"But the government's economic policy is still on track and we have no plans to change it," Prime Minister Anders Fogh Rasmussen told reporters following a cabinet meeting.

Denmark "has a solid budget surplus and current account, so there is no need to make dramatic changes to the economic policy," he said.

"In the meantime we are naturally following the situation very closely, and we will not hesitate to intervene if we judge it necessary in the event that unemployment registers a dramatic rise," he stressed.

The rate of unemployment was 5.7 percent in February.

Rasmussen's announcement came on the heels of similar comments by Finance Minister Thor Pedersen to financial daily Boersen on Tuesday.

He said that the war on Iraq, the economic crisis in Europe and the general slowdown of the global economy would lead the government to revise downwards the forecasts, which will be published on May 27.

The Organization for Economic Cooperation and Development (OECD), which is to publish its report on Denmark on April 23, is also expected to revise downwards its growth forecasts for the Scandinavian country from 2.0 to 1.6 percent, Boersen said.

Nordea bank chief economist Helge J. Pedersen said the revision does not bode well for the government's plan to create 85,000 new jobs by 2010.

SPACE.WIRE