Prime Minister Erna Solberg made it clear on Tuesday that “job number-one is to hinder the spread of the Corona virus” in Norway. Next is to limit the ill effects of the virus on the country’s otherwise “solid” economy, by offering “concrete” assistance that’s expected to have an immediate effect.
Details remained sketchy and won’t be revealed until Friday. Solberg and her new finance minister, Jan Tore Sanner, could nonetheless confirm that their “goal-oriented” measures are meant to ward off any “unnecessary bankruptcies and loss of jobs.”
“We’re in a serious situation,” Sanner said. In addition to the danger posed by the Corona virus to life and health, “we see that more sectors of Norwegian business are being hit by the virus outbreak, especially within the travel industry.” More companies are warning of layoffs, with Norwegian Air doing so just minutes before the ministerial press conference began Tuesday afternoon.
Both Solberg and Sanner were also alarmed by news from Norway’s central bank (Norges Bank) that more than a third of Norwegian companies surveyed have lowered their growth prospects in recent weeks. “It’s difficult to say how grave the consequences will be and how long they’ll last,” Sanner said, “but we know that it’s highly probable it will get worse before it gets better, because the virus is spreading.”
He also noted how Norway is especially hard-hit by the dramatic decline in oil prices over the weekend, which also set off sharp stock market declines. There was some recovery on Tuesday but the Oslo Stock Exchange remained battered because so many of its companies are tied to the oil industry.
“Fortunately the Norwegian economy is solid and well-prepared to handle this,” Sanner said. “We also have a well-functioning bank system and the banks are solid.” He contended that Norway’s oil- and oil service companies are also better prepared to handle lower oil prices now than they were when prices also fell in 2014, because most have a much lower cost base.
Now the government will also offer assistance in three areas tied to the labour force and tax system, specific industries that are hardest hit, and longer-term economic stimulus. Measures due to be presented in more detail on Friday will include more funding for the health care sector, an easing of rules about how companies can go about laying off workers, and changes in tax rules that will postpone payments to help companies retain liquidity. Companies like Norwegian Air and Nordic Choice Hotels, which have already warned of the need to temporarily lay off workers because of low demand in the travel industry, will likely be able to avoid still paying salaries for the first two weeks of a furlough and thus save money. Company owners who must pay tax on their net worth even if the company is unprofitable will be able to postpone payments to preserve their cash.
Sanner couldn’t say anything about what the state measures will cost taxpayers, but seemed confident that resources can be found in the state budget. “We have room to act,” Prime Minister Solberg confirmed, just as Norway has done on previous occasions like during the finance crisis of 2008.
“We must take care of the companies we have,” Sanner said. “If the economic situation gets worse, we will also consider whether there’s a need to stimulate the economy in general. We’re working on this every day.”