What an independent Scotland can learn from Denmark

Denmark is about two thirds the size of Scotland with a slightly larger population of 5.8 million. It comes in the top five of the Scotianomics Wellbeing Index. It is also far wealthier – the GDP per head is about twice that of Scotland. So how does independence work for Denmark? Here are five lessons for an independent Scotland. 

Image: The Believe in Scotland Wellbeing Index

1. Denmark is more democratic

High levels of democracy tend to correlate with other positive measures – like trust in institutions, happiness, stability and even prosperity.

Denmark is a constitutional monarchy with a Queen, Margaret the Second, but power resides in the Parliament – the Folketing (the Commons). It has only one chamber. A second chamber, the Landstinget,  which had some similarities with the UK House of Lords, was abolished in 1953. 

Denmark’s Parliament is elected by proportional representation and because no party wins an overall majority, the government has to build cross party support for each element of its legislative programme. In Scotland, the Scottish Parliament is similar – it even uses the D’Hondt method for elections, like Denmark. 

But the UK regards all sovereignty as resting with Westminster. That means Boris Johnson’s tennis partner has more power to rule over Scotland than the entire Scottish population. The UK Parliament would not meet the standard of democracy - the “Copenhagen Criteria” - required for admittance to the EU. That lack of democracy undermines Scotland’s levels of trust, wellbeing and prosperity. 

2. Denmark has its own currency and central bank

Denmark, Sweden and Norway all use currency called the crown, or krone. It may have the same name but each country mints its own currency, its own exchange rate on international markets and each central bank makes decisions based on what is best for their own economy. In an independent Scotland we will use the Scottish pound, which will be similar to the British pound in name only. It will have its own value on international markets and the Scottish central bank will mint currency and make decisions based on what is best for the Scottish economy.

At the moment, in the UK, decisions about interest rates are made with the interests of the City of London in mind. But conditions may not be the same in Scotland and Scotland’s central bank may choose different measures.

When it comes to Denmark, the DKK is tied to the Euro and it is stable. Inflation in Denmark has fallen and is now about the lowest in Europe, at 0.9% last month - Danish interest rates peaked at 3.75%. Denmark is a wealthier country than Sweden, with a service-based economy. Sweden, which is more on the periphery of the EU and has an export-driven economy, has allowed its currency to fall so that the SEK is worth about a third less than the DKK.

The point is that having their own currency and central bank gives both of these countries economic levers that an independent Scotland would also be able to use to further the interests of the Scottish economy specifically. 

3. Flexicurity means a strong labour market

Denmark is a popular choice for innovative businesses in technology and other sectors. That is because of its unique labour laws called ‘flexicurity’. Businesses can hire and fire at will but that is backed by very generous unemployment benefits, training and support.

So in a given year, about a quarter of the people employed in the private sector will change jobs. This system makes it easier for businesses to innovate and try new products or services. It also encourages them to take a chance on hiring people who may be excluded from a more traditional labour market. 

The system was designed in partnership with trade unions. While union membership is high, strikes are uncommon because the unions see their role as wider than defending the interests of their members in job cuts or wage increases. They see themselves as part of a political consensus, building and maintaining a stable society. 

4. Denmark has a well-designed national pension scheme

Old age poverty in Scotland and the UK is high and rising. The state pension is among the lowest in the developed world and many people end up struggling to manage small, fragmented workplace schemes. 

In contrast, according to the Mercer Global Pension Index, Denmark has: “A first-rate and robust system that results in a good pension, is future-proof and demonstrates a high degree of integrity."

Almost everyone in Denmark pays into the Danish Labour Market Supplementary Pension, also known as the ATP. People can have their contributions paid for them during parental leave and periods of unemployment. Danes can also choose to defer claiming their pension at retirement age in return for a higher payment later on. 

“Pension rights with ATP are accrued on a what-you-pay-is-what-you-get basis. In principle, each generation finances their own rights and ATP is devoid of intergenerational transfers”, the OECD reports. (The UK system is very different - read more here)

5. Denmark has a large, government-backed media sector

An underlying condition for a strong democracy with high levels of public trust is a strong media. Currently, Scotland’s media sector is much smaller than Denmark’s - or most other similar-sized independent countries. 

In Denmark, the revenue of the media sector in 2023 is expected to be around $5 billion. It is hard to find similar figures for Scotland but it is likely much less. Broadcasting is controlled by Westminster (recent demands by Scottish politicians that important games by the national football team should be free to air as they are in England and Wales were rejected by Westminster). The BBC is supposed to spend a population share of revenue in Scotland but they generally fail to do even that – it typically spends about £70 million a year in Scotland. ITV/STV spends less than £10 million. 

In Denmark, there are two strong public broadcasters (DR and TV2) and several successful commercial brands which receive an annual public subsidy. Newspapers also receive public subsidies. 

The Danish media is innovative - one example is TV2’s stream of info-graphics and other content aimed at young Danes on social media. An independent Scotland, with control of broadcasting, could back original Scottish media that will inform the public and help to support a strong democracy. 

Conclusion

Denmark is not perfect. It has recently adopted some of the most restrictive measures on immigration in the EU – though these are less restrictive than the UK which has made asylum seekers who arrive without permission into criminals. 

Not all of Denmark’s choices will appeal to an independent Scotland. But with independence, Scotland can look to the neighbouring country of Denmark for some lessons on how to use the new levers at its disposal to build a stronger, fairer, more democratic society.