10/07/2024 | Press release | Distributed by Public on 10/07/2024 02:07
The National Budget 2025:
Press release | No: 48/2024 |Date: 07/10/2024| Ministry of Finance
Through the proposed National Budget for 2025, people will be financially better off, Norway's preparedness against war and crime will be strengthened, and social and geographical differences will be reduced. Unemployment is still low, wages are increasing faster than prices and businesses are thriving. After several years of economic unrest, we are experiencing an economic turning point where people are financially better off.
-In the National Budget for 2025, we are prioritising extensive resources for defence, and the fight against gangs and criminal networks. The Government will support Ukraine. We are also implementing new measures to reduce hospital waiting times, to make schools more practical and to give people more financial security, says Minister of Finance Trygve Slagsvold Vedum.
After a difficult economic period, the future is now looking brighter. Economic projections with stronger growth and an unwavering low unemployment rate form the backdrop for next year's National Budget. The last few years have been defined by rapid and strong price growth originating overseas. Earlier periods with sharp price growth were long and characterised by higher unemployment, but it now appears that the Government's economic policy has been successful in bringing price growth down without a significant increase in unemployment and with sustained economic growth. With the projection that wages will increase more than prices, the purchasing power of households will increase and contribute to more economic growth in Norway next year. Since this Government came into power, 145,000 more people are working, businesses have set record corporate profits, record investments and record exports.
The Government aims for people to be financially better off and to have a budget that provides security for the population and the country, and develops the whole of Norway. We have prioritised fair division and broad welfare measures for large groups.
- Ever since the strong price growth started, the Government has emphasised sound economic management to help reduce price growth, while helping people with their daily finances. Through the energy support scheme, lower income tax, more affordable kindergartens and wraparound care, increased child benefit, and cheaper ferries, the financial security of the wider society has increased. More value creation and fairer distribution has enabled the Government to finance this, says the Minister of Finance.
Lower ordinary and special taxes, and lower living costs for families with children
The Government proposes new net accrued relief on ordinary and special taxes amounting to BNOK 17.5. Of this, abolition of temporary employer's national insurance contributions constitutes BNOK 12.
- It has been an explicit goal of the Government to cut income tax for people on low or average incomes. We have implemented targeted measures in four budgets to reduce the differences, as we believe this is an equitable and necessary prioritisation. With this budget, we have cut income tax by BNOK 10.5 in total, says the Minister of Finance.
The Government is implementing targeted measures to reduce the living costs of both Norwegian households in wider society and the disadvantaged. In the National Budget 2025, the Government proposes to:
The budget proposal also entails continuation of several measures to strengthen the housing benefit scheme, and continuation of earlier increases in child benefit with the last increase being on 1 September this year
Work - vital for people's daily finances
Having a job to go to is vital for people's daily finances and, fortunately, most people have jobs. Since the Government came into power, 145,000 more people are now working and the Government's explicit goal is that even more people will get jobs.
- No one should question that the Norwegian society will support those who need it. Undeniably, those who cannot work for various reasons will be properly taken care of. At the same time, it must pay to get up in the morning and go to work. Therefore, we are continuing to reduce income tax on low and average incomes. In addition, we are significantly raising the lower threshold for paying personal National Insurance contributions the healthcare exemption card, which may stimulate young people to form an attachment to the labour market, says Mr Vedum.
In order for displaced people from Ukraine and other vulnerable groups to get jobs quicker, funding for labour market measures was increased from 2023 to 2024. The Government proposes a further increase in 2025 equivalent to around 5,800 more places on programmes compared to this year. In addition, the 'Varig tilrettelagt arbeid (VTA)' (Eng: Permanently Adapted Work Programme) is also being extended with around 500 places. The extension is part of a planned escalation in the next few years.
Quicker medical care and reduced waiting times
The Government proposes to bolster hospitals with BNOK 5.5 compared to the balanced budget for 2024. This allows hospitals to increase the services they offer with BNOK 3 exceeding population changes. The bolstering includes continuation of the grant increases given in the Revised National Budget 2024. The objective is a marked reduction in waiting times in 2024 and 2025.
- The welfare state should be the best health insurance we have in Norway, therefore the waiting times in our national health service must be reduced. The health queues started increasing in 2017 and continued to increase due to many non-urgent treatments being postponed during the pandemic. We are now bolstering the hospitals further, so we can reduce waiting times in the national health service in line with the Government's waiting time pledge, says Mr Vedum.
People shall feel safe
Financial security for the public must be followed by safety on the streets, at school and otherwise in the local community.
- Since we want people in Norway to feel safe, we are heavily committed to catching organised criminals who create anxiety and steal from people, businesses and the public sector. These are destructive forces that undermine Norwegian values. The gangs and their professional accomplices will notice that Norwegian society is stronger than them, says Mr Vedum.
