April 20, 2018 / 8:58 AM / a month ago

UPDATE 1-Risk of strikes hurts Danish consumers' optimism

(Adds context, analysts)

COPENHAGEN, April 20 (Reuters) - The risk of major public sector strikes next month seem to have worsened Danish consumer confidence in April, analysts said on Friday.

An index of consumer confidence in the Nordic country fell to 7.1 in April, the lowest this year, from 8.5 in March.

“A likely cause of the weakened optimism may be found in the growing risk of a major (labour) conflict that will affect a very large proportion of the Danish population,” Handelsbanken’s chief economist Jes Asmussen said in a note.

After months of negotiations, unions and employers were on Wednesday given a final May 1 deadline to try and reach a wage agreement.

If they do not succeed, 100,000 public employees may strike a week after that, and 440,000 could be locked out from May 12.

There are 750,000 public employees in Denmark, which has a population of 5.7 million.

Denmark has one of the world’s largest public sectors as a share of the total workforce, according to OECD figures.

Danske Bank said the lower consumer confidence could be an indication that the risk of a labour conflict has made the Danes less optimistic about their own economy.

The direct impact of the strikes would be around 5 billion Danish crowns ($830 million), or 0.3 percent of the gross domestic product, per week, according to Danske Bank.

As consumers’ mood usually goes up over the spring the seasonally adjusted drop is actually to 5.9 percent from 8.8 percent, Handelsbanken’s Asmussen said.

Unions and employers began a new round of wage talks Friday morning, and they had been told to bring their toothbrushes as they could face very long negotiations, one of the negotiators told broadcaster TV2 News.

The monthly consumer confidence survey asks a cross section of the population its views on current personal and national economic trends, along with consumer intentions for the coming months.

The respondents answer on a scale between plus 100 and minus 100 with 100 being “much better”, 50 being “slightly better”, 0 being “unchanged”, minus 50 being “slightly worse” and minus 100 being “much worse”. ($1 = 6.0325 Danish crowns)

Reporting by Teis Jensen; Editing by Toby Chopra

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