Danes reject the Euro, October 2000

In a referendum on 28 September, voters in Denmark rejected joining the Euro by a majority of 6.2&percent;. A reported turnout of 88&percent; registered 53.1&percent; against joining the Euro, with 46.9&percent; in favour. Responses from official EU sources expressed regret at the decision, but the governments in Sweden and the UK - where referendums on the Euro will also be held - chose not to dwell on the implications of the Danish vote for their own plebiscites.

Background

Denmark is not part of the 'Eurozone', whose members are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. Greece will join from January 2001 (background to EMU and details of Greece's application can be found in In Focus 11 March 2000: Greece submits formal application to participate in monetary union, 9 March 2000). The three Member States outside the Eurozone - Denmark, Sweden and the United Kingdom - are sometimes referred to as the 'outs'.

The Danish Constitution identifies the circumstances under which a referendum may - or must - be held. The same source also gives details of the 12 previous referenda held in Denmark since 1953, including the 1992 vote on the Treaty on European Union. (The Danes' rejection of the Treaty had far-reaching effects and provided the impetus for development of the Union's current information policy - see In Focus 28 January 2000: Commission adopts proposed regulation on public access to EU documents, January 2000).

Denmark was the first of the three 'outs' to hold a referendum. In the wake of the Danish result, the Financial Times reported that a referendum in Sweden is likely to be delayed 'until well after a general election in 2002.' The Guardian reported that Sweden will not hold a referendum until 2004 or 2005. Public opinion in both Sweden and the UK is currently anti-Euro.

The date for a UK referendum on the Euro has not yet been set, although the intention to hold one was announced in October 1997:

'Because of the magnitude of the decision, we believe - again, as a matter of principle - that whenever the decision to enter is taken by government, it should be put to a referendum of the British people. So whenever this issue arises, under this Government there will be a referendum. Government, Parliament and the people must all agree.'

The outcome of the vote in Denmark was difficult to forecast. In mid September, European Voice asserted that:

'the outcome of the Danish referendum on euro-zone membership is on a knife-edge. But the yes campaign appears to be gaining momentum as the decision on the country's future in the EU comes closer.' (Women may hold key to Denmark's euro referendum).

On 26 September, a 'surge' in the pro-Euro vote was reported by The Independent.

A number of correspondents reported that the referendum was not fought purely on economic grounds, but on broader political issues:

'In what became a political campaign as much as an economic argument, the ragtag rainbow coalition of campaigners from the far left and far right made it a battle about Danish identity and played on people's fears that Europe was integrating too far and too fast.' (CNN.com)

'The Danish people's decisive 'No' to the euro is bad news for the EU and even worse for Tony Blair. Britain's prime minister says he will hold a referendum on the single currency after the next election, provided five economic tests are met. But Thursday's result had little to do with economics and was not primarily about the euro. As the campaign for the sixth Danish referendum since 1972 made clear, it was about the political development of the European Union.' (Financial Times)

'But the debate has not just been about the euro. Instead it has bounced back and forward across an array of subjects as the politicians clashed over Europe's sanctions against Austria, the fate of the Danish pension system and even a possible EU threat to the Danish monarchy.' (The Independent)

Anti-Euro groups in the UK and Sweden emphasise these wider issues: a British perspective is provided by Business for Sterling, and a collection of relevant press articles (in English) has been collated by the Swedish-based www.nejtillemu.com.

Reaction to the result

Finance Ministers of the Eurogroup (the EU member States participating in the Euro), met on 29 September. They issued a statement regretting the Danish decision, but emphasising that it 'does not close the door to a later participation to the Euro area.' It was also noted by Ministers and the President of the European Central Bank that 'the Danish authorities are committed to keeping the Danish krone in the European exchange rate mechanism and within the existing narrow bands.' As with other pro-Euro groups, Ministers also denied that the vote would have any significant impact on EMU: 'Irrespective of the outcome of the Danish referendum, the economic and monetary union is a reality and a great project for the European integration, which will ensure a sound and job-intensive growth.'

