Danes went to the polls on Tuesday in an election that may hand Prime Minister Mette Frederiksen a third term thanks to her staunch line against US President Donald Trump over Greenland, even as cost-of-living worries have hurt her leftist credentials.
Opinion polls show her Social Democrats are heading for their weakest result since before the Second World War. Many Danes blame Ms Frederiksen for failing to do enough to protect their Nordic welfare model, while others point to growing weariness after nearly seven years of her leadership.
Ms Frederiksen, 48, called the vote months before an October deadline, in what observers said was an effort to capitalise on an sharp rise in popularity when Mr Trump's rhetoric about controlling Greenland intensified in January and he refused to rule out military force.
Wealth tax debate
But the Greenland issue has since moved to a less heated diplomatic track and has been overtaken by domestic concerns including a proposal for a wealth tax and debates about immigration.
The economy is at the top of voters' minds, a TV2 poll on March 12 to 13 showed, with the environment coming second, foreign and security policy third and health care fourth, followed by immigration in fifth place.
In a bid to counter competition from left-wing political parties, Ms Frederiksen announced that she intends to impose a 0.5 per cent levy on fortunes above 25 million Danish crowns ($3.87 million). The Social Democrats had abolished an existing wealth tax in 1997.
Her proposal would affect 20,000 people in a country of six million, with proceeds set aside for some tax relief and lowering the number of six to nine-year old pupils in school classes from about 26 to 14.
The announcement has been welcomed by teachers' unions but criticised by chief executives at big Danish companies including wind turbine company Vestas and shipping company Maersk.
“I think there is a good chance Denmark will become poorer,” Martin Thorborg, chief executive of Danish accounting software company Visma Dinero, told Reuters as he discussed the consequences of a tax he would expect to pay. “If we make Denmark poorer, there may well be less inequality, but this will affect the weak in our society more than the rich."
The chief executive of toymaker Lego, Niels Christiansen, has said it would “impact society pretty hard in the long run” – due to less job creation, less tax and less competitiveness.
The experience of Norway – with a wealth tax dating back to 1892 – offers fodder for both sides of the argument. Data from conservative think tank Civita show 261 residents with assets above 10 million crowns left Norway in 2022 and 254 in 2023. But despite the exodus, revenue from the wealth tax has gradually risen to a not-trivial 0.6 per cent of national output.
Testing times
Ms Frederiksen, who has led Denmark since 2019, was the first premier to bridge the left-right divide in Denmark in more than 40 years, but her coalition is now projected to lose its parliamentary majority.
“To a large degree, this election is about Mette Frederiksen,” said political analyst Hans Engell. He added that, while some voters view her as the right person at a time of crisis, others see her as too authoritarian. Her Social Democrats, whose tough asylum reforms had alienated some on the left, have recovered in polls since the Greenland crisis, rising from a December low of 17 per cent to around 21 per cent.
But the left-leaning bloc is still expected to fall short of the 90 seats needed for a majority in Denmark's 179-seat Folketing, with projections pointing to about 85 seats. With left-wing allies expected to hold firm and the right bloc fractured, however, she remains the favourite to form the next government.
In Denmark's parliamentary system a government need not command a majority – it simply must not have one against it. The right-leaning bloc is led by Defence Minister Troels Lund Poulsen of the Liberal Party, while the outcome could hinge on former prime minister Lars Lokke Rasmussen, leader of the centrist Moderates and current Foreign Minister, who is positioned to play kingmaker. Mr Rasmussen's alignment either with Ms Frederiksen's bloc or a right-leaning combination could determine who forms the next government.
In all, 12 parties are contesting the ballot. Additionally, four seats allocated to candidates from Greenland and the Faroe Islands may prove decisive. Observers are also watching out for voting outcomes in the massive Arctic island, seeking signs whether the governing coalition in Nuuk could be crumbling, a possibly troubling issue at a time when Denmark is in talks with US and Greenlandic officials about future policy.
Polling stations close at 8pm local time, with exit polls due shortly after.
