Guidance

Overseas business risk: Norway

Updated 5 June 2023

1. General overview

Norway ranks in the top ten highest GDP per capita in the world, thanks to its natural resources (Norway is the world’s 3rd largest exporter of natural gas and 10th largest exporter of crude oil), skilled workforce and use of new technology. The Norwegian economy is open, highly dependent on international trade and features a combination of free market activity and government intervention.

The state is an extensive owner of companies and is heavily invested in energy and seafood. Through government ministries, the state has direct ownership of 69 companies. At year-end 2021, the value of the state’s direct ownership was estimated at approximately £86.6bn.

The state’s revenues from oil and gas are transferred into Norway’s Government Pension Fund Global (GPFG), which is the world’s biggest sovereign wealth fund – now worth close to £1006bn. The Fund is a significant source of Norwegian public welfare funding and covers about one fifth of state budgets. A fiscal rule limits withdrawals from the Fund to the expected real return on the fund, currently estimated at 3%.

Norway’s large merchant shipping fleet is one of the most modern and ranked the 4th largest by value. Other major industries that have performed well in recent years include offshore energy, shipbuilding, fishing and fish farming, information technology, and light metals processing.

Trade unions and employers’ organisations have existed and cooperated for more than a hundred years, and there is a deeply rooted tradition for employee involvement and the information/consultation of workers. Wages are negotiated by the parties concerned and there are no minimum wages. The industries most exposed to international competition provide the framework for wage growth in other sectors (the so-called trend-setting trade model for wage formation).

Norway was ranked at number 17 of 141 countries in the 2019 Global Competitiveness Index (measuring national competitiveness - defined as the set of institutions, policies and factors that determine the level of productivity).

2. UK-Norway trade and investment

As close neighbours sharing the natural resources of the North Sea, Norway and the UK have a strong trading relationship that stretches back almost a thousand years. Shared culture, values and experiences make Norway and the UK natural partners. Norway is also technologically and digitally advanced and ranks high when it comes to ‘ease of doing business’.

Total trade in goods and services between the UK and Norway was £54.5bn in the four quarters to the end of Q4 2022. This was an increase of 54.4% from the four quarters to the end of Q4 2021, and a 40% increase in total trade value since 2016. This makes Norway the UK’s 9th largest trading partner, accounting for 3.2% of total UK trade, while the UK remains Norway’s largest trading partner.

The top five goods exported from the UK to Norway and from Norway to the UK are electricity (9.6%), general industrial machinery (5.9%), aircraft (5.3%), refined oil (4.9%), miscellaneous metal manufactures (4.7%), and gas (56%), crude oil (32.2%), electricity (2%), refined oil (1.6%), fish & shellfish (1.5%) respectively.

In 2021, the outward stock of foreign direct investment (FDI) from the UK in Norway was £6.6bn, accounting for 0.4% of the total UK outward FDI stock.

After Brexit, the UK and Norway negotiated a comprehensive free trade agreement (FTA). The agreement establishes an important framework for supporting and further developing trade, investments and the close business cooperation between Norway and the UK.

3. Politics

There are 169 seats or Members of the Storting, and parliamentary elections are held every four years. Ten parties are currently represented in the Storting. The share of women is 45% and the average age of MPs is 45. The last Parliamentary Election was held in September 2021.

In the 2021 election, the Labour party took office after eight years of a Conservative-led government. PM Støre formed a Labour-Centre Party (agrarian) minority coalition government, with 76 of the Storting’s 169 representatives (45%). The coalition needs support from others to pass key bills including the budget. Most often they look to the Socialist Left (SV) (socially/environmentally progressive: economically hard left) party for cooperation. Minority governments are a regular feature of Norwegian politics and single-issue ad-hoc coalitions are accepted to have a disproportionate influence in government programmes.

Domestic priority issues include work for all, levelling up, social welfare and renewing the public sector. The cost-of-living crisis and energy crisis has changed government priorities, as support packages for households and businesses struggling with the high cost of electricity funnels funding away from longer-term projects and priorities such as infrastructure and public buildings. Norway’s next local and Parliamentary elections will take place in September 2023 and 2025, respectively.

