(Bloomberg) After spending a record amount of Norway’s oil wealth to prevent a recession, Prime Minister Erna Solberg is poised to become the first Conservative Party leader in Norway’s history to win re-election in more than 30 years.
The 56-year-old, and the groups of lawmakers who support her, are set to hold on to a majority in the 169-member parliament, according to projections from the election authority after voting ended in Oslo late on Monday. The count is very tight, largely dependent on whether the Liberals can reach above the 4% barrier to gain extra seats in parliament.
"It’s what I hoped for," said Jan Tore Sanner, deputy leader of the Conservatives, at the party’s election rally. “Erna Solberg is the people’s prime minister. But it’s only a prognosis. There are several parties under the threshold. So it can tip over.”
She now needs to sit down with the anti-immigration Progress Party, the Liberal Party and the Christian Democrats to start talks on forming a new coalition. Over the past four years, the quartet clashed regularly over issues such as immigration and the environment.
The leader of Scandinavia’s richest nation staged a remarkable comeback after trailing behind the Labour Party-led opposition at the start of the summer. She was helped by an economic rebound in western Europe’s biggest oil and gas producer, which became more pronounced in the middle of this year.
The recovery was buoyed by a weaker exchange rate and record-low interest rates. But much of the turnaround followed unprecedented government spending, as Solberg tapped into Norway’s oil wealth. She will go down in history as the country’s first prime minister to make direct withdrawals from Norway’s sovereign wealth fund, valued at almost €84 billion.
Solberg has promised to moderate spending over the next four years as the economy normalises. But she’ll also need to mollify her coalition partner, the Progress Party, which is keen to keep up spending even as it targets tax cuts.
The early results were met with silence at the Labour Party rally. The vote was tantamount to a disaster, with projections showing it won about 28%. If confirmed, it would be its worst result since 2001. Party leader Jonas Gahr Store made several miscalculations during the campaign, including failing to capture the shifting mood on the economy. His personal wealth (Gahr Store is a millionaire) and his flirt with the centre-right parties also turned off many left-wing voters.
"We’ll need to communicate even more clearly with our voters on the big dividing issues, which are about economic policy, welfare policy," said Labour’s economy spokeswoman, Marianne Marthinsen. "I believe the next term will make those differences even more visible, because we won’t have all these oil billions that can be pumped into the budgets at the pace we’ve seen over these past four years."