Article / 09 September 2017 at 7:30 GMT

Norwegians to vote Monday in cliffhanger election

Consulting editor / TradingFloor
Norway
  • Norway's Sept. 11 general election looks too close to call
  • Prime minister Solberg's blue bloc looks increasingly likely to cling to power
  • Labour-led opposition bloc has seen its lead in the polls vanish over the past year
  • Labour Party leader Støre campaigned on a pledge to raise taxes on high incomes

The Storting, Norway's parliament
 The Storting, Norway's parliament in Oslo. Photo: Shutterstock

By John Acher

Norwegian voters will go to the polls on Monday in a general election that is too close to call, with prime minister Erna Solberg’s centre-right coalition edging ahead but still facing a strong challenge from the Labour-led opposition.

The latest opinion poll for national broadcaster NRK showed Solberg’s blue bloc (Conservatives, Liberals and Christian Democrats) clinging to power and winning 85 seats in the 169-seat Storting (parliament) against 74 seats for the red bloc (Labour, Centre Party and Socialist Left). But some other recent polls have still shown the opposition ahead.

Even with support from the small Green and Red parties, the Labour-led alliance would fail to win a majority according to the latest poll, NRK said.

Until about a year ago, the Left appeared to be cruising towards an election victory, with opposition Labour Party leader Jonas Gahr Støre seen as the likely next prime minister. But Labour’s support in the polls has dwindled, and Solberg’s chances of retaining power for another four-year term have grown as election day approaches.

Jonas Gahr Store
 The challenger, Labour Party leader Jonas Gahr Støre, has seen 
his lead in the polls evaporate. Photo: Shutterstock

The main argument during the election campaign has been over the government’s management of the economy since it won power in 2013. The opposition has blamed Solberg's Conservatives and the allied Progress Party for granting tax cuts to high-earners and the wealthy and spending profusely from Norway’s nearly $1 trillion sovereign wealth fund.

Last year, Solberg’s government spent more money from the sovereign wealth fund, commonly known as the “oil fund,” than went into it – marking the first net withdrawal for a full year since the fund was established in 1996.

But the economy of this North Sea oil and gas producer has not cooperated with Labour’s view, and instead it has recovered from the hit it took from the steep drop in oil prices in 2014-16. Mainland GDP grew by a better-than-expected 0.7% in the second quarter from the first quarter, and unemployment dropped back to 4.4%, while inflation at just 1.5% remains well below the central bank’s target of 2.5%.

The second-quarter GDP growth equalled the first-quarter’s pace, and overall for the first half of the year, Norway had a “moderate economic upturn,” Statistics Norway said last month. “The recovery came after two and a half years with weak growth,” it said.

Hard to see big problems here:
Norway GDP
 
In a mind-bogglingly Norwegian version of “telling it like it is,” Støre has campaigned on a pledge to raise taxes if elected.

Along with the other Nordic countries, Norway has steeply progressive income-tax rates, with a top marginal rate of 46.7%, and a total tax burden of around 45%, which is above the OECD average.

“Tax is not so important as what we shall do with it – we want to have as low taxes as possible, but as high as necessary,” Støre said in a recent interview with national broadcaster NRK.

He wants to raise taxes on incomes of 600,000 Norwegian kroner ($77,820, USDNOK 7.71) and above, while people with incomes below that level would pay the same as before or less. Aiming to boost total tax revenues by up to NOK 15 billion, such a tax hike would not only affect the super-rich, but also wage-earners who likely consider themselves as unmistakeably middle-class.

If Støre and his allies fail to inspire voters on Monday, his election-year tax-hike pledge will surely come in for criticism as a politically costly gamble.

The first preliminary results will be published at 9 p.m. local time (1900 GMT) on Monday, and a near full tally should be available by around midnight.

Norwegian 200-kr note
"In cod we trust" -- oh, and oil too. Image: Norges Bank
 
John Acher is a consulting editor at TradingFloor

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