Norway is part of the European Economic Area (EEA), bringing Norway into the EU’s internal market. Referendums on EU membership were held in 1972 and 1994 but lost on both occasions. EU membership remains a divisive issue, but (although more politicised in recent years) the EEA agreement is supported by a stable majority of the population. As part of the EEA, Norway implements and follows EEA law (on the four freedoms and more) to ensure a homogeneous internal market with equal conditions for competition.

Foreign policy is generally stable across governments, with focus on the rules based international system and multilateralism, enhanced Nordic cooperation and increased contribution to UN peacekeeping. The Nordics and Northern Europe, along with the EU, remain Norway’s most important political and economic partners.

4. Economics

Norway’s economy rebounded quickly after Covid-19, with historically high private consumption driving the recovery. By mid-2021, the mainland real GDP (excluding offshore oil and gas sector) exceeded its pre-pandemic level. Swift implementation of social mobility restrictions, strong political unity, and broad public support were among the country’s key success factors. Norway’s solid financial footing enabled the government to finance generous support packages to mitigate the pandemic’s economic impact on workers and businesses.

The effect of the war in Ukraine on the Norwegian economy has so far been relatively mild. Norway’s earnings from oil and gas have been record high due to the surge in prices. However, higher energy prices and input costs have pushed up business costs, which in turn have spilled over into consumer prices.

Inflation is markedly above the 2% target (now at 6.4%). Although the policy rate has been raised considerably over a short period of time, activity in the Norwegian economy is high and unemployment remains low (at 3.5%). Together with a higher wage growth and a weaker krone than projected, this is continuing to push inflation up (the krone has been weak for some time and reached a two-year low in February, much due to lower oil prices and high level of fear in the international market).

Mainland GDP increased by 3.7% in 2022. The rise was primarily driven by growth in retail trade and other private services. Activity in the oil industry is expected to rise substantially in 2023 as a result of higher petroleum sector investment in Norway and abroad. Investments in renewable energy are also pushing activity up. The Central Bank believes the Norwegian economy has reached a cyclical peak and predicts growth will slow to 1.1% in 2023.

5. Foreign direct investment into Norway

Norway is politically stable, with strong property rights protection and an effective legal system. As of 2021, Norway ranked 9 out of 190 economies in the World Bank’s ease of doing business index; scores particularly high when it comes to starting a business, registering property, and trading across borders; and was ranked 12 out of 102 countries in the 2022 Corruption Perception Index, making Norway attractive for foreign direct investments.

Strong collaboration between industry and research institutions attracts international R&D activity and funding.

In the first six months of 2022, FDIs to Norway totalled USD 3.9bn, compared to a flow of USD 5.8bn recorded in the same period one year earlier. The main sectors for inward FDIs are mining and quarrying (18%), financial and insurance services (17.8%), manufacturing (12.1%), wholesale and retail trade (9.1%), and real estate (8.3%). There are approximately 8,100 foreign-owned companies in Norway.

Before the outbreak of the war in Ukraine, the price of hydrocarbons had been going down for some years and investments in Norwegian oil companies dropped as a result. The war and its effects on the energy market and prices has reversed this trend (new investments in the gas sector worth USD 672 million were announced in 2022 – FDI Intelligence).

As a member of the EEA and the EU’s single market, foreign investment legislation has and continues to be liberalised with the aim of conforming more closely to EU standards. The Norwegian government introduced a new investment screening regime, allowing Norwegian authorities to investigate and block FDI on grounds of national security, national financial stability and autonomy in 2019. The decision applies to EU and non-EU investments alike.

6. Free trade agreements

Norway is one of the UK’s most important trading partners and a likeminded partner on important UK objectives such as energy security and strengthening the multilateral trading system through the WTO. Total trade in goods and services (exports plus imports) between the UK and Norway was £54.5bn in the four quarters to the end of Q4 2022, an increase of 54.4% or £19.2bn in current prices from the four quarters to the end of Q4 2021.

