underskud

Underskud is the Danish term for a deficit, describing a situation where expenditures exceed revenues, resulting in a negative balance. The concept is used across contexts, including personal finance, corporate accounting, and especially public finance, where it denotes a fiscal shortfall within a given period. In government budgeting, underskud means that annual spending surpasses tax receipts and other revenue.

Public sector underskud can be categorized as cyclical or structural. A cyclical underskud occurs during economic downturns when revenues fall and welfare or stimulus spending rise. A structural underskud persists even when the economy operates at or near full capacity, reflecting a longer-term imbalance between spending programs and revenue streams. The primary deficit is a related measure that excludes interest payments, focusing on current fiscal activity before debt service.

Deficits are typically financed by borrowing, which increases public debt. While borrowing can smooth spending and support investment, persistent underskud can lead to higher interest costs, constrain future policy options, affect credit ratings, and, if monetized, influence inflation. In households or companies, sustained underskud implies drawing from savings or using credit, which can lead to debt problems if not corrected.

Policy responses to underskud commonly include revenue enhancements, expenditure controls, or growth-stimulating measures to improve the deficit over time. In macroeconomic and fiscal reporting, underskud indicators help assess fiscal sustainability and inform policy decisions.