The government is tightening up a bit in today’s proposal for the State Budget. The key figures, which were released at 8 o’clock this morning, show that we are now in a period where the Norwegian economy needs tightening. In short: things are going well in the Norwegian economy. To measure how much the authorities are now slowing down, one looks at the figure for budget impulse – which shows whether budget policy contributes to higher or lower activity in the economy. In today’s revised budget, it is -0.6 – a fairly moderate tightening. Norway therefore spends less money than in a normal situation. High activity “Activity in the Norwegian economy is high. Employment has increased sharply, a record number of people are in work and unemployment is low,” the government writes in its proposal. A major challenge for the government in this budget, however, is to get the people on board. In August this year, Finans Norge presented the expectations barometer for the third quarter. It shows that Norwegians’ expectations of their own economy have fallen to a record low level. The measurement has not shown such a low level since the measurements started 30 years ago in 1992. It is nevertheless not too difficult to point out the obvious reason for this. The inflation. From being a word that was hardly used just a few years ago, the vast majority of people have learned what it means. That prices rise over time. Now they rise even more. Eating away at the people And it eating away at the people. Food prices are rising at a high pace. The price of basic things like petrol and electricity as well. It gives great pessimism, and less left in the wallet. The contrast is stark to our well-stocked accounts during the pandemic, where interest rates plummeted to zero and we spent our travel budgets on tents and primus. When the wallet feels thinner, it is easy to forget that we are actually in what is called a “boom” in the Norwegian economy. Unemployment is at 1.6 percent. The last time it was in 2008. Before that was in 1988. There is historically high pressure in the labor market. Perhaps the most important political variable in Norway is precisely unemployment. Still, people are extremely concerned. It’s a weird situation. Crisis or not? So, is it a crisis or is it not a crisis? Will there be a crisis? We are far from a crisis for the time being, although there has been a shift in the Norwegian economy. Central bank governor Ida Wolden Bache said in connection with the interest rate meeting at the end of September that “there are clear signs of a turnaround in the Norwegian economy”. In the analysis Monetary policy report, which comes out four times a year, Norges Bank now writes that “the turnaround in the economy has come somewhat faster than we envisioned in the previous report, and seems to be more marked”. Large gaps Something that is also striking are the large gaps in the government’s forecasts and Norges Bank’s. The government is far more positive than the experts at Bankplassen. The government predicts an unemployment rate of 1.7 per cent next year, Norges Bank 2 per cent. The government predicts a price increase of 2.8 per cent next year, Norges Bank 4.5 per cent. The government predicts growth in the economy of 1.7 per cent next year, Norges Bank a fall of 0.3 per cent. One of the reasons for the large deviations is that the government’s forecasts were locked on 1 August, and did not, among other things, take into account the strong price increase in July. The deviations also say a lot about the uncertainty the forecasters face. Can the high inflation be overcome, through interest rate increases and tighter public budgets? Will the austerity eventually result in higher unemployment. These are the key questions going forward, the answers to which will affect us all. Safety valve for spring It is not entirely easy to put forward a budget that is adapted to the economic situation we are in. Even when unemployment is at a crisis low, many people want more. That is the joy, and the challenge, of having large sums on the books. The government still has a safety valve, should the picture look less pleasant when spring arrives. In May, they revise the state budget, and have the opportunity to change course. Many would argue that there is nothing that pleases politicians more than the prospect of a recession, because then they can spend money.
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Raise your hand who has good finances right now – Speech
