Norway’s Finance Minister issues warning for 2021: “We are still in the middle of a crisis”

The Finance Minister’s main concerns for 2021? The high unemployment that is taking hold, a wave of bankruptcies in vulnerable industries, and young people sitting in isolation. 

“When I took over as Minister of Finance, employment was on the rise. Unemployment was low and declining. The growth was good,” Minister of Finance Jan Tore Sanner told news bureau NTB.

Since the shutdown, almost everything has been about ensuring that the Norwegian economy recovers from the pandemic.

“It is strange to have been Minister of Finance for one year and feel as if it lasted several years. I have presented seven crisis packages, in addition to the budgets,” the Conservative Party veteran Sanner stated.

Best in class – almost

Sanner can now celebrate an important partly win. According to a recent OECD report, only two countries in Europe had a smaller fall in the economy than Norway in 2020, namely Lithuania and Turkey.

“But even though Statistics Norway estimates a growth of 3.7% in 2021, we are still in the middle of the crisis. The fall in 2020 can be recovered during 2021, but we will still be lower than we would have been without the pandemic,” he stated.

“This means that the pandemic will affect the Norwegian economy for several years to come. We can’t say that it is over now,” Sanner added.

“When I can still say that I am optimistic, it is because we have managed to keep control of the infection, we have managed to keep the activity up, even though many industries and companies are hard hit.”

Sanner believes the key has been that Norway has prioritized health first. 

The countries that have prioritized reducing infection have also managed to bring up activity in the economy faster.

Hopes for 2021

The hope for 2021 is that mass vaccination will eventually defeat the pandemic. The forecast is that it will provide strong economic growth and consumption, as most Norwegians will have a lot of money to spend when society reopens.

The Minister of Finance nevertheless urges caution and raises three main concerns:

1) Unemployment. In December, 193,300 people were completely unemployed, partially unemployed, and job seekers at the Norwegian Labour and Welfare Administration (NAV).

2) Bankruptcies. A wave of bankruptcies among companies that were in a weak position into 2020 and that have taken out large loans. 

3) Norway’s youth. Young people have paid a high price during the pandemic, with a lot of isolation, attending school from home, and digital study time alone at home and in the dormitory.

Sanner pointed out that many teachers and volunteers have gone much further than one might expect.

“Still, I sit with a lump in my stomach at the beginning of 2021 because we know that many young people have paid a high price,” he noted.

More crisis help

This year, the government has spent an extra NOK 130 oil billions on crisis management. Next year, NOK 40 billion has been set aside for temporary coronavirus measures, on top of a budget that is geared towards creating activity in the economy.

And there will be more, Sanner guarantees – he just still doesn’t know how much. 

The pandemic’s unpredictability means that the government is planning for different scenarios from March 1, when the current broad compensation scheme expires.

Sanner emphasized that compensatory measures should be used when strict infection control measures lead to a shutdown of the economy.

“But when we start easing the infection control measures, there are other types of measures that are correct and important. Then it is the activity that must be stimulated,” he concluded.

© NTB Scanpix / #Norway Today