Bill English
National Finance Spokesperson
Tuesday 31 October 2000

Bleak Christmas ahead, survey warns

It will be no surprise to families facing a steadily rising cost of living that business confidence continues to stagnate, National Finance spokesperson Bill English said today.

"Every indicator in the National Bank survey is worse, including firms' expectations of their own activity, employment, unemployment, profits, investment and interest rates.

"This shows just how deeply entrenched and fundamental the pessimistic mood is.

"Most worrying is the continued worsening in inflation expectations and the consequent increase in pricing intentions.

"Firms are under real price pressure - so consumers are in for a bleak Christmas. There'll be juggling bills rather than jingling bells for shoppers this year.

"Pressure on prices is making life particularly hard for the Reserve bank which has to balance strong price pressures on the one hand and a weak domestic economy on the other.

"The families who are facing cuts in their standard of living will be looking forward to the promised benefits of export recovery.

"Despite the continued gloom, economists generally have an expectation that economic growth recovered over the September quarter and that the economy will continue to grow, lead by strong exports offset by a weak domestic economy.

"But one thing is for certain: with the current mood, any pick-up in activity will remain well below the economy's potential to grow,.

"Businesses are looking at the reality of what New Zealanders have to spend. They're much more in tune with the pressure on families than the Government which thinks all the problems can be fixed by a one-day PR exercise," Mr English said.

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