.8	872.2	784.5	781.8
Reserves and budget regulation	-103.2	-133.4	-133.4	-133.4
12.12. Personnel
Danish Defence Personnel Organisation	468.6	440.8	408.4	424.8
Danish Defence Personnel Organisation, Functional operations	1.212.8	1,169.7	1,113.1	1.078.6
Danish Defence Personnel Organisation, Centrally Managed Units	361.8	362.8	371.9	371.4
12.13. Equipment and IT
Danish Defence Acquisition and Logistics Organisation	918.1	905.3	887.3	874.9
Equipment management	3,821.7	3.660.1	3,586.9	3,513.0
Informatics planning	498.6	459.2	474.9	448.9
Equipment acquisition	1,572.3	2.328.7	2,134.3	2,083.9
12.14. Estates
Danish Defence Estates and Infrastructure Organisation	320.0	315.8	309.5	303.2
Equipment management	1,385.1	1.191.4	1,200.4	1,173.4
Informatics planning	257.9	257.9	257.9	257.9
Equipment acquisition	0	0	0	0
12.15. Accounting
Danish Defence Accounting Agency	77.8	77.2	75.7	74.3
12.2. MILITARY DEFENCE	8,766.9	8,775.2	8,640.1	8,459.2
12.23. Joint Services Defence Command with pertaining agencies and areas
Joint Services Defence Command	484.9	476.6	467.1	457.6
Army	2,807.8	2.798.9	2,742.8	2.687.0
Navy	1,216.5	1.219.2	1,194.7	1.170.4
Air force	1,531.7	1.533.4	1,517.6	1.486.5
Special operations	232.8	242.9	238.0	233.1
Defence Workshops	312.6	312.3	306.0	299.7
Defence Academy	362.2	358.9	348.9	342.3
Defence Health Service	129.2	128.0	125.4	122.8
12.24. Home Guard	489.8	489.8	480.0	470.2
12.25. Defence Intelligence Service	827.7	874.7	886.1	856.1
12.29. Special expenses re. NATO	371.7	340.5	333.5	333.5
12.4. Emergency Management	433.3	373.4	363.7	356.7
12.41. Emergency management Agency
Emergency Management Agency	494.1	484.2	474.5	467.5
Civil Defence Union	14.3	14.3	14.3	14.3
Reserves and budgetary regulation (reordering of priorities for the rescue preparedness)	-75.1	-125.1	-125.1	-125.1
Total (million DKK)**) net figures	21,040.6	21,376.7	20,790.7	20,379.8

*) The centrally managed initiatives primarily cover un-implemented initiatives of the agreement, as well as international cooperation and initiatives, centrally managed by the Department of the Ministry of Defence
**) Finance Act for 2016 (net appropriations) and budget estimation years 2017-2019 (estimated in 2016 prize level).

On 30 November 2012 the Danish coalition government (the Social Democrats, the Social-Liberal Party and the Socialist People's Party) and the ‘Venstre’ (the liberal party), the Danish People's Party, the Liberal Alliance and the Conservatives entered into the an agreement regarding the Danish defence for the period 2013-2017.

There was agreement that the annual defence spending2 is to be reduced by DKK 2.5 billion in 2015, DKK 2.6 billion in 2016, and by DKK 2.7 billion in 2017. The gradual phasing in of measures to improve efficiency and development initiatives entails that a total of DKK 2.4 billion is to be released in 2013 and 2014. The defence budget is reduced correspondingly, and the released funds of DKK 2.4 billion are used according to a separate agreement in the Ministry of Finance between the Parties to the Defence Agreement.

The Danish Defense Agreement concluded in June 2004 and covered the period 2005-2009 in which it reorganized, rationalized and streamlined the Danish Armed Forces. The cross-party negotiations in 2004 resulted in an agreed financial budget of DKK18.6 billion for 2005, DKK19.3 billion for 2006 and 2007 and DKK19.2 billion for 2008 and 2009. Only USD500 to USD600 million is set-aside on an average yearly basis for new materiel acquisition.

During the 2005-2009 Defence Agreement period, the Danish defence coffers were drained by international operations. The Danish Armed Forces have drawn on their reserves and are faced with seriously depleted stocks of ammunition and training equipment. It should be a matter of course that the soldiers who are sent to Afghanistan are trained on the equipment they are to use down there, but that is not the case. There is therefore a need to raise the level of equipment investments in the long term if the soldiers we send out are to be given the best possible protection.

