Economy minister Margrethe Vestager (Radikale) is urging councils to spend more money after a new study showed that a quarter expected to come in under budget by the end of the year.

Vestager argues that council spending plas an important role supporting and stimulating the economy and that they were letting down their residents by spending less than they had agreed with the government.

“The deal with the councils for 2013 needs to be stuck to because it forms the framework for the entire economy and is important for employment,” Vestager told Politiken newspaper. “The money needs to be spent.”

In May, Vestager congratulated councils for saving 5.3 billion kroner in 2012 each to help keep a lid on public spending.

But while the councils’ budgets were allowed to grow by 3.5 billion kroner, many have continued to find savings, particularly by streamlining home care for the elderly and merging public administrations.

Dennis Kristensen, chairman of FOA, a trade union made up primarily of public sector employees, said the development was troubling.

“It’s parliament’s job to control the economy and speed it up and slow it down according to the needs of the country, but if councils choose to increase their savings too, we end up with a double austerity policy,” Kristensen said, adding that the savings could be a fear being sanctioned by the government if councils overspend.

The government and the association of councils, KL, are currently negotiating the 2014 spending plan.