Oil economy woe
There are perhaps some points which might counterbalance these claims. For example, the value to the Norwegian economy of petroleum and pipeline transportation will have gone from a 17.1 per cent year-on-year increase in 2013, to a projected 8 per cent year-on-year decrease in 2015.
It is also anticipated that there will be a 23 per cent fall in net cash flow from petroleum activities by 2015 compared with the 2012 accounts.
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Hide AdBy 2010, the net cash flow from these activities was 23 per cent of Norway’s GDP. By 2060, it is expected that this figure will drop to approximately 1 per cent of the GDP.
Business investments in Norway have fallen considerably and these declines were stronger in Norway than in other countries with which it is normally compared.
This drop in investments includes investments in North Sea oil exploration, which at the end of 2013 stood at 20 per cent of the 2010 figure.
These reductions were partly caused by the country’s high borrowing and cost levels. These factors render the Norwegian economy vulnerable and may slow activity in the short to medium term.
In order to boost the economy, the Norwegian government reduced the rate of income tax between 2013 and 2014 by one percentage point. This still makes it 35 per cent higher than the UK’s basic rate of 20 per cent.
Overall, the Norwegian government has determined that their economic policy must support the development of a less oil-reliant economy.
The figures are not mine, they are published in the Norwegian government’s budget document.
Alastair Gentleman
Linlithgow