Next year’s state budget will be presented on Monday at 10.00. But in reality large parts of the budget are already known. The reason is that the government has been boasting about new initiatives for several weeks. A rough calculation shows that Finance Minister Trygve Slagsvold Vedum (Sp) and Prime Minister Jonas Gahr Støre (Ap) have leaked budget news worth over NOK 30 billion this autumn. For now, it is highly unclear whether, and if so where, there will be savings in the budget. But as this is the budget on which the two parties will go to the polls in a year’s time, everything indicates that the government will steer clear of unpopular cuts. BUDGET COMPANIES: Finance Minister Trygve Slagsvold Vedum (Sp) and Prime Minister Jonas Gahr Støre (Ap). Photo: NTB Security and economy For Vedum and Støre, two words set the tone for the 2025 budget: security and economy. In kroner and øre, the investments in police, defense and hospitals are the heaviest in next year’s budget. NOK 2.8 billion more is set aside to fight crime. The police will be strengthened with 2.4 billion, while 405 million will go to the prevention of child and youth crime. The defense budget will be strengthened by NOK 15 billion this year and next year. In addition, the framework for Ukraine support will be increased to a total of NOK 135 billion until 2030. An investment in the hospitals is also part of the government’s “security package”: the Minister of Health has announced 5.5 billion more for the hospitals in next year’s budget. The government estimates that inflation will eat up 3 percent of the grants next year. And while the billions are flying, there is one factor that smiling ministers rarely disclose, namely how many of the kroner are in reality a mere adjustment to an expected price increase of 3 per cent next year. The answer to that will come on Monday. Get an overview of all the budget leaks here Police: The government is setting aside NOK 2.8 billion more to fight crime. Of this, NOK 2.4 billion goes to strengthening the police, which will increase the budget by 10 per cent. NOK 90 million is targeted at combating financial crime. NOK 405 million goes to the prevention of child and youth crime. Of this, NOK 145 million goes to more places for minors in correctional facilities. NOK 100 million goes to emergency teams and other school environment measures. The rest goes to various other smaller projects. Personal finance: People with low and middle incomes will get lower income tax next year, but the details are not clear. The government is reducing the VAT on water and sewage from 25 to 15 per cent from 1 May next year. The full-year effect of the move is NOK 4 billion. The government will spend NOK 515 million on increasing the free card limit from NOK 70,000 to NOK 100,000. This means that you can earn up to NOK 100,000 without paying tax. The government has also announced that the inhabitants of the country’s 212 least central municipalities will have their student loans canceled by NOK 25,000 a year from January 2026, while the rate increases for Finnmark and Nord-Troms. Canceling student loans will cost approximately NOK 1.3 billion. The commuter deduction is increased, the basic deduction goes up by NOK 300 to NOK 15,250. The upper limit is increased from NOK 97,000 to NOK 100,880, and the mileage rate is increased from NOK 1.76 to NOK 1.83. Shop employees will be allowed to shop tax-free for NOK 2,000 more from their own place of work, according to the Free Trade Movement. The trade union deduction in 2025 will be increased by NOK 250 to NOK 8,250, according to Frifagbevegelse. The tax-free limit for renting out housing for less than 30 days and holiday homes will be increased from NOK 10,000 to NOK 15,000, according to Frifagbevegelse. Health: The government has promised a scheme to compensate hospitals for interest expenses and to compensate for depreciation costs. 26 million for health technology, according to the Altinget. The government promises to increase the hospitals’ budget framework by NOK 3.8 billion compared to the revised state budget for 2024. Energy: The electricity subsidy for people will also be continued next year. The government has also announced that the fixed price agreements on electricity for business will continue. The government allocates NOK 887 million for energy efficiency in housing in its budget proposal for 2025, a decrease from 2024. NOK 587 million is earmarked through Enova, while NOK 300 million is distributed via Husbanken’s grant scheme. Support ceiling of NOK 35 billion for floating offshore wind, according to DN. Climate and environment: The government is footing the bill for increased CO2 taxes on the fuel for fishing boats. In the budget proposal, the compensation for the fees is increased by NOK 153.6 million. 100 million extra for nature conservation. Defence: In the new long-term plan for the Armed Forces, a commitment has been made in the years up to 2036. The government has said that the defense budget will increase by a total of NOK 15 billion in the revised budget for 2024 and the state budget for 2025. Since the defense budget was increased by NOK 7 billion NOK in the revised budget, one can thus assume that there will be around NOK 8 billion more in the state budget. Support for Ukraine will be increased by NOK 12 billion already in this year’s budget. In addition, the framework for the following years will be increased, so that a total of NOK 135 billion will be provided until 2030. In the following years, at least NOK 15 billion will be provided annually. The Home Guard will be strengthened with 277 million in the state budget for next year. Transport: The government will spend 12 billion on the railway: 2.9 billion more to take care of the railway next year. NOK 6.6 billion more (26 per cent more than this year) will go to operation and maintenance. 5.5 billion more (38 per cent more than this year) will go to renewal. NOK 10.8 billion is set aside for operation and maintenance of national roads in the state budget. That is NOK 1.1 billion more than this year. The budget for county roads is increased by 11.4 per cent to NOK 481 million. Culture: NOK 15 million for the Norwegian Theatre. The Ministry of Culture: NOK 43.4 million in fresh funds – NOK 20.1 million from the state budget and NOK 23.3 million from tip funds – will increase the supply of literature for children and young people and contribute to an increased desire to read. 77 million for the Jewish museum in Oslo, according to Dagen. The government gives NOK 56 million to the skrei museum in Lofoten. The government has promised a direct grant of NOK 3 million to the agricultural event Dyrsku’n in Seljord in next year’s budget. Still full VAT compensation for voluntary organisations. An extra NOK 210 million has been set aside for this. Education: 60 million for the development of practical teaching schemes to strengthen learning in mathematics, reading, science and writing. 