Echoing Ministers' sentiments, Romano Prodi, President of the European Commission, said in a Press Release that: 'The Danish people have confirmed that they do not want to adopt the Euro as their currency. The Commission regrets this decision and I firmly believe that a positive vote would have been in our common interest.' He also stated that the 'good results' achieved since the single currency was adopted in January 1999 'will not be affected by the Danish decision'.

In a brief Press Release, the President of the European Central Bank emphasised that 'this will not in any way affect the co-operation between Danmarks Nationalbank and the European Central Bank.'

Danish Economics Minister Marianne Jelved was reported as saying she 'could not envisage a second referendum until after general elections that must be held by March 2002.'

Other views were reported by the BBC, eCountries.com, Financial Times, The Guardian and The Independent.

The Confederation of Danish Industries issued a brief statement expressing disappointment at the outcome.

Interviewed shortly after the result was announced, UK Minister for Europe, Keith Vaz, preferred to express no opinion on it, but emphasised that the UK Government is in favour of joining a successful Euro 'when the conditions are right'. Foreign Secretary Robin Cook, writing in The Independent, said 'The Danish referendum changes nothing in Britain.'

The Prime Minister of Sweden, Goran Persson, told the BBC that he hoped 'people around Europe will perceive this as a purely Danish decision'.

However, according to Robin Oakley, CNN.com European Political Editor, the vote could signal the start of 'two-tier Europe'.

The BBC website summarises views on the implications of the Danes' decision. Their Europe Correspondent, Justin Webb, reported:

'I don't think [the Danes have] harmed the euro and I don't think they've done their own economy much good. But I do think they have done something much more far reaching. They have, in a dramatic fashion, kick-started the debate about who is in charge in Europe. In that they have done us all a service.'

Further information within European Sources Online:

European Sources Online: European Voice:
- 27.1.00: Euro time bomb ticks under Blair- 8.7.99: 'Outs' wrestle with euro dilemma- 4.6.98: Euro enters Denmark by back door- 9.4.98: A Danish 'yes' to build peace and prosperity- 30.10.97: An empty victory on control of euro- 28.11.96: Letting the public have its say- 4.4.96: Denmark walks a tightrope

The Penguin Companion to European Union (Penguin, 1998):
- Ratification
- Referendum

EMU Facts, Challenges and Policies (OECD, 1999):
- Annex I: The position of the EU 'outs' towards joining the Monetary Union

EU Law (Penguin, 1999):
- The future of the single currency

OECD Economic Outlook (OECD, May 2000):
- Developments in individual OECD countries: Denmark

OECD Economic Survey: Denmark (OECD, 2000):
- Monetary conditions facilitated the slowdown

Further information can be seen in these external links:
(long-term access cannot be guaranteed)

Daily Telegraph:
- Wonderful, wonderful Copenhagen? Daniel Hannan says that the Danish euro referendum could put Labour off calling one here

Danish European Movement:
- European Politics Daily [fee-based, but includes free summaries of articles from the last five days]

Dansk Selskab for Europaforskning:
- Pleasing the Voters or Maximising Influence? The Danish SDP and European Monetary Integration

ECountries.com:
- Central bank raises key interest rate slightly after Danes reject euro
- Danish government and central bank turn their focus on incumbent currency
- European monetary upset

European Commission: DG Economic and Financial Affairs:
- Key indicators for the euro area

European Industrial Relations Observatory Online (EIROnline), April 2000:
- Unions and employers' organisations both recommend a Danish 'yes' to EMU

European Sources Online: Financial Times:
- Euro decision has little impact on bourses

The Guardian:
- It's still yes: British Europhiles can learn a lot from the Danish defeat. Think of it as a challenge.

New Europe [Europe yes, Euro no]

Time Europe:
- On the Outside

United Kingdom: HM Treasury:
- UK Membership of the Single Currency: an assessment of the five economic tests

Further and subsequent information on the subject of this week's In Focus can be found by an 'Advanced Search' in European Sources Online by inserting 'referendum and euro' in the keyword field.

Eric Davies
KnowEurope Researcher
Compiled: 1 October 2000

In a referendum on 28 September 2000, voters in Denmark rejected joining the Euro by a majority of 6.2%. A reported turnout of 88% registered 53.1% against joining the Euro, with 46.9% in favour.