The top goods and service types exported from the UK to Norway in the four quarters to the end of Q4 2022 were:

• Telecommunications, computer and information services
• Travel
• Insurance and Pension
• Electricity
• General industrial machinery
• Aircraft
• Refined oil

The top goods and service types imported to the UK from Norway in the four quarters to the end of Q4 2022 were:

• Gas
• Crude oil
• Transportation
• Electricity
• Refined oil
• Fish & shellfish
• Travel

Norway is part of the EU’s internal market as an EEA-member and a member of the trading block EFTA, through which the majority of Norway’s Free Trade Agreements (FTAs) are negotiated.

The UK’s bilateral trading relationship with Norway is underpinned by the comprehensive UK-EEA EFTA FTA. The FTA was provisionally applied between the UK and Norway from 1 December 2021 and came into force on 1 September 2022.

The agreement covers goods, services, investment, and a range of other commitments including on customs, procurement, digital, and telecoms designed to liberalise and support trade. The government continues to work with Norway to maximise the benefits of our comprehensive FTA for businesses and consumers.

7. Business and human rights

In Norway, human rights are protected under the Constitution, the Human Rights Act and specific legislation in certain areas. In the event of conflict with domestic law, the provisions of the UN conventions incorporated through the Human Rights Act prevail over other Norwegian legislation.

The Norwegian Anti-Discrimination Act prohibits direct and indirect discrimination based on ethnicity, national origin, family background, skin colour, language, religion and belief. Norwegian society is characterised by a high level of gender equality, coming second in the World Economic Forum’s Global Gender Gap Report 2020.

Trade union membership is common in Norway (50%), and two thirds of employees are covered by a collective agreement. Norway has been the destination for large-scale labour migration from EU countries in Eastern and Central Europe, presenting some challenges for authorities to ensure foreign workers enjoy wages and labour conditions that are in accordance with Norwegian legislation and collective agreements. There is no statutory minimum wage in Norway.

Norway is a member of the Voluntary Principles on Security and Human Rights (VPs), an initiative involving governments, companies, and non-governmental organizations that promotes implementation of a set of principles that guide oil, gas and mining companies on providing security for their operations in a manner that respects human rights. Norway is also a Member State of the International Code of Conduct for Private Security Service Providers (ICoC) Association, an initiative working with private security companies to set out international principles and standards for the responsible provision of private security services.

Norway hosts the secretariat of the Extractive Industries Transparency Initiative (EITI). This organisation works for good governance and transparency in the oil, gas and mining industries, and the countries benefiting from them. The focus of Corporate Social Responsibility (CSR) is as prominent in Norway as in the UK.

8. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

In 2021 Norway ranked fourth in the Transparency International’s Corruption Perception Index (CPI). Recent media headlines covering corruption in Norwegian companies’ international operations, as well as domestic incidents of unjustified entertainment have intensified public scrutiny on bribery and corruption.

Visit the Risk and Compliance Portal providing advice and guidance about corruption in Norway and some basic effective procedures you can establish to protect your company from them. Also read the information provided on our Bribery and Corruption page.

9. Terrorism and security

See the FCDO Travel Advice for Norway for the latest information on terrorism threats.

10. Cyber security

Norway is one of the most digitalised countries in the world and is heavily dependent on well-functioning digital solutions. Norway has much to protect including a digital society with an advanced e-health system and a leading energy sector.

Cybercrime increased during the Covid pandemic and has continued to rise during the war in Ukraine, both in number of attacks and complexity. Norway is now facing a complex and vulnerable cyber risk where states and criminal bodies look to exploit vulnerabilities in systems by using a wide range of tools and methods.

In 2022, a cyber-crime survey showed that 64% of respondents were more concerned about attacks now, due to the war in Ukraine, than before and almost 60% had taken steps to improve their security as a result. Over 80% of companies said they had experienced phishing, over 30% had lost control over personal data and just under 20% had experienced blackmail in various ways. The greatest fear is that critical systems will be disabled and that information, including personal information, will be stolen or compromised.