The memorandum by the MOD entitled "Consolidated Implementation Basis for Danish Defense Agreement 2005-2009" is indicative of the whole-scale changes that Denmark has been and continues to make in the structure of its Armed Forces. There has been a gradual shift from the role of the Danish Armed Forces as one of protectorate of Danish territory to one of protection and promotion of basic democratic values regionally (the European continent) and internationally (under US or UN led leadership). What this means in purely materiel terms is the phasing out of equipment designed for an international society that ended in 1991 and the procurement of equipment designed to meet the basic requisites (flexibility,durability, reliability) of peacekeeping and peacemaking missions across the globe.

The main defense cuts have included

1. Full-time personnel to be reduced from 29,000 to 24,500 (2,400 of these will be full-time conscripts).
2. Danish Defense will sell or transfer Sjælsmark, Jægersborg, Værløse, Auderød, Melby, Herving and the buildings of the Danish Construction Service inCopenhagen and Viborg as well as various depots.
3. A number of home guard establishments will be sold or exchanged. The total revenue from points 2 and 3 is expected to be in the region of USD80 million.
4. In accordance with a reduced threat to Danish sovereign territory, there will be a further reduction in the home guard. Those that undertake national service are no longer expected to be educated as full soldiers but will be expected to provide a reserve of approximately 15,000 individuals in the case of a terrorist attack or natural catastrophe. The budgetary savings associated with this have been estimated from $70-$100 million annually over the next five years.
5. The closure of materiel acquisition offices for the Army, Navy and Air Force. There will, from 2008, be a joint materiel procurement office for the entire Danish Armed Forces.
6. The three remaining Danish submarines have been withdrawn from duty.

Detailed information on structural issues and the consumption of resources, including personnel, will be indicated in the annual appropriation act. The annual appropriation bill, as well as the acts that implement the budget, are to be discussed in advance with the accord parties. In addition, the agreeing parties are to be continuously informed on matters within the framework of this agreement that are of significance to the personnel structure and the acquisition of equipment. Moreover, a statement of activities, including deployments and redeployments, the financial situation of Danish Defence and on the implementation of the accord, especially on the developments af the functional services is to be prepared each year with a deadline of 1 January. The statement is to be sent to the Defence Committee of the Parliament and should lay the groundwork for a discussion between the agreeing parties. The purpose of the discussions is inter alia to consider necessary corrections to the development of the Danish Defence during the agreement period in order to ensure ideal relevance of Danish Defence and its capacities and to evaluate the coherence of the activities, efforts and economy of the Home Guard.

Investment in equipment is to be increased and targeted in relation to relevant, future operational capacities to an extent that assists in reducing the "technology gap" between Denmark and certain other allies. It should also be ensured that Denmark can live up to the commitment to participate in NATO's capability initiatives, including strategic sea and air transport, air tanking, etc., stated by the Government during the NATO Summit in autumn 2002. Approximately DKK 2.845 billion is to be set aside each year for equipment investment and just as in the present accord period, there must be a general balance between payments and allocations for new projects throughout the accord period. The equipment debt at the end of 2009 will thus correspond to the debt at the end of 2004 of approximately DKK 6.7 billion (2004 price index).

The current Danish Defence Agreement covers the years 2010 through 2014. The agreement was made between seven of the eight political parties represented in the Danish parliament on June 24, 2009. The agreement describes that the development of the armed forces is to be continued along the lines set down in the 2005-2009 defence agreement. Thus, the transformation of the Danish armed forces towards more deployable and sustainable forces for international operations is continued in the years 2010-2014. In this transformation process, special emphasis is put on improving the ability to participate in long during international operations - also referred to as sustainability. The armed forces will also maintain the ability to conduct operations on the national territory, notably surveillance of the airspace and waters throughout the kingdom - including Denmark proper, the Faroe Islands and Greenland - and support to other government agencies and the society as a whole.

The 2010-2014 defence agreement contains an increase in the defence budget. This additional funding is in part ear-marked for identified one-off expenditures. Another part of the additional appropriation is put in a special funding pool for protection measures for deployed personnel.