Norway - the wealthiest nation on earth

The country that's got it all - but is still saving for tomorrow

Exporting oil at $70 a barrel has turned Norway into the wealthiest nation on earth. So what does it mean to have the highest GDP per head on the planet? Patrick Collinson went to Oslo to find out

• Patrick Collinson
• The Guardian, Saturday 20 May 2006
•  Maureen Baird moved to Oslo in 1960 from Scotland. In her native city of Glasgow, times were hard, but she found they weren't much better in Norway. "People forget just how poor the country was. Its history was about getting out on the boat to America. We had two pairs of shoes, one for summer and one for winter. No one had any money."
  Today she lives in a society which, on paper at least, enjoys the greatest affluence the world has ever seen. Its GDP in 2005 rose to £35,800 per head (that's for every one of its 4.5 million population) leap-frogging past both Switzerland and the United States, and way ahead of Britain's £21,000.
  This year it will reach dizzier new heights. Forget public borrowing and the national debt - there isn't one. Instead, there's a huge tax surplus, and the national debt has been paid off.
  
  But what do these figures mean? Are Norwegians basking in incomparable affluence? What's it really like to live in the wealthiest country on earth?
  Arriving in Oslo, the airport terminal is spanking-new, enormous and eerily quiet; all signs of prestige spending projects funded by easy money. The bullet-style train into the city centre is the first warning of price shocks to come; £30 return for a 15-minute hop, but at least the ticket seller smiles. And I thought the Heathrow Express was the world's priciest train.
  In oil-boom Oslo, one might expect rows of Dubai skyscrapers, swaggering executives and a glut of fat 4x4s. Instead, it's more like Birmingham city centre on a quiet shopping day. There's two big glass towers, but they were built in the 1960s and most Oslo-ites would happily see them demolished.
  Perhaps the shops are quiet because, unless you're on a Norwegian salary, the prices are eye-popping. Even the well-off Danish on day-trips gasp. Norwegians, meanwhile, pour over the Swedish border every weekend just to pick up groceries. And when they fill up their (heavily-taxed) cars, the price they pay at the pump is amongst the highest in Europe. Rather like whisky in Scotland, there's no discount on petrol just because they make it there.
  
  But don't be fooled by the sky-high prices; even after taking them into account, Norwegian incomes still top the table on a "purchasing power parity" basis. Though food and drink (especially wine) is at times gobsmackingly expensive, other goods are on a par with Britain. Housing in Oslo (despite recent rises) is cheaper than London.
  So where's the money going? Is the government splashing out on schools, hospitals and lavish welfare projects? A brief visit suggests spending is indeed up - a new cancer wing here, a fancy new school gym there - but nothing that shouts boom-time.
  At Uranienborg school in the west of Oslo, scaffolding covers the fabric of the building, with the (Polish) decorators hard at work. Inside, the 525 students are hard at work, too. And it's here you come closer to the contented, placid (at times almost docile) society that Norway's wealth has created.
  I asked a class of 15-year-olds about their job prospects. Would they find jobs after school? Would they earn enough to buy homes and obtain the standard of living their parents enjoy?
  
  The answer was a unanimous "yes". Unemployment is, after all, the lowest in Europe. On a claimant-count basis it is around 2.5%, close to half the level in Britain.
  Another sign of contentment and economic security is the country's fertility rate. Norwegian mothers have more children per head than anywhere else in Europe except Iceland and Ireland. Norway also has among the highest level of female participation in the workforce. Squaring the circle is maternity leave that stretches to 42 weeks on full pay.
  But visitors are still left scratching around for signs that they're really in the richest place on earth. Where are the Ferraris and Porsches? Why, in a country almost smug about its superior welfare standards, are there an uncomfortably large number of beggars and rough sleepers around the central station?
  The answer lies in a remarkable decision taken many years ago to ringfence the flood of oil revenues from the North Sea. Every dollar earned is swept straight into what was once called the State Petroleum Fund but is now called the Government Pension Fund. The truth is that Norwegians are simply not spending their oil windfall, but putting it aside for the future. What's more, none of the money is allowed to be invested in Norway.
  
  The fund has ballooned in size and recently became the world's biggest pension fund, for the first time outstripping "Calpers" the $200bn Californian Public Employees fund.
  Auke Lont, the head of Norway's biggest economic consultancy, ECON, says: "It's almost Calvinist. These are people who almost want to punish themselves for this enormous windfall."
  For now, at least, policymakers have convinced the public that spending the oil money will only result in the "Dutch disease". In the late 1970s the Dutch economy was flooded with dollars after finding huge gas deposits, and the country went on an unprecedented spending spree. The economic hangover took a decade to unwind.
  But not all Norwegians buy into this frugality. The far-right, anti-immigration Progress Party has overtaken the Conservatives to become the official opposition on a populist platform of tax cuts and spending the oil wealth on hospitals and care for the elderly.
  It is also tapping into xenophobia in a country that has always taken pride in its permissive liberalism. News magazines in recent weeks have focused on what are described as Nigerian prostitutes lining Oslo's equivalent of London's Oxford Street late at night and an influx of East European beggars.
  
  more:
  http://www.guardian.co.uk/money/2006/may/20/moneysupplement2