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Economists: Fogh low in economy test

The Anders Fogh Rasmussen government was the worst of the last five governments on economic policy.

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Anders Fogh Rasmussen’s (Lib) time as prime minister resulted in economic policy that was so poor that it measures that of the Anker Jørgensen government that resigned in 1982, according to 22 economists who have rated the last five governments.

“Over the past decade we have repeatedly heard from the government that we had no problems and could afford everything. Proposals from various commissions for necessary reforms were just laughed at, despite the fact that the politicians knew throughout that reforms would be necessary. We wasted 10 years of economic policy,” says Aarhus University Economy Prof. Nina Smith, who is a member of Politiken’s economic panel.

Nyrup at top
The ratings show the Social Democratic government of Poul Nyrup Rasmussen (1993-2001) to be the economists’ preferred administration of the last five, with that of Conservative Prime Minister Poul Schluter (1982-1993) as second best. The current administration of Lars Løkke Rasmussen (Lib 2009- ) is rated third, Anders Fogh Rasmussen’s Liberal coalition (2001-2009) fourth and Anker Jørgensen’s Social Democratic government (1972-73, 1975-82) as worst.

Anders Fogh Rasmussen has declined to comment on the survey.

The economists say that while Schluter and Nyrup Rasmussen were prepared to introduce unpopular but necessary reforms, Fogh Rasmussen’s biggest mistake was a lack of reform of the early retirement scheme and unemployment benefits. At the same time the housing bubble got worse as a result of a housing tax freeze in real terms as opposed to income tax, Smith says.

Aarhus School of Business Economy Prof. Niels Westergaard-Nielsen says the Fogh government managed to avoid reforms by spending liberally from North Sea oil revenues.

“The Fogh government increased costs without increasing taxes, by using oil money. But that is money that you can only use once. That is why Norway has put its oil money into a fund. In Denmark we will suffer from what economists call the Dutch Illness. The Dutch based their revenues on oil and gas, and when they ran out there was no alternative. We can now end up with the same problem,” says Westergaard-Nielsen.

“In oil we had extraordinary revenues that could have been invested in education. We currently have an education system which isn’t all that good. That is the worst sin that the Fogh government committed. Taking money that should have been used on the future and using it to increase public spending,” he adds.

Cepos: Nyrup better at reform
On average, the economists give Fogh Rasmussen’s economic policy a mark of just over three on a scale of 12 – or just passed.

Mads Lundby Hansen, chief economist of the Cepos think-tank says he is not surprised that Fogh Rasmussen is marked much worse than Nyrup Rasmussen.

The Fogh government – and also (current Prime Minister) Løkke Rasmussen’s – have not been able to manage public sector growth. Each time they have budgeted for a krone in growth, growth has been at 2 kroner. The government itself has accepted that it has made mistakes here,” says Lundby Hansen, who is also a member of the economy panel.

Edited by Julian Isherwood

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