Denmark scraps public holiday to finance higher defence spending

COPENHAGEN (Reuters) - Denmark's parliament on Tuesday passed a much-debated bill put forward by the new government to scrap a public holiday to help finance increased defence spending.

The newly formed government, which has proposed sweeping reforms aimed at overcoming challenges to the country's welfare model, says the move will help raise tax revenues for higher defence spending in the wake of the Ukraine war.

Labour unions have protested a plan to abolish the Great Prayer Day, a Christian holiday that falls on the fourth Friday after Easter and dates back to 1686, since it was put forward in December.

The government also agreed to accelerate defence spending following increased geopolitical uncertainty after the sabotage of two pipelines carrying gas from Russia to Germany through Danish waters.

Denmark will aim to meet a NATO defence spending target of 2% of GDP by 2030, three years earlier than planned. The government says most of the extra 4.5 billion Danish crowns ($639 million) needed to meet the target will be covered by the higher tax revenues anticipated from abolishing the holiday.

Unions, opposition lawmakers and economists have questioned the effect of the proposal, but the majority-government passed the bill with 95 votes in the 179-seat parliament.

($1 = 7.0478 Danish crowns)

(Reporting by Jacob Gronholt-Pedersen and Nikolaj Skydsgaard, editing by Terje Solsvik)