COPENHAGEN: Danish Prime Minister Lars Lokke Rasmussen on Tuesday announced a plan to boost Denmark’s sluggish economic growth, with proposed measures including income tax cuts to entice people to work and raising the pensions age.

Rasmussen, of the conservative Venstre party, leads a minority government and is struggling to meet the conflicting demands of his political allies, including on welfare and taxes. Some parties have warned that there could be a snap election in the autumn if their demands are not met.

Denmark’s economic growth is lagging behind neighbours Norway, Sweden and Germany, and some economists and politicians partly blame the country’s generous welfare system and high tax burden.

The government has trimmed its economic growth forecast for 2016 and 2017 to 0.9 per cent and 1.5pc, respectively, partly due to the UK’s vote to leave the European Union.

“We risk falling behind, and risk that our children won’t have the same welfare and possibilities as their peers in Germany or Sweden,” Rasmussen said at a news conference to announce the plan.

Under the proposal income tax would be lowered for those earning incomes below 1 million Danish crowns ($150,000) a year by 2025, and the top marginal tax rate would be lowered to 10pc from 15pc.

All measures in the plan are subject to parliamentary approval, with political negotiations to take place between now and year-end.

The Liberal Alliance had made the lowering of the top marginal tax rate a key demand, threatening to withdraw support for Rasmussen’s government if it was not met.

Published in Dawn, August 31st, 2016