LONDON (Standard&Poor's) Aug. 31, 2012--On Aug. 27, the Danish government presented its proposed budget for 2013. The government's announced fiscal policy remains in line with our expectations and does not have an immediate effect on our ratings on Denmark (AAA/Stable/A-1+). We expect the budget deficit to widen to 4.6% of GDP in 2012 from 1.9% in 2011, driven by the one-off negative effect of retirement reforms and the acceleration of public-sector investments. However, labor market reforms, tax increases, and the new system of spending ceilings--as well as declining public investment--should result in the deficit reducing to 3% in 2013. We base our forecast on the technical assumption of there being zero revenue from Denmark's pension yield tax. In
