Following the war, the question of Denmark’s southern border arose once again as the Danish minority in German-controlled South Schleswig called for incorporation with Denmark. The idea won strong support among the local population, but in Denmark opinion was divided. In the autumn of 1946, after the United Kingdom formally requested the Danish government to state its intentions regarding South Schleswig, all parties agreed to the October Note of 1946, which rejected any alteration of the 1920 boundary between Denmark and Germany. Once the Social Democrats, under the leadership of Hans Hedtoft, returned to power in 1947, all remaining plans to pursue the boundary question were abandoned.
Meanwhile, the Danish government had made the defense of the realm a top priority in the immediate postwar period. Denmark joined the United Nations in June 1945 and the North Atlantic Treaty Organization (NATO) in April 1949. Its military defenses were considerably strengthened by statutes passed in 1950 and 1951 and were further complemented by armaments from the United States. Denmark nevertheless rejected a request by the United States to establish air bases on Danish territory. With West Germany’s admission to NATO, Denmark succeeded in obtaining guarantees—formalized in the Bonn Protocol of 1955—for the rights of the Danish minority in South Schleswig.
A number of political reforms were instituted in the postwar era. In 1953 the constitution was substantially revised. Female succession to the throne was introduced, allowing Margrethe II to assume the throne in 1972 upon the death of her father, King Frederick IX. In addition, the new constitution reduced the national legislature to one chamber, the Folketing, whose membership was increased to 179—including two seats for Greenland and two for the Faroe Islands. All members of the Folketing were to be elected based on proportional representation, thus making a wide spectrum of political parties possible. On the other hand, it became almost impossible for any one party to secure an absolute majority. As a result, subsequent governments have tended to be either minority governments or coalitions of two, three, or even four parties.
The postwar political scene was dominated by the so-called “old” parties: the Conservative People’s Party (Konservative Folkeparti), the Left (known after 1964 as the Liberal Party), the Radical Left, and the Social Democratic Party (which remained more leftist in its outlook than the so-called Left parties). However, a number of smaller parties also gained influence and complicated the political situation.
The Social Democratic Party was the leading party of the 1950s, ’60s, and ’70s. From 1953 to 1968 it was in power, either alone or in coalition with the Radicals and, for a short period, the Justice Party (Retsforbundet; a party based on the ideas of the economist Henry George), and always with a Social Democrat as prime minister. The major results were new tax laws, particularly the institution of a general value-added consumer tax as well as a new type of income taxation that deducted taxes from income as it was earned rather than at a later date. This kind of income taxation enabled the government to stimulate or restrain spending by lowering or raising the level of taxation.
In the 1968 election, the majority shifted to the right. The Radical Left’s leader, Hilmar Baunsgaard, deserted the Social Democrats and headed a coalition with the Conservatives and the Liberals (the Left) until 1971, when Jens Otto Krag again formed a Social Democratic government.
Krag unexpectedly resigned in 1972, leaving the post of prime minister to Anker Jørgensen, who had to call an election in November 1973. An electoral landslide resulted in heavy losses for the four “old” parties and the emergence of three new parties: the Centre Democrats (Centrum-Demokraterne), the Christian People’s Party (Kristeligt Folkeparti), and the Progress Party (Fremskridtspartiet), an antitax party. A weak minority government under Poul Hartling of the Liberal Party tried to solve the country’s growing economic problems, but his austerity program resulted in protests from trade unions and the opposition. In 1975 Jørgensen again came to power (from 1978 in coalition with the Liberals), rejecting support from the left-wing Socialist People’s Party (Socialistisk Folkeparti), which opposed Danish membership in NATO.
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The end of the 1970s brought a deteriorating economic situation and the political system’s inability to reach a consensus on measures to solve the problems. Increased indirect taxes to reduce the foreign debt and the deficit on the balance of payments met with strong opposition from the trade unions, many of which staged strikes and demonstrations; in 1979 Jørgensen was again forced to resign. After the election in October, however, he formed a Social Democratic minority government, which introduced what was called the most stringent wage-and-price-freeze program since World War II.
After a new general election in December 1981, the voting age having been reduced from 20 to 18 following a referendum, Jørgensen again lost seats in the Folketing, but he continued as leader of a weak minority government that faced many problems, especially high unemployment, which had risen to about 10 percent. He was once more forced to resign—this time, however, without an election—in September 1982. The leader of the Conservative Party, Poul Schlüter, formed a minority government with three other centre-right parties: the Liberals, the Centre Democrats, and the Christian People’s Party. Together, they had only 66 seats in the Folketing.
The Conservatives remained in power through the 1980s and into the 1990s. Schlüter, the first Conservative prime minister since 1901, introduced a counterinflationary and economic recovery program that yielded results in 1985–86, but the country’s foreign debt and balance-of-payments deficit continued to cause serious concern during the 1980s. Schlüter was consequently forced to call several general elections (1984, 1987, 1988), carry out government reshuffles (1986, 1987, 1988, 1989), and threaten to call elections or resign. He survived 23 no-confidence votes concerning foreign and defense policy, brought by the Social Democrats in tactical attempts to force him from office.
When Schlüter reshuffled the government in 1988, he incorporated the Radical Left and excluded the Christian People’s Party and the Centre Democrats. The coalition government came under greater pressure from the left-wing Socialist People’s Party and the right-wing Progress Party, both of which gained seats in the Folketing at the end of the 1980s; the Progress Party advocated substantial cuts in the public sector and a more restrictive policy toward the dramatically increased number of refugees. It was a scandal over Tamil refugees that forced Schlüter’s resignation in 1993 and brought a coalition government under the leadership of Social Democrat Poul Nyrup Rasmussen to power.
While the postwar period saw its share of economic difficulties, it was also a time of an overall rise in the standard of living. During the early 1950s the Danish economy suffered a large deficit in the trade balance, but the situation improved later in the decade as the result of lower import prices for raw materials, a considerable increase in industrial production, and the stabilization of prices for agricultural export products. The period from 1957 to 1965 saw rapidly rising prosperity. Within the framework of the Organisation for European Economic Co-operation, Denmark, during the 1950s, abolished most of the regulations that had restricted its foreign trade, and it was one of the founding members of the European Free Trade Association in 1959.
During the 1960s, however, the balance-of-payments deficit became larger, and the government was forced to intervene in an attempt to control rising consumption. This was done by instituting the value-added tax, by compulsory savings, by intervention in labour conflicts, and by the regulation of wages and prices. Nevertheless, economic problems worsened in the 1970s. The various Danish governments attempted to impose stringent measures, such as harsh savings programs, but strong opposition to some plans led to the dissolution of the Folketing on several occasions. After 1973, rising oil prices and the international recession badly affected the Danish economy and led to a dramatic increase in unemployment.
In 1972 Denmark was offered membership in the European Economic Community (EEC; later the European Community, which was embedded in and ultimately replaced by the European Union). In a referendum that year, 63 percent of Danish voters approved EEC membership, which became effective on Jan. 1, 1973.
Austerity measures introduced by Prime Minister Schlüter in the early 1980s led to lower inflation, recovery in business confidence and investments, growth of employment in the private sector, and increasing economic activity. It proved difficult, however, to eliminate the budget deficit, and in 1986 the government was forced to increase energy and payroll taxes and to impose new austerity measures to curb private consumption, stimulate saving, and make private borrowing less attractive. The early 1990s brought a gradual recovery in the Danish economy, including a balance-of-payments surplus, despite the general European recession.