National says the blame for plummeting business confidence belongs solely with the Government, but the Finance Minister continues to blame the “inbuilt bias” of business towards a Labour-led government.
The latest business confidence numbers from ANZ reveal firms’ optimism levels are now the lowest since the height of the Global Financial Crisis. This is worrying some economists, with Bagrie Economics chief economist Cameron Bagrie - formerly ANZ's chief economist - saying the figures show an economy at “stall speed.”
Under the headline "in a funk," ANZ says; "Headline business confidence and firms’ views of their own activity continued to fall in July, reaching their lowest levels since May 2008 and May 2009 respectively. Activity sub-indicators were weak across the board, retail is the least confident sector."
The data shows a net 45% of business are expecting general business conditions to deteriorate in the year ahead.
Businesses’ perceptions of their own prospects – which has a closer link to Gross Domestic Product growth than the headline confidence figures – are now at the lowest levels since May of 2009.
“This Government is having the same effect on business confidence as a global financial crisis did a decade ago,” National Party leader Simon Bridges says.
He says the drop in the confidence levels is the Government’s responsibility – “there is no other credible explanation for what is happening.”
He blames poor policies, such as industrial law changes, and a lack of leadership for the drop in confidence levels.
Bridges says most of the banks have privately made clear to him that there is no other credible explanation for the receding levels, other than Government’s actions.
Finance Minister Grant Robertson says ANZ’s numbers “aren’t unexpected, given the trend we have seen.”
But he says the fundamentals of the economy are sound.
“We still have relatively low unemployment, we still have a surplus and we have debt tracking down.”
Robertson says the Government will continue working with the business community on the issues which are concerning them.
He “completely rejects” Bridges’ assertion the drop in confidence levels is all the Government’s fault, saying business confidence always falls under a Labour-led Government – “there is an inbuilt bias.”
‘Forget business confidence…’
Bagrie is most concerned about the businesses’ own activity measure in the survey.
Just 4% of businesses are now expecting an improvement in their own prospects.
“Forget about the business confidence figures,” he says. “It’s the fact firms own activity expectations, employment and investment intentions are near zero that is the concern.”
He says this figure seldom gets down this low.
“The economy is a long way short of the 3% plus [growth] projected by Treasury. The Government now has a fiscal hole from two sides; more spending demands and a weaker economy, which means less tax revenue.”
But Robertson remains confident that, over the forecast period, the economy will grow at around that 3% figure.