Jarle Bergo, Deputy Governor of the Norwegian Central Bank, thinks we will see unemployment rise to 110,000, and therefore cut interest rates by 0.5 percentage points yesterday. More cuts are in the offing. The Norwegian Central Bank has reduced its estimates for the full range of economic indicators, with the exception of unemployment, the forecast for which has been raised sharply. The downward adjustment is based on extremely sluggish developments in the world economy, greater pessimism both in the business sector and among consumers, significant reductions in industrial employment levels, longer periods with only a slight improvement in the service sector, and tight public spending budgets which reduce public sector demand for labour. For the first time in nine years the total number of available jobs in Norway is set to fall.
Mortgage-holders advised not to fix interest rates yet (Verdens Gang)
There is no immediate need to rush to your bank and ask for a fixed rate of interest on your mortgage. Economists expect another cut in interest rates in April. Economists VG has spoken to believe Central Bank Governor Svein Gjedrem will cut interest rates by another 0.5 percentage point at the Banks next interest rate meeting in April. The Banks leadership have themselves indicated that there may be more cuts in the offing, even after they cut the base rate from 6 to 5.5 per cent yesterday. “If the Norwegian Central Bank also cuts interest rates by 0.5 percentage points in April, the floating rate will be at the same level as the fixed rate. There is therefore not much to be gained from fixing interest rates now,” said senior analyst Erik Bruce of Nordea Markets.
Lessons to be learned for Gjedrem, says Stoltenberg (Dagens Næringsliv)
According to Labour leader Jens Stoltenberg, Central Bank Governor Svein Gjedrem is partly to blame for the countrys recent exchange rate problems. Mr Stoltenberg is suggesting that Mr Gjedrems comments have helped to exacerbate the problems caused by the strong Norwegian krone and, in consequence, the problems experienced by Norwegian industry. “I think the Bank has some useful lessons to learn from what has happened over the past few months, so that we can help to prevent such major fluctuations in the future,” said Mr Stoltenberg at a press conference in Drammen yesterday. Referring to the Banks guidelines he added: “It says there that monetary policy should contribute to ensuring exchange rate stability and to expectations of exchange rate stability. This is a timely reminder.” However, Mr Stoltenberg was circumspect in his criticism of the Banks handling of monetary policy.
Employerss organization would have preferred new business development body to incude Norwegian Tourist Board as well (Aftenposten)
The Confederation of Norwegian Business and Industry (NHO) would have preferred the new business development body which will result from the merger between the Norwegian Industrial and Regional Development Fund (SND) and the Norwegian Board of Trade to include other related organizations as well. The Norwegian Tourist Board and the Norwegian Seafood Export Council are at the top of the NHOs wish-list. But otherwise, the NHO is happy that Trade and Industry Minister Ansgar Gabrielsen has finally concluded plans for a merger between the SND, the Norwegian Board of Trade and the Norwegian Government Consultative Office for Inventors. When Mr Gabrielsen announced the plans, he indicated that, in the longer term, the Seafood Export Council might also be included in the new body. However, this suggestion met with a negative response from the fisheries industry, and has been rejected. Unlike the other institutions, the Seafood Export Council is financed by the industry itself, and has a different administrative structure to the others.
Stoltenberg accepts PMs invitation to cooperate on unemployment (Dagsavisen)
“I gladly accept Prime Minister Bondeviks invitation to cooperate in order to reduce unemployment,” said Labour leader Jens Stoltenberg. “The Governments problem is a Conservative Party that has tax cuts as its main concern, not jobs,” he added. Mr Stoltenberg and Olav Flåthen, Vice President of the Norwegian Confederation of Trade Unions (LO), were visiting the Osram light-bulb factory in Drammen yesterday, where they announced the two organizations joint policy initiative, dubbed the solidarity alternative. “The solidarity alternative requires that all sides sit down together to find a solution to the unemployment problem. We have worked well with the Christian Democrats before. The problem is that the Conservatives and the Progress Party, to which the Government owes its existence, represent a different political line. For them, tax cuts are more important than jobs. If we are to make a solidarity alternative work over time, the Christian Democrats will have to choose between the Labour Party and the Conservatives,” said Mr Stoltenberg.
Krekar facing more charges (nrk.no)
The National Authority for Investigation and Prosecution of Economic and Environmental Crime has brought a new charge of illegal imprisonment against Mulla Krekar. During questioning, Krekar himself is supposed to have explained that his organization, Ansar al-Islam, arrested nine people in northern Iraq in December 2000. Krekars Norwegian attorney Brynjar Melling has attacked the Authoritys decision, claiming that Krekar himself was responsible for gaining the release of those arrested. The new charge carries a maximum penalty of ten years in jail.
