Norway’s budget balancing act will be harder to follow in decades ahead, warns report

Dark clouds may be forming on Norway’s financial horizon due to an ageing population and diminished income from oil and gas, according to a new report released on Friday. But the government remains optimistic about the country's future.

Norway’s budget balancing act will be harder to follow in decades ahead, warns report
Photo by Elwin de Witte on Unsplash

The government on Friday published its Long-term Perspectives on the Norwegian Economy. The White Paper, published and presented to parliament every four years, outlines the key expected developments and challenges Norway will be facing in the next 40 years.

The report stresses that while expenses are estimated to increase in the decades ahead, revenue will trail behind. The reasons are linked to a steadily ageing population, diminishing growth in the sovereign wealth fund and waning income from the fossil fuel industry, which Norway relies heavily on.

“While today there are four people in work for every person retired, this will have dropped to two by 2060,” said Minister of Finance Jan Tore Sanner in a statement.

“This means increased expenses associated with pensions and health and care services, without a corresponding increase in tax revenue. In addition, income from the oil and gas sector will decline,” he added.

The White Paper projects that low oil prices may mean 50,000 to 90,000 fewer jobs in the sector in the next ten years.

Norway’s Prime Minister Erna Solberg says the government is planning on tackling these issues through increased private sector growth.

“The government’s most important strategy is getting more people to work. In order to do this, we need more private sector jobs and we have to ensure that people can participate,” she said.

“A strong, diverse and green business sector is crucial to secure jobs for people and solid growth in our standard of living in the time ahead,” Solberg said.

Yet the government stresses that Norway is well prepared to tackle the challenges ahead.

“Norway has the best starting point to manage these issues,” said Sanner. “We have a high degree of trust in our society, we have advanced far in the digital transformation and we have relatively high rates of employment, low unemployment and a well-functioning work sector.”

The reassurances by Norway’s ruling Conservative Party have been met with scepticism by some members of the opposition.

“We must and can expand the welfare state, if we redistribute from private wealth to public welfare,” said financial spokesperson for the Socialist Left Party, Kari Elisabeth Kaski.

“We can afford this if we get an economically responsible party at the helm, rather than the Conservative Party,” she added.

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Could Oslo-Copenhagen overnight train be set for return?

A direct overnight rail service between the Norwegian and Danish capitals has not operated since 2001, but authorities in Oslo are considering its return.

Norway’s transport minister Knut Arild Hareide has asked the country’s railway authority Jernbanedirektoratet to investigate the options for opening a night rail connection between Oslo and Copenhagen.

An answer is expected by November 1st, after which the Norwegian government will decide whether to go forward with the proposal to directly link the two Nordic capitals by rail.

Jernbanedirektoratet is expected to assess a timeline for introducing the service along with costs, market and potential conflicts with other commercial services covering the route.

“I hope we’ll secure a deal. Cross-border trains are exciting, including taking a train to Malmö, Copenhagen and onwards to Europe,” Hareide told Norwegian broadcaster NRK.

The minister said he envisaged either a state-funded project or a competition awarding a contract for the route’s operation to the best bidder.

A future Oslo-Copenhagen night train rests on the forthcoming Jernbanedirektoratet report and its chances of becoming a reality are therefore unclear. But the Norwegian rail authority earlier this year published a separate report on ways in which passenger train service options from Norway to Denmark via Sweden can be improved.

“We see an increasing interest in travelling out of Norway by train,” Jernbanedirektoratet project manager  Hanne Juul said in a statement when the report was published in January.

“A customer study confirmed this impression and we therefore wish to make it simpler to take the train to destinations abroad,” Juul added.

Participants in the study said that lower prices, fewer connections and better information were among the factors that would encourage them to choose the train for a journey abroad.

Norway’s rail authority also concluded that better international cooperation would optimise cross-border rail journeys, for example by making journey and departure times fit together more efficiently.

The Femahrn connection between Denmark and Germany, currently under construction, was cited as a factor which could also boost the potential for an overland rail connection from Norway to mainland Europe.

Night trains connected Oslo to Europe via Copenhagen with several departures daily as recently as the late 1990s, but the last such night train between the two cities ran in 2001 amid dwindling demand.

That trend has begun to reverse in recent years due in part to an increasing desire among travellers to select a greener option for their journey than flying.

Earlier this summer, a new overnight train from Stockholm to Berlin began operating. That service can be boarded by Danish passengers at Høje Taastrup near Copenhagen.

READ ALSO: What you need to know about the new night train from Copenhagen to Germany