Norwegian authorities are concerned that foreign states’ intelligence services are employing a wide variety of methods and means to attack Norwegian systems: computer network operations, recruitment of sources, digital and physical sabotage, influence operations and covert procurement. Cyber threat organisations also exploit vulnerabilities like weak passwords, outdated software and the lack of two-factor authentication to gain illegal access to information. The attack against the Norwegian Parliament’s email systems in 2021 is an example of an extremely serious cyber incident in Norway.

State ownership of digital infrastructure is becoming increasingly more important. The cloud services market is dominated by a few international commercial providers, where the five largest account for over 80% of the IaaS (Infrastructure as a Service) market. Data centres can pose a security risk as international investment companies fund many.

As part of the 2023-revised national budget, the Norwegian Government is investing NOK 581mn in cyber security. This will be used on the protection and renewal of the Norwegian Cyber Defence ICT systems against digital threats from military and civilian actors, and the Cyber Defence’s ability to support the Defence operations and increase staffing of the Cyber Security Centre.

The aim of the Ministry of Justice and Public Security’s Digital Security Act is to encourage and ensure that businesses which have a particularly important role in maintaining critical social and economic activity, comply with digital security requirements. The Norwegian authorities continue to develop frameworks that define roles, responsibility and governance structures for handling serious cyber-attacks, as set out in the government’s National Strategy for Digital Security from 2019.

Norway is an associated member of the European Union Agency for Cyber Security (ENISA) and is ensured assistance from ENISA on cyber incidents, which involves cross-border incident management, analysis and technical investigations.

11. Commercial disputes

The Norwegian legal system is based on civil law. The Dispute Act is based on an adversarial model where the parties, as a rule, are responsible for providing evidence and presenting their legal arguments. Cases are started and prepared through written submissions. But, as a rule, the parties are, at least at one stage during the proceedings, entitled to argue their case orally and to present their evidence directly to the court.

Disputes that cannot be settled amicably, are usually resolved either by the ordinary courts, arbitration or judicial mediation. Arbitration is rarely used except for contracts between large commercial entities.

Norway is a party to the Lugano Convention. For disputes covered by the convention, Norwegian courts will have jurisdiction as stated in the convention. For disputes not covered by the Lugano Convention, or other conventions, Norwegian courts only have jurisdiction over the parties in international commercial disputes if a legal venue can be found in Norway pursuant to distinct venue provisions in Norwegian statutory law.

12. Intellectual property

The Free Trade Agreement between UK, Iceland, Lichtenstein and Norway includes precedented commitments on Intellectual Property (IP) that provide high standards of protection for, and enforcement of, IP rights. These include registered IP rights such as patents, trademarks and designs, unregistered rights such as copyright as well as trade secrets. These provisions refer to, and in many areas exceed, the standards set out in international agreements such as the WTO Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and World Intellectual Property Organization (WIPO) treaties. The Agreement between UK and Norway went into force December 2021.

Norwegian IP legislation mirrors that of the EU and Norway is also party to most important international conventions in the area of intellectual property rights, including the TRIPS Agreement, the Paris Convention, the Berne Convention, the Patent Cooperation Treaty and the European Patent Convention (EPC).

For information about obtaining patents in Norway, please contact:

The Norwegian Industrial Property Office

PO Box 8160 Dep. N-0033 Oslo Sandakerveien 64, 0484 Oslo Telephone: + 47 22 38 73 00 (switchboard) E-mail: post@patentstyret.no (all enquiries)

The Norwegian Industrial Property Office in Norway is organised under the Ministry of Trade, Industry and Fisheries and is the Authority that handles IP protection, registration of trademarks and design, while also serves as International Searching Authority for patent applications within the international system PCT.

13. Contact

Please contact the Department for Business and Trade (DBT) team in Norway for any business risk concerns and contact our European Trade Hub for any general inquires or visit our Export Academy launch site to learn more about exploring trade opportunities.

For an overview of live export opportunities from around the world, contact information and general business advice for exporting to Norway visit GREAT.

14. Useful links

• FCDO Travel Advice for Norway
• Exporting guide to Norway
• Department for Business and Trade’s Export pages
• Business Anti-Corruption portal
• British-Norwegian Chamber of Commerce