THE PRIME MINISTER’S OFFICE (VG) Prime Minister Jonas Gahr Støre (Labor Party) says he understands the concern that rising prices and the war in Ukraine bring with it, but warns against pumping out billions in oil to compensate for inflation.
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At the same time, he goes to great lengths to state that the economic situation is now completely different than when the Hurdal platform was made in October – and that promises from there must be put on hold when defense and preparedness are to be prioritized.
– What is at the top of my list now is safe financial management, Støre says to VG.
There will not be much free time this weekend, he confirms. It’s Friday afternoon, and Støre’s closest employees are eating buns in the foyer of the Prime Minister’s office. Together, they will spend the weekend preparing for Monday’s budget conference.
– I do not want you
The main lines for the 2023 budget will be laid there. At the same time, the world, and the economy, are changing rapidly. Food, electricity and fuel have become significantly more expensive, and the war in Ukraine makes the future more uncertain. Both for the state and the households.
– I understand well that people are worried about the wallet now, says Støre.
– It is a priority for this government to stand up for people with low and ordinary incomes. If we do it wrong, then we may end up with the opposite result, namely that it affects ordinary people with medium and lower finances. I do not want yours.
–Wrong choice
In line with galloping electricity, oil and gas prices, government revenues have risen sharply. But it is wrong to think that we can use the large extra income to stem the negative effects for people and companies, says Støre.
– We must make choices, and not fall for the temptation to spend big money wrong, in ways that will affect ordinary people, and especially those with the weakest finances.
– What could be an example of a wrong choice?
– Now the Norwegian economy has high activity and low unemployment, with pressure on prices and wages. A wrong choice now is if we think that temporary high income that comes to the Norwegian pension fund can be used into the Norwegian economy now.
–Fear interest rate hike
– We have good knowledge that two things will happen: The first is that interest rates will rise faster. For an ordinary family, with a little over four million in loans, this can mean more than 30,000 kroner in increased interest rates a year. It is a bigger bang than increased food prices or fuel prices, and we must avoid that, warns the Prime Minister.
He also points out that the krone may come under pressure.
– The second is that if we press too much on the gas, it will strengthen the krone exchange rate. It will affect Norwegian companies that compete internationally.
– Let’s tell the truth
Støre also warns against looking blindly at the increased income.
– Let’s tell the truth about Norway’s increased revenues. What is true is that we get income when energy prices go up quickly. But Norway is a nation that has a pension fund that notices the other side of this, namely that the securities markets are falling, he says and adds:
– As of today, it is difficult to say how this calculation ends up. Since the new year, the pension fund has lost up to NOK 1,000 billion.
Therefore, Støre will hold back from the many well-meaning proposals to spend the NOK 1,500 billion that Norway is estimated to earn due to increased oil prices as a result of Russia’s invasion of Ukraine.
The Green Party will give everything to Ukraine in particular, while Støre’s own climate and environment minister Espen Barth Eide (Labor) will spend the staggering profits on green conversion.
– Many of the suggestions are good, and the suggestions can be nodded to one by one. But the sum can end up affecting people’s finances, and that requires that we place great emphasis on being responsible, Støre answers.
–Postpone promises
In the Hurdal platform from October, the government presented a number of promises and initiatives for the next four years.
But: As in previous government platforms, Støre & co. “Secured” by entering the following wording:
“The extent to which we succeed in achieving the goals will depend on the economic room for maneuver.”
– Are we already there that you see that much of what is in the platform becomes demanding?
– It is a good and ambitious platform with goals that extend to 2025. But when we are where we are today, it will be the government’s responsibility to ensure safe financial management. Then there are some investments we have to push on. It is inevitable.
– Do you know anything about which ones?
– I have an idea about it, but we will do it in a good and social way, says Støre.
He highlights preparedness and security as areas in which the government must spend more money in the future than what was envisaged when it sat on Hurdal in October.
– When we have war in Europe, we must consider new challenges as a result and find room for necessary investments in our budgets. These include preparedness and security, and the help we must give Ukrainian people fleeing war.
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