Euro-crisis also felt in Norway

European leaders and the Central Bank can’t seem to get interest rates under control, and Norwegian exporters have already started to feel the effects of the financial trouble in Europe.

Still, Norway has only seen the beginning of what’s to come, according to Aftenposten.

"Already in September, companies’ confidence in the future had weakened compared to the summer," Tor Steig, Chief Economist in the Confederation of Norwegian Enterprise (NHO), tells the newspaper.

He fears that December will show an even steeper decline. Especially Norwegian companies in competitive markets are fighting a tough battle against cheaper import prices, while facing high salary expenses and costs in Norway. Federation of Norwegian Construction Industries, tells Aftenposten. The competition with foreign suppliers is tough, and they have already had to lay people off. it is worrisome that Norwegian banks are placing restrictions on lending. That will slow down new projects," he concludes.

With Italy’s interest rate back at more than seven percent, the fear for Europe’s economy has started spreading to pretty much all countries except for Germany. There is currently a debate about the Euro-zone being divided into a Northern zone and a Southern zone, but the debate induces fear and increased interest rates among member countries, such as France. The speculation surrounding the division of the Euro zone could eventually turn into a European banking crisis, which would inevitably affect Norway as well.

Although we’re not there quite yet, what worries Steig, as well as Norwegian companies, is the banking industry’s recent restriction on lending, in order to preserve the banks’ reserves. The Norwegian Bank (DNB) is not giving out any new loans, and other banks are also showing more hesitation to lend.

This insecurity is not good for Norwegian innovation and creativity, Steig explains, and the increasing level of pessimism makes Norway even more dependent on the oil. Almost six out of ten companies reported increased levels of insecurity due to the current international financial situation compared to last year, according to the survey. Most of them are companies in the transport and manufacturing industry.

In spite of the heavy volume of new construction, the building industry has also started to show signs of worry. "Parts of the industry, especially timber and building materials, can feel the crisis in Europe," Audun Lågøyr, Director of the

"We are preparing to face the insecurity in Europe if it hits Norway, but

(Aftenposten)

Julie Ryland

Friday, 18 November 2011 08:07