depreciation of the krone through the past year indicates that this mechanism is functioning. as long as there is confidence that inflation will remain low and stable over time, the krone can depreciate markedly even if the key policy rate is low. the benefit of a national currency is lost if the temporary rise in inflation due to the depreciation is countered by higher pay increases. the result could then be a higher key policy rate and a stronger exchange rate than would otherwise be the case, and higher unemployment. the social partners have a particular responsibility in this regard. oil companies had already given notice of lower investment, workforce reductions and cost cuts in winter 2014. this tendency has been reinforced by the sharp fall in oil prices, resulting in spillover effects on the mainland economy and rising unemployment. chart : key policy rate reduced as long as inflation expectations are firmly anchored, monetary policy can serve as a first line of defence when the economy turns down. since december 2014, norges bank has reduced the key policy rate by a total of 0. 75 percentage point, to 0. 75 percent. the weaker outlook for the norwegian economy has been given weight in our assessments. from the end of the 1990s, the price of north sea oil rose from about usd 10 per barrel to over usd 100 per barrel. large shares of the sizeable revenues from the petroleum sector over the past 20 years have been transferred to the oil fund. norway ’ s sound public finances have been a great advantage to the economy, particularly through the financial crisis. but the management of the government ’ s large petroleum revenues through our 40 year - long oil history has not always been equally well planned. in the mid - 1970s, the budget deficit – including petroleum revenues – reached a high level. and we could not know then that oil prices would more than double a few years later – with the second oil shock in 1979, known as opec ii. but we learned from our mistakes. the oil fund mechanism in 1990 and the fiscal rule in 2001 were introduced to discipline fiscal policy in such a way that norway ’ s petroleum wealth would also benefit future generations. oil fund assets are now equivalent to more than twice the gdp of norway ’ s mainland economy, and the oil fund, or the government pension fund global ( gpfg ), is today one of the world ’ s largest sovereign wealth funds. the gpfg represents the nation ’ s savings, to be managed for the benefit of both current and future generations.

sector and higher consumption of goods and services, other industries had to give way. the mechanisms described in the white paper are familiar : “ a transfer of production and jobs between firms and industries can occur via increased domestic cost pressures. ” so, the nation was prepared for restructuring and for the costs this would involve. but the white paper also made it clear that, in order to reap the benefits of economic growth, restructuring would be necessary. we now know, more than 40 years later, that structural changes were indeed made. the industry structure of our economy has changed. a growing number of firms, and not only in the engineering industry, have targeted the oil industry. labour shedding in some sectors has freed up labour for other uses. chart : high wages in the oil industry bis central bankers ’ speeches oil companies have had the capacity and the willingness to pay. tax rules have favoured investment spending and earnings have been solid. oil company employees have been wage winners here in norway. a state - of - the - art oil service industry has emerged. new products and technological solutions have been developed. for many firms, the contracts on the norwegian continental shelf have been a springboard to new export markets. chart : growth in oil investment high oil prices and a profitable petroleum production industry have led to record - high oil investment in recent years. the level of investment in 2014 was equivalent to that of all the domestic non - oil industries combined. the positive spillovers to the oil service industry and other firms have been substantial. employment has remained high and unemployment low, even when the financial crisis hit in 2008. a large share of the business sector and the labour market is now linked to the oil industry. a relatively small number of jobs are directly involved in oil and gas production. but if account is taken of all the suppliers to the petroleum sector, about 1 in 9 jobs in norway, a total of about 300 000, were linked to the oil industry in 20141. a growing number of these jobs are related to exports of oil extraction equipment. the oil and gas industry has played a decisive role in the strong growth of the norwegian economy over the past 40 years. the past 15 years stand out in particular. but this dependence on oil has also made the norwegian economy vulnerable to changes in oil prices or a decline in petroleum revenues. chart : high wage growth ( not incl. the krone depreciation over the past two years ) high domestic labour costs have also increased the norwegian economy ’ s vulnerability