Labour keen to build more gas-fired power stations (Dagsavisen)
The Labour Party wants to allow the construction of more gas-fired power stations. Environmentalists within the party are furious, while Prime Minister Kjell Magne Bondevik has described Labours electricity policy as old-fashioned. Yesterday, the Labour Partys parliamentary group discussed the Governments gas report to the Storting. During the meeting, Sylvia Brustad won support for a major push to build more gas-fired power stations in Norway. She argued powerfully that the three gas-fired power stations that have already been given an operating licence are not enough. More power-stations are needed, she said.
1. Worth Noting
- Since December, interest rates have been cut three times. This has reduced the total amount of interest owed by Norwegian households by NOK 10 billion a year after tax.
- More women on company boards could block greedy men and result in more moderate pay rises for senior executives. This is something both former Consumer Ombudsman Kristin Moe and Trade and Industry Minister Ansgar Gabrielsen agree on. “Women are more prudent when it comes to money. We see that in many situations. They often have better social antennae with regard to what is acceptable and what is not which seems to be lacking in many company boards,” said Ms Moe.
- The opposition parties have reacted sharply to the news that people could be forced to take out loans or sell off personal assets to pay this winters hefty electricity bills. A circular distributed by the Social Affairs Minister and the Local Government and Regional Affairs Minister indicates that parents could be forced to help themselves to their childrens savings before they qualify for social security assistance to pay their electricity bills. The Labour Party has accused the Government of heartlessness, and the Socialist Left Party is demanding that the ministerial circular be withdrawn.
- Absenteeism due to illness costs Norwegian employers NOK 10 billion less than previously estimated, according to figures from the National Insurance Administrations analysis department. The department has examined the National Insurance Services own figures for doctor-reported sick leave, and compared them with Statistics Norways overview of employee-reported sick leave. The results of the study are published in the latest edition of the Norwegian Medical Associations journal.
- In the first two months of this year, 3,128 new companies have been registered. This is almost 20 per cent fewer than in the same period last year. At the same time, both politicians and business organizations have been talking warmly about how important it is to encourage new businesses. “Business entrepreneurs must find almost everything they need themselves, and banks and other investors are more cautious than they were two or three years ago,” said Tore Widding, chief analyst at Creditinform.
- The acquisition of Kreditkassen has left Nordea with a raft of loss-making investment projects. In the fisheries sector alone, the banking group has a risk exposure totalling NOK 15-16 billion in Norway. So far, Nordea has probably not made a penny from its acquisition of Kreditkassen. But despite this, group chief executive Lars Nordstrøm says he has full confidence in Nordeas Norwegian management team.
- Vocational training is becoming more and more popular with lower secondary school pupils. Only three out of ten lower secondary school pupils have applied for a place on an academic course of study at Norwegian upper secondary schools next year.
- The Banking, Insurance and Securities Commission has announced it will carry out a full investigation of the way auditors Ernst & Young handled the accounts of now bankrupt Sponsor Service. Dagens Næringsliv is given to understand that the asking price for Sponsor Services entire bankrupt estate is now less than NOK 100 million.
- The charitable foundation Stiftelsen Hest, Helse og Rehabilitering, which was supposed to operate a riding centre at the Royal Farm at Bygdøy, went bankrupt last year. The Palace will now have to pay the foundations bankrupt estate NOK 4.5 million.
2. Todays comment from Aftenposten
With the jobless figures once again topping 100,000, Prime Minister Kjell Magne Bondeviks call for all the political parties to participate in a joint effort to reduce unemployment comes not a day too soon. That Labour leader Jens Stoltenberg should respond positively to the PMs invitation hardly goes without saying. Labour, more than any other party, has a history that gives the unemployed reason to expect the party also in opposition to join the battle to keep as many people in work as possible. But the ruling coalition parties and Labour not to mention the Socialist Left Party and the Progress Party, which have never had to shoulder the burden of government office and so can allow themselves the luxury of solving any problem with calls for ever greater public spending must follow up their fine words with practical actions. We can no longer afford to allow the political parties to be more preoccupied with pushing responsibility for the rising number of unemployed onto each other, rather than joining forces to smooth the path for the creation of more jobs. Over the past six months, the political pressure on the ruling coalition parties, and particularly on the Christian Democrats, has been enormous. The Government therefore deserves respect for having managed to push through a national budget that was sufficiently tight to have achieved in part some of the effects that were intended. Three cuts in interest rates, totalling 1.5 percentage points, and indications from the Norwegian Central Bank of more up ahead, as well as a reduction in the pressure on the Norwegian krone, should gradually prove to be effective tools in the battle against unemployment.