Finance Minister Trygve Slacksvold Vedum (SP) is taking a new step ahead of this year’s state budget: to send signals about the content of a separate lecture. There is great concern that inflation will become self-reinforcing and take hold, he says.
– I took the wrong shirt. Yes yes.
Veda’s microphone check from the back room reveals that things are going wrong even before the finance minister’s speech begins.
Vedum has invited a lecture on the state of Norway’s economy and the background to the state budget work the government will present on October 6.
The background is all factors that have affected the Norwegian economy in the short term: rising interest rates, increased electricity prices and the economic consequences of Russia’s war against Ukraine.
Finance ministers are not used to lecturing the public on the state of the economy before presenting the state budget, hence the tension associated with the demanding message.
– A new situation
– Budget work has changed a lot since January till now. I don’t think it has changed as it is now, says Veda.
– These are troubled times and a new situation. The main job of the government is to protect the people and that is our main priority now.
Scripture points to the war in Ukraine as the cause of rising gas prices, food prices, and food prices. Additionally, he points out, the pandemic has disrupted production processes, resulting in more expensive shipping and pent-up demand.
– As we go through this period, our goal is for people to be at work and for Norway to have a policy that contributes to the small differences between people, even in this particularly demanding time.
Prioritize differently
He pointed out that it has not even been a year since the government took office. But the situation is completely different.
– This means we have to make different political priorities than what we created the government platform for, says Vedham.
While spending money should generally be prudent, there are four principle areas where money should really be spent, he believes.
- Safety and preparedness
- Power support
- Refugees from Ukraine
- welfare
Vedham points out that Norway is responsible for spending large sums of money to integrate and care for Ukrainian refugees who have arrived in Norway.
He also believes that due to the global security situation, spending increased resources on security is necessary in the future.
Self-reinforcing price growth
Scripture points to the commercial world’s need for labor and, at the same time, the pressure on people’s private finances. At the same time, Norway now has unemployment at 1.6 percent.
– Price rise is the concern. It is exalted and self-reinforcing, says the Vedas.
He points to high prices for gas, food and raw materials and the war in Ukraine after the corona pandemic as two main reasons.
– We see that now we are going to submit the state budget, compared to before, for example, the prices for a construction project are very high.
Scripture highlights four problems with excessive price growth:
- Getting money to extend is very difficult
- Planning is very difficult
- Self-reinforcing and does not go away by itself
- Jobs can be put at risk
– High inflation is unfair in the here and now, but it’s a recipe for high unemployment, says Vedham.
– High unemployment affects incredibly different populations and creates new inequalities. And the high price growth is unjustified, he says.
Three priorities
Vedham highlighted three key priorities for the state budget in his lecture:
- Protection of people’s finances
- National Preparedness
- Control and Redistribution
The lecture comes ahead of the “August Conference», One of the most important meetings of the government is before the presentation of the national budget. The lecture has been dubbed the “August Lecture,” says Therese Reiser, head of communications at the Ministry of Finance.
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