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Norway to give students 1,500 kroner more in electricity support this year

The Norwegian government and the oppositional Socialist Left Party (SV) reached an agreement on several crisis support measures on Monday, including giving students 1,500 kroner extra this year due to increased electricity costs.

Published: 24 October 2022 15:51 CEST

Student reading

Students in Norway are getting a one-off payment of 1,500 kroner. Photo by Eliott Reyna / Unsplash

On Monday, the governing parties (the Labour and Centre parties) and the SV agreed to provide students with a one-off payment of 1,500 kroner – with the total cost amounting to 210 million kroner.

READ MORE: Norwegian government secures parliamentary majority for new crisis support measures

“I am happy and proud that we have been able to get extra money for a group that has struggled with electricity bills all year. It was needed,” SV’s educational policy spokesperson Freddy André Øvstegård said, according to the news bureau NTB.

“In the winter months ahead of us, the electricity bills will be even higher, so I hope and believe this scheme will come in handy,” Øvstegård added.

Student Organization welcomes support measure

In a phone call with The Local, the leader of the Norwegian Student Organisation (Norsk Studentorganisasjon – NSO), Maika Marie Godal Dam, said that the students welcome the support – especially ahead of the cold winter months.

“First of all, we are thankful that the government and the SV prioritized students this way. We know there are a lot of students who are preparing for a cold winter, and this will help them in the coming months.

“That said, we hope for the future we will see student funding get a real lift so that students don’t need to depend on extraordinary support measures,” Godal Dam noted.

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'Turning point': What the future holds for Norway's economy

Norway’s economy should begin to pick up in the coming months and years after a period of stagnation, according to a national data agency, Statistics Norway, in a forecast on the Norwegian economy.

“With lower interest rates and clear wage growth, household consumption will increase. Economic activity will also pick up as a result of increased public consumption and an increase in housing investment,” said Thomas von Brasch, head of research at Statistics Norway.

The stagnation would likely continue for the rest of 2024 before picking up in 2025 and returning to a more neutral position in 2026.

“The standstill in the Norwegian economy is soon over,” von Brasch said.

After a period of high inflation, peaking at 7.5 percent in October 2022, price rises have begun to moderate. During this period, inflation in Norway was at its highest level since the 1980s.

This is good news for those hoping for lower interest rates, as the central bank had raised rates rapidly to try and control inflation and get it towards a target of two percent.

“Lower inflation at our trading partners will cause inflation here at home to continue to fall. Reduced interest rates internationally also contribute to the policy rate being gradually cut in Norway,” von Brasch said.

After the latest inflation figures for Norway were released, many economists predicted that the first cut would arrive around December. Between May 2023 and May 2024, inflation was measured at 3 percent.

READ ALSO: What Norway’s latest inflation figures mean for your finances

Market rates, the interest rates consumers pay, are expected to fall from around 4.7 percent this year, to 4 percent next year, and 3.5 percent the year after.

Norway’s PM, Jonas Gahr Støre, said the Norwegian economy was at a “turning point”, with the future looking much more positive for those in Norway.

“It is good news for people’s finances and clearly confirms that we are at a turning point in the economy where people can get better advice. Statistics Norway estimates that price growth will continue downward, so interest rates can eventually be lowered. They also expect increased purchasing power for people this year and in the following years. The government aims for people to get better advice,” PM Jonas Gahr Støre told Norwegian newswire NTB.

One factor that had the researchers at Statistics Norway more uncertain was the development of the Norwegian krone.

“The development in the krone exchange rate is important for inflation, among other things through import prices measured in Norwegian kroner. There is great uncertainty surrounding exchange rate movements,” the report read.

However, it added that keeping exchange rates the same in the coming years could be considered a positive development. This may disappoint those who have been negatively affected by a weakened krone.

Still, there was much better news when it comes to wages. Over the past eight years wages have barely grown in real terms, meaning price increases have outpaced wages. Workers in Norway can look forward to real wage increases of around 1.5 percent until 2027.

Unemployment would rise slightly in the coming years, though, from 4 percent currently to 4.2 percent in 2025.

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