Hafnarfjörður targets savings after 2.36 billion króna deficit

Hafnarfjörður recorded a 2.36 billion króna operating deficit in the first half of 2026, against a budgeted surplus of 435 million króna, according to an article by Orri Björnsson published by mbl.is. The shortfall against the forecast was nearly 2.8 billion króna.

Björnsson says the town began work in the spring to address the worsening finances. He attributes the shortfall to lower revenue from building rights and rising operating costs, including spending on education, social services and financing.

Hafnarfjörður has grown rapidly in recent years, with new neighbourhoods and investment in schools, preschools, sports facilities and other infrastructure. The town’s budget assumed continued development and revenue from building-rights sales. But interest rates rose, the housing market stalled and construction companies scaled back, reducing that revenue.

Björnsson says the financial pressures explain the situation but do not remove the responsibility of those leading the town to respond. The Independence Party has led Hafnarfjörður since 2014, he writes, during a period of growth and extensive development.

Last week, Hafnarfjörður’s municipal executive council approved savings measures in the town’s central administration. They include job cuts, tighter hiring rules and a two-year freeze on senior management salaries. The measures are expected to produce about 330 million króna in permanent annual savings from 2028.

For the 2027 budget, Björnsson says the town will need to reduce operating costs, reassess its projects, consider postponing investments, review purchasing and examine the sale of assets.