30 November 2010 Media Statement

Recovery simply not happening under National

National can provide nothing but bluster and bravado in the face of bleak predictions for economic recovery, says Labour’s Finance spokesperson David Cunliffe.

David Cunliffe said the New Zealand Institute of Economic Research (NZIER) Quarterly Predictions points to what it calls ‘wintry’ economic conditions this summer and a reversal of any economic recovery, and refuses to rule out a double dip recession.

“The NZIER report reflects much of what I have been hearing from businesses that tell me that 2010 has been much more difficult for them than 2009,” David Cunliffe said. “It is not just retailers saying that, but professionals and businesses in the construction industry. Housing consents have continued to fall over the past quarter and are now at their lowest point in over a year. Big business projects are on hold.

“Last month John Key responded to NZIER’s Survey of Business Opinion, showing the economy in reverse, by saying things would pick up in summer. His recipe for summer cheer is now being shown up for what it is --- meaningless and baseless bravado that is not being borne out by what’s actually happening.”

David Cunliffe said the best that can be taken from the latest NZIER report is that New Zealand businesses should be planning for a shallow economic recovery.

“Although a broader-based recovery is predicted from halfway through 2011, unemployment will remain high, savings are falling behind where they need to be, the current account deficit is forecast to blow back out to high levels, and business investment remains low.

“On top of that dark clouds remain on the international horizon, with obvious potential to dampen demand for our exports,” David Cunliffe said. “While occasionally surveys like yesterday’s National Bank report point to improving business confidence, the good intentions that businesses report are not being transformed into action.

“The Government, in fact, seems to bounce from survey to survey, with the only constant being its lack of a credible economic plan that New Zealanders can understand and get behind. There is a real risk that uncertainty will feed on itself unless there is a clear plan for jobs, investment and sustainable growth.

“That plan needs to put in place measures that underpin household saving and incentives for real business investment,” David Cunliffe said. “It needs to emphasise action and investment to encourage exports and innovation, and to promote partnerships to unlock opportunities for good jobs across regions and sectors."

ENDS

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