30 million for a national program for practical learning (experience bank, pilot schools). 29 million more for equipment for practical learning, a total of 160 million in 2025. 10 million for school libraries (continues the same level from the strengthening in the revised national budget 2024). Other: The government is setting aside NOK 114 million to strengthen foster homes. NOK 52 million for entrepreneurial investment, according to Adresseavisen. Increased amount limit for wage disclosure obligation from NOK 1,000 to NOK 2,000, according to FriFagbevegelse. NOK 10 million to a center that will research vocational subjects, according to Nettavisen. Promises to SV: The government has also committed to measures to be fulfilled in the budget for 2025 in the budget agreements with SV in recent years. These are among the promises that, according to the agreements, must be fulfilled in next year’s budget: The rights to dental health treatment in the public dental health service for people over 85 years of age must be strengthened. In the state budget for 2025 at the latest, the government will propose a scheme that supports the development and structural upgrading of crisis centers modeled on the Housing Bank’s scheme with investment subsidies for care homes and nursing home places. The government must set a target of 10 TWh reduced electricity consumption in the total building mass in 2030 compared to 2015 and report back to the Storting on this in connection with the state budget for 2025. In the state budget for 2025, the government must propose an ambitious support program for floating offshore wind areas in Vestavind B and Vestavind F. In the state budget, the government must provide an assessment of a possible subsidy scheme for long-distance buses on stretches without trains and corresponding commercial offers. In connection with the state budget for 2025, the government will propose to give light electric vans an exemption from traffic insurance tax, subject to notification and approval by Esa. (Source: NTB/news) Moves for better advice The government is also taking several steps in the hope of ensuring that people really have more to look forward to next year. Vedum has promised cuts in income tax for people with ordinary and medium incomes. The details of the scheme are not known, apart from the fact that the personal allowance is increased from NOK 88,250 to NOK 108,550, according to E24. At the same time, it should be possible to earn up to NOK 100,000 without paying tax next year. And from 2026, people in the rural areas will be able to have their student loan canceled with NOK 25,000 a year. A billion dollar cut in the VAT on water and sewage will also benefit the economy of most people. And people also don’t need to be overly afraid that electricity will become too expensive again in the winter: the electricity subsidy will continue in 2025. But there are above all three factors that the government has no control over, which will determine whether people will really be able to afford better next year , as the government assumes. A price increase of 3 per cent, well above Norges Bank’s target, will eat into the wallet. Another question is whether there will really be three to four interest rate cuts in 2025, as the experts assume. The last big x-factor is the salary settlement in the spring. Hardly any interest rate effect As the billions flow out of the treasury, there is every reason to believe that Vedum will have to make an even bigger dent in the oil fund next year to pay for the measures. But will increased spending put increased pressure on interest rates? Not necessarily, says researcher Thomas von Brasch at Statistics Norway (SSB). – The effect on the interest rate depends on how the money is used, he says to news. – If the money is used for increased public investment and employment, it will put little upward pressure on interest rates. But if you choose to give the money in the form of increased aid or tax relief, the pressure on the interest rate will not be particularly great, he says. – If you give NOK 30 billion in tax breaks to Norwegians over three years, won’t that lead to increased interest? – If households get tax relief, they don’t spend everything, but save some. In addition, not everything they consume is made here in Norway, a good part is imported. This savings leakage and import leakage mean that the pressure on interest rates here at home will not be very great. Increasing spending The politicians have made a rule that no more than 3 per cent of the oil fund can be used in the annual budgets. But the oil fund has become so large, and it is growing so quickly, that spending will not come close to the limit. Economists assume that spending will be well below 3 per cent, and also below this year’s level of 2.7 per cent. – I am very sure that will be lower. I have an estimate of 2.4, says chief economist at Sparebank 1 Harald Magnus Andreassen. – And the fund has risen a lot. Nevertheless, there will be room for a significant increase in the use of money in the budgets, but then far below the scope of the action rule. If Andreassen is right, around 30 billion more oil kroner will be used next year than this year. SV demands The government does not have a majority in the Storting and must therefore negotiate with SV to get the state budget adopted. SV has already announced that cheaper dentists for young people under 30 and new billions for free after-school care for fourth-graders will be high on the party’s priority list. In addition, SV will also demand action to reduce Norwegian greenhouse gas emissions, in the hope that Norway will reach its climate targets by 2030. After the budget proposal from the government is presented on Monday, SV will ask a number of questions to the Ministry of Finance about the basis of figures and calculations . The actual negotiations will start at the turn of October-November, after SV has first presented its own budget with its own priorities. The budget for 2025 must be adopted in the Storting before Christmas. Published 06.10.2024, at 12.12
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These are the leaks from the state budget – news Norway – Overview of news from various parts of the country
