Euro crisis keeping Finance Minister Bill English awake at night; may roll on for a couple of years

By Alex Tarrant

The European sovereign debt crisis has kept Bill English awake at night, but New Zealanders' acceptance of the need to rebalance the economy was making him sleep easier, the Finance Minister said.

English was speaking to a Cullen Law breakfast on Thursday, when asked what kept him awake at night.

“One factor is the volatility in international markets," English said. "We learnt from 2008 that we have one cash pipeline coming in here, which is the Australian banks borrowing essentially in European and American financial markets," he said.

That pipeline could shut, English said, and it did. "It shut down for a number of months in 2008 and these people are getting grumpier, they’re not settling down," he said.

"So this week it’s Ireland. The euro and Ireland and Greece - that could roll on for a couple of years. We don’t want to be vulnerable to those markets. That’s one thing that keeps me awake."

Sleep easy

However English said one thing that helped him sleep was that New Zealanders really had "got a grip" on what was needed in terms of rebalancing the economy, away from debt and consumption toward savings and investment.

There was a risk when the government had a theory about what needed to happen in an economy that the public was totally disconnected from it, which had happened before, he said.

"But I think now people [and] the way they’re dealing with their own households and businesses, is the way we need to deal with the economy.

"That’s very reassuring."

English said this had become clear in the Mana by-election.

"If there was an opportunity for anyone to get a strong argument up that the economic policy was wrong, or the tax changes were wrong and politically unsustainable, then they’ve had that opportunity in the last month, and in almost the most typical New Zealand electorate you can get," he said.

The Mana electorate had everything – ethnic mix, rural, urban, old people and young people. "And they haven’t got any issues up."

"I think that tells you middle New Zealand is roughly in line, and I think the government has done a reasonable job, actually, at going at the right pace through all of this.

"So I’m sleeping reasonably easy at night," he said.