Denmark’s Economy Shrank More Than Estimated Last Quarter - by Frances Schwartzkopff

Denmark’s economy contracted in the third quarter, after households spent less and the government cut expenditure, threatening to delay the nation’s recovery as twin housing and bank crises persist.

Gross domestic product shrank 0.8 percent from the second quarter, after growing 1.2 percent in the previous three-month period, Copenhagen-based Statistics Danmark said today. 

The economy contracted 0.2 percent from a year earlier, the office said. GDP was expected to shrink 0.4 percent on the quarter and remain unchanged from a year earlier, according to the median in a Bloomberg survey of seven economists.

Falling house prices have sapped consumer demand, while banks are calling in loans as funding markets remain closed to all but the biggest lenders. The government cut its 2011 forecast for private spending on Nov. 3, and estimates consumption will shrink 0.6 percent versus an earlier estimate for growth. One third of businesses face deteriorating financing prospects, the Confederation of Danish Industry said this week.

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