The Government proposes to increase funding to prevent and combat crime by a total of BNOK 2.8. Most of this will go to the police and lead to more visible police on the streets and more resources for combatting gang crime and financial crime. In addition, we propose to make it easier for the police to confiscate assets from criminals.
Drug trafficking represents a massive threat to both Norway and the rest of Europe. With a permanent strengthening of the budget with MNOK 250, Norwegian Customs has the opportunity to improve border control through new equipment and increased operational staffing.
Strong commitment to defence
War in Europe also impacts the budget proposal for 2025. The Government's proposed National Budget follows up on what we decided in the long-term plan. Next year we will spend BNOK 110.1 on our Armed Forces. This includes an increase of BNOK 15.5 to follow up our ambitions in the new long-term plan - a strong commitment to protect the population and Norway.
This year, Norway has already reached NATO's goal to spend 2% of our GDP on defence. This is two years earlier than the Government's original aspiration. In 2025, it is estimated that defence spending will amount to 2.16 of Norway's GDP.
The Government continues to develop the whole of Norway
The Government is launching a new scheme for deleting student loans for those who live in the least central municipalities. Through the scheme, everyone who lives for at least one year in one of the 189 municipalities in centrality regions 5 and 6 will annually have NOK 25,000 deleted from their student loan applicable from January 2026. In addition, the conditions for debt deletion are being doubled in the Finnmark og Nord-Troms initiative zone from NOK 30,000 per annum to NOK 60,000 per annum from 2026.
- Norway's success story has involved and always will involve people living and creating assets throughout the nation. After eight years of targeted centralisation under Erna Solberg's Government, this Government's policy has been to make it even more attractive to choose rural areas as a place to live. Labour is needed throughout Norway and the Government is now implementing active measures to make it slightly easier for young people to choose to move or settle in rural municipalities, says Mr Vedum.
Sound financial management
The Government is following up the Revised National Budget for 2024 and proposes abolition of the extra employer's national insurance contribution. We have now abolished both temporary taxes from 2022, completely in line with what was promised upon introduction.
In the National Budget for 2025, the Government proposes spending capital from the Government Pension Fund Global amounting to BNOK 460. Measured as a share of the value of the Fund, the spending is equivalent to 2.5%.
- Increased spending of capital from the Fund must be seen in light of the historical defence pledge, and the need to strengthen the police and hospital finances. The withdrawal of capital from the fund is well below the long-term benchmark for the budgetary rule of 3%, and we continue to govern safely and responsibly, says the Finance Minister.
Everyone shall have access to good high-quality healthcare services when needed.
The Government prioritises transport and infrastructure throughout Norway:
The Government is facilitating more energy and reduced greenhouse gas emissions
The Government's budget proposal facilitates encounters with future energy challenges through energy efficiency measures and technology development. The Government has ensured a shift in the time span for its commitment to offshore wind.
The Government is implementing an ambitious climate policy and the reduction of Norwegian greenhouse gas emissions is expected to continue.
Cultural services for everyone throughout Norway
The Government wants the whole population to have access to cultural services, regardless of where they live and their social background. In the 2025 budget, we therefore propose, inter alia, to create a subsidy scheme for regional culture funds, intended to contribute to enhancing local and regional cultural life throughout Norway. The Government also proposes increased commitment to digitisation of cultural heritage and archives. This will provide jobs in Mo i Rana and Tynset.
The Norwegian Child Welfare Service will help safeguard the most vulnerable children
Table 1 Key figures for the Norwegian economy. Percentage change from the previous year, unless otherwise stated.
