Despite the fast-paced economy, economists say it will not be easy to deal with a sharp rise in prices, according to Finance Minister Dryway Sloxvolt.
– There is no doubt that he is in a very dire situation, says Hystein Dørum, chief economist at the NHO.
After Norway wakes up from a price shock on Tuesday morning, he mentions the role of Finance Minister Trigway Sloxwold (SP) in submitting his revised national budget on Thursday:
Numbers from SSP Prices were 5.4 percent higher in April than in the same period last year. Inflation has not been high since 2008.
The question now is what action the finance minister will take to delay growth.
According to Dorum, the answer cannot be that the government puts too much money on the table.
The reason: Lack of money is not the problem. Rather.
– Although the horizon has become much darker in recent months, now things like laughter are happening in the Norwegian economy. The economy is at a boil – probably over – and manpower is scarce in all industries.
The war in Ukraine has pushed up prices. In addition, higher activity and lower unemployment at home can lead to higher wages and higher prices – that is, higher inflation.
– Dørum says there is a risk that further public money will pay into such an economy, further raising wages and prices.
In an interview with VG on Tuesday, The government’s most important contribution to consumers is a budget that does not yet put pressure on electricity support and interest rates, they said. He pointed out the reason for the government to reconsider before introducing new measures: Norwegian families are at the top of the world in debt.
– Unfortunately Norway is also one of the countries on the stage when it comes to how much debt you owe a family – an average of 3.4 million. If you know how important interest rates are for many Norwegian families, it is important that the Norwegian government is concerned about not doing more to create more pressure on interest rates, Vedam said.
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– Stumbling block
Inflation is now much higher than economists had anticipated and is higher than Norges Bank’s target. This would mean a rapid rise in interest rates to slow growth.
Therefore, Ola H., Professor of Economics at the Norwegian School of Management (NHH). Gritton, do not believe that more money is the right medicine.
– If the interest rate rises, the effect decreases. This is a terrible stumbling block, he says.
Another challenge, according to Gritton, is that the government has already spent too much money.
– So it’s hard to imagine that they will have a lot of structures to go through, he says.
Dørum also points out that spending has increased by NOK 60 billion since the budget was adopted, even before the agricultural settlement.
– If this is not covered up, the use of oil money will be on par with the epidemics of 2020 and 2021 this year, which will be exceptional years in government spending.
Avoid interest rate pressures
The Finance Minister said that the most important contribution of the government to the consumers is the budget which has not yet put pressure on electricity support and interest rates. VG to Mars.
Not least, because with an average debt of 3.4 million, Norwegian families are number one in the world.
What options does the role have to reduce the pressure on the economy?
– A check can be handed over
The government has Already signaled There may be fewer public road and construction projects than expected in the future.
Jan Ludvig Andreassen, chief economist at Eika Gruppen, believes public-speaking buildings that cost a lot of money should be cut down.
– Then he says you will control the growth of the economy and free up labor, and points to a new government quarter worth nearly 40 billion kroner.
But what about the electricity bills of ordinary people?
Andreassen believes it’s time to use creativity – after all, we live in a time of war.
– Do not subsidize the use of scarce goods. Only then will there be an even greater shortage. But you can do something, like giving homes electricity, like giving a check for a thousand kroner to the x number, he says.
– But will it not affect inflation and interest rates?
– Yes, but the chief economist says it is small and temporary.
– Now the most important thing is the lack of electricity. Homes need to accelerate and use less electricity. The only way we can force them to do that is to have higher electricity prices. But some also become poor, and we can resist it by giving them a check.
Andreassen believes it is important not to lose hope, even though for many it will be a year of financial need.
– Norway is a rich country and has become rich during the Corona and war. It will get better over time. All storms will eventually calm down, he says.
Gritton fears the government will not tighten enough on Thursday’s revised national budget.
– Then prices will rise and interest rates will rise. It is again beyond the purchasing power of the people.
– What would you do if you were the Minister of Finance?
– I will say, listen here folks: this will be a tough time. We need to tighten, and expect prices and interest rates to stay a little lower to keep people from rising further. If so you need to explain why you prioritize, he says.
Want to find millions
Dørum believes the government understands that they need to cut costs.
– In the middle of a budget year, it’s about where in the world you’ve going to find billions to make up for it, he says.
Earlier, NHO Deputy CEO Anniken Hauglie proposed that the government increase revenue by introducing VAT on electric cars and non-life insurance. They also suggest that the judiciary reform of the previous government and the reversal of district affiliation should be abandoned.
– Is that enough?
– This may not be enough, but Doram says we need to do things smarter.
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