Right-wing government wins re-election on oil, tax

Finance


One of the two parties, the Liberals, wants strict limits on oil and gas exploration in Arctic waters.

Solberg’s Conservative Party was set to lose three seats to 45 in parliament, making her more dependent on outsiders’ help and perhaps heralding a less stable government.

And the head of the other small party, the Christian Democrats, warned Solberg he would not automatically back every government decision. “We will not give a guarantee for the next four years,” party leader Knut Arild Hareide said.

“They (The Liberals and the Christian Democrats) will support Solberg as prime minister, but the question is whether they get a firm agreement or if there is cooperation on a case-by-case basis,” said Elisabeth Ivarsflaten, a professor in comparative politics at the University of Bergen.

“Then it may be a weaker government,” she told Reuters.

The Norwegian currency, the crown, strengthened slightly following the first projections after falling sharply earlier in the day on weaker-than-expected inflation data.

For much of the year, Labour and its allies were favoured by pollsters to win a clear victory, but support for the government has risen as the economy gradually recovered from a slump in the price of crude oil, Norway’s top export.

Unemployment, which a year ago hit a 20-year high of 5 percent, has since declined to 4.3 percent, while consumer confidence is at a 10-year high.

Solberg has won credit for the upturn with a no-nonsense style of management. Norway’s economy also has the cushion of a sovereign wealth fund worth almost $1 trillion, the world’s biggest, built on income from offshore oil and gas.

“Regardless of which government we get, the challenge will be to use less oil money,” said Erik Bruce, chief analyst at Nordea Markets. “There is broad consensus about the outlook for the sovereign wealth fund and the Norwegian economy, which means a tighter fiscal policy.”

The sovereign wealth fund has wanted to invest in unlisted infrastructure to boost its return on investment. Finance Minister Siv Jensen has twice said no to the request over the past two years, citing political risk.

That stance is unlikely to change now that the government has been re-elected.



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