Vestre’s three proposals to the government for getting the economy back up to speed after Covid-19
In May, Norway’s Minister of Finance Jan Tore Sanner and Minister of Trade and Industry Iselin Nybø invited ten business leaders to a meeting to get their ideas on the Norwegian economy after the coronavirus pandemic. Vestre’s CEO Jan Christian Vestre was among those invited. He presented three specific proposals that could quickly stimulate demand, increase investment in mainland Norway and boost exports. Norway is not the only country to experience major economic challenges as a result of the pandemic, so Vestre’s proposals are also relevant for other countries’ governments. The proposals are presented below.
Vestre proposes that the Norwegian government should:
- Prioritise export-oriented companies. This was important even before the coronavirus crisis. Out of all the member countries of the Organisation for Economic Cooperation and Development (OECD), Norway is the one that has lost the largest market share measured by export volume over the past 20 years. The trade deficit from mainland Norway has doubled in the past decade. The value of Norwegian exports fell by almost NOK 100 billion in 2019. This challenge did not arrive with the pandemic, but has been intensified by it. Vestre proposes the setting of a national target to double exports from mainland Norway in the coming decade. The government should establish an export development scheme that would cover 50 per cent of companies’ export-development costs. This would help to reduce the risk involved in export activities, particularly for small and medium-sized companies. It would also encourage companies to increase their export volumes, which we need to safeguard a healthy balance of trade.
- Prioritise companies with tangible investment projects that can be started up quickly. In Norway last year, the value of industrial investments was lower than during the 2008 financial crisis. We can only guess what this year’s figure will be after the coronavirus pandemic. Vestre therefore proposes the adoption of a target to double industrial investment in mainland Norway over the coming decade. For Norway, this means that the government should make a substantial change in the criteria for allocating government support in order to trigger tangible investments that create jobs this year and every year going forward. Large portions of Norway’s existing support package go to strategy and competence development, the facilitation of development projects and business networks. But it is not necessarily business networks that create jobs. We need support to build up production capacity and ensure sufficient supply when demand increases. We must see that factories are built nationwide. This generates optimism and jobs.
- Ensure that there is sufficient funding for maintenance activities that stimulate demand. In Norway, both the private and public sectors are holding back investments because they are uncertain how much the coronavirus crisis will cost them. It is vital that these investments are maintained. Vestre proposes that local authorities be compensated for costs they incur in connection with the pandemic, so that they can retain their purchasing power and keep demand at a more or less stable level. This is more effective than a general cash grant to companies, which we have no guarantee will create jobs and growth.
Finally, Vestre calls on politicians to talk positively and highlight opportunities. Business is alarmed at the situation and that does not precisely encourage new investment. The authorities should actively support companies that generate exports, invest in mainland industrial production and operate sustainably. They should also ensure that public investment is maintained. Every country should use this crisis to speed up the transition we must undergo in ways that make a real difference for economic growth, employment and the climate.