BNOK1 |
|||||
2023 |
2023 |
2024 |
2025 |
2026 |
|
Private consumption |
1,922.9 |
-0.8 |
1.2 |
2.6 |
2.5 |
Public consumption2 |
1,121.9 |
3.4 |
2.2 |
2.1 |
1.2 |
Gross fixed capital formation |
1,196.5 |
0.0 |
-2.8 |
1.9 |
1.8 |
Hereof: Oil extraction and transportation through pipelines |
216.1 |
10.6 |
11.0 |
-1.0 |
-7.0 |
Companies on mainland Norway |
499.3 |
4.0 |
-6.2 |
0.9 |
0.8 |
Homes |
207.7 |
-15.6 |
-17.0 |
12.1 |
13.7 |
Public administration |
262.0 |
3.0 |
3.9 |
-0.3 |
2.3 |
Demand from mainland Norway3 |
4,013.8 |
0.3 |
-0.2 |
2.5 |
2.4 |
Demand from the public sector2 |
1,383.8 |
3.3 |
1.6 |
1.4 |
|
Exports |
2,419.6 |
1.4 |
2.7 |
2.5 |
1.0 |
Hereof: Crude oil and natural gas |
1,194.1 |
-1.1 |
2.7 |
1.5 |
-2.3 |
Goods and services from the mainland |
1,045.9 |
6.4 |
1.4 |
3.4 |
4.4 |
Imports |
1,664.4 |
0.7 |
1.0 |
3.0 |
2.9 |
Gross Domestic Product |
5,126.5 |
0.5 |
1.1 |
2.1 |
1.2 |
Hereof: Mainland Norway |
3,855.4 |
0.7 |
0.7 |
2.3 |
2.1 |
Other key figures: |
|||||
Employment |
1.3 |
0.5 |
0.7 |
0.6 |
|
Unemployment rate, registered (level) |
1.8 |
2.0 |
2.2 |
2.2 |
|
Unemployment rate, labour force survey (level) |
3.6 |
4.0 |
4.1 |
4.1 |
|
Annual wage |
5.2 |
5.2 |
4.5 |
4.3 |
|
CPI |
5.5 |
3.7 |
3.0 |
2.5 |
|
CPI-ATE |
6.2 |
4.1 |
3.2 |
2.7 |
|
Crude oil price, USD per barrel (current prices) |
82 |
83 |
79 |
75 |
|
Gas price, USD per MMBtu (current prices) |
13.6 |
10.3 |
11.5 |
9.7 |
|
Three-month money market interest (level) |
4.2 |
4.7 |
4.3 |
3.5 |
|
Import-weighted kroner exchange rate4 |
7.9 |
1.0 |
1.3 |
0.0 |
1 Interim national accounts for 2023 with current prices. Growth rates from this level are stipulated as volume.
2 For 2026, the estimates follow public consumption and gross formation of demographic development trends, and the long-term plan for the Norwegian Armed Forces spring 2024.
3 Excluding changes in stock.
4 Positive figures indicate a weaker NOK.
Sources: Statistics Norway, Norges Bank, Norwegian Labour and Welfare Administration (NAV), Reuters, ICE, Macrobond and the Norwegian Ministry of Finance.
Table 2 Key figures in the National Budget and the Government Pension Fund in BNOK
2023 |
2024 |
2025 |
|
Total revenue |
2,494.4 |
2,259.0 |
2,250.0 |
1 Revenue from petroleum activities |
1,008.5 |
710.5 |
672.4 |
1.1 Ordinary and special taxes |
623.2 |
416.6 |
388.5 |
1.2 Other revenue from petroleum |
385.2 |
293.9 |
283.9 |
2 Revenue other than petroleum revenue |
1,485.9 |
1,548.5 |
1,577.6 |
2.1 Ordinary and special taxes from mainland Norway |
1,352.1 |
1,387.1 |
1,423.3 |
2.2 Other revenue |
133.8 |
161.4 |
154.3 |
Total expenses |
1,806.8 |
1,926.4 |
2,020.8 |
1 Expenses related to petroleum activities |
30.4 |
30.1 |
29.6 |
2 Expenses not related to petroleum activities |
1,776.4 |
1,896.3 |
1,991.2 |
Profit in the National Budget before transferral to |
687.6 |
332.6 |
229.1 |
- Net cash flow from petroleum activities |
978.1 |
680.4 |
642.8 |
= Non-oil profit |
-290.5 |
-347.8 |
-413.6 |
+ Transferred from the Government Pension Fund Global |
286.2 |
347.8 |
413.6 |
= Profit in the National Budget |
-4.2 |
0.0 |
0.0 |
+ Net allocations in the Government Pension Fund Global |
691.8 |
332.6 |
229.1 |
+ Interest and dividend income, etc., in the Government Pension Fund1 |
354.9 |
408.2 |
451.6 |
= Total profit in the National Budget and Government Pension Fund1 |
1,042.5 |
740.7 |
680.7 |
Memo: |
|||
Interest and dividend income, etc., in the Government Pension Fund Global |
338.6 |
389.4 |
431.7 |
Market value of the Government Pension Fund Global2 |
12,413 |
15,761 |
18,500 |
Market value of the Government Pension Fund2 |
12,732 |
16,115 |
18,890 |
National Insurance Scheme's obligations towards old age pensioners2,3 |
10,135 |
10,805 |
11,468 |
Structural non-oil fiscal deficit |
367.6 |
416.5 |
460.1 |
Percentage of the Government Pension Fund Global |
3.0 |
2.6 |
2.5 |
Per cent of Mainland Norway trend GDP. |
9.6 |
10.4 |
10.9 |
Change from previous year as percentage points (fiscal impulse) |
0.5 |
0.7 |
0.5 |
Estimated contribution from the budget proposal on mainland Norway GDP in 2025, percentage points4 |
- |
- |
0.2 |
Real, underlying increase in expenditure, percentage. |
- |
- |
1.0 |
1 Does not include exchange gains or losses.
2 At the beginning of the year.
3 Current value of rights that have already been earned to future old age pension payments in the National Insurance Scheme.
4 Based on calculations using the KVARTS and NORA macroeconomic models.
Sources: The Norwegian Ministry of Finance and Statistics Norway.