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The government’s “economic weather forecast” for 2020 (revised national budget) is clear. The most important figures of the revised national budget were presented at 08:00 on Tuesday morning, a few hours before the budget was known.
These are some of the key points of the budget:
The Government’s proposal for a revised national budget must be considered in the Storting, and the proposals can be modified.
Ole Erik Almlid, NHO CEO, believes that government proposals targeting the oil, gas and supply industries are not enough to trigger activity and secure Norwegian jobs.
“Without more reliable aid to the industry, pioneering companies, climate initiatives and jobs across the country are at risk,” he says.
– In addition, politicians should prioritize lowering taxes on working capital, start carbon capture and storage projects, and ensure increased skills in collaboration with companies and industries.
Substantial increase in the use of oil money
The government proposes to spend NOK 419.6 billion on the state budget for 2020. This corresponds to 4.2 percent of the Norwegian Petroleum Fund, an increase of NOK 174.4 billion from last year.
The action rule allows three percent of the fund to be used each year over time, but allows the government to overcome this in times of crisis.
The use of oil money is reported as the structural deficit corrected for oil. This figure has been adjusted for better or for worse in the Norwegian economy, while the actual figure for the use of oil money this year is NOK 479.6 billion.
Track retracement from four to seven percent
The Finance Ministry estimates that the Norwegian economy will decline by 4.0 percent this year, which would be the worst recession since the war.
But it is warned that recovery will take time.
“Value creation in the continental economy is projected to fall 4 percent this year, and there is a risk that the decline will be greater,” the ministry writes.
The report also states that they estimate growth of between four and seven percent in 2021, depending on the extent of the pullback.
“The projections in these reports are based on a purely technical assumption that the dire situation in Norway will last for three months and that the economy will recover quickly,” the report said.
The highest unemployment rate in 75 years.
The ministry forecasts an unemployment rate of 5.9 percent, which will be the highest level in 75 years.
“An expected increase in activity is expected to lead to a drop in unemployment during the current and next year. There is considerable uncertainty associated with the strength of the rebound in economic growth. We consider it likely that registered unemployment could drop below 4% of the workforce over the course of six months. […], “The revised national budget establishes.
The budget boost, which indicates whether budgets help gas or slow the economy, is estimated at 5.1 percent.
“This is significantly higher than when the budget was presented last fall (-0.2 percent). In order to limit the effects of the virus outbreak on the Norwegian economy, very broad economic measures have been implemented in various ways, ”states a government press release.
Abrupt drop in oil revenues
The price of oil has fallen sharply in recent months, and now the Ministry of Finance believes that the price of oil will remain low throughout the year. In the revised national budget, they forecast an oil price of $ 33 this year, according to documents DN has accessed.
The historic drop in oil prices is suffocating the state’s oil revenues.
The Ministry estimates that oil revenues will be NOK 125.8 billion this year, a decrease of NOK 157.4 billion from last year.
Low wage growth
In the revised national budget, the government estimates that the average annual salary growth will be 1.5 percent from 2019 to 2020 according to the documents to which DN has access.
This is much less than the government predicted when the state budget was presented last fall. Later, the government estimated a wage growth of 3.6%.
Introduce the salmon tax
The much-discussed basic interest tax in the aquaculture industry, which was proposed by a government-appointed committee, is not included in the government’s revised national budget.
Instead, the government opens a tax on salmon, trout, and rainbow trout in the state budget for 2021.
The tax is set at NOK 0.40 per kilo of fish produced, which is estimated to provide around NOK 500 million annually in higher income for the municipal sector. The tax proceeds will be distributed to aquaculture municipalities and county municipalities.
Practically, the plan will be introduced as of January 1, 2021, but will be paid as back taxes in 2022.
Own reimbursement scheme for tourist packages
In the revised national budget, the government is proposing a new scheme for granting state-subsidized loans to tour package organizers that should start between March 14 and June 14, 2020.
The plan, which was presented in a revised national budget, will be administered by Innovation Norway and will receive a NOK 2 billion cap, as well as a loss provision of NOK 1 billion, the Ministry of Trade and Fisheries writes in a statement from press.
Of course, this is because several trips had to be canceled as a result of the crown pandemic. The plan must be administered by Innovation Norway, and applies to tour packages and compound events, such as a cultural event in combination with hotel accommodation.
– We want to help consumers reimburse their money from tour package operators for cancellations due to the virus outbreak. With this scheme, it will be easier for tour package operators to return money to consumers, Commerce Minister Iselin Nybø said in a press release.
Will extend the layoff scheme
Regarding the revised national budget, the government is proposing to extend the period of exemption from the employer’s payroll obligation during layoffs and the period of unemployment benefits for layoffs.
Therefore, companies are not billed for the layoff period until November, which can prevent them from having to lay off employees.
Since March 12, when many of the most comprehensive measures to limit the spread of the corona virus were implemented, a total of 433,900 applications for unemployment benefits have been received. Of these, 378,800 daily allowances are applied for layoffs.(Terms)Copyright Dagens Næringsliv AS and / or our suppliers. We want you to share our cases using a link, which links directly to our pages. Copying or any other use of all or part of the content may only be made with written permission or as permitted by law. For more terms see here.
