**Grant Robertson has blamed weak business confidence on political prejudice. Thomas Coughlan reports.
The Finance Minister was responding to ANZ’s latest Business Outlook Survey, which showed business confidence falling 12 points to a net 39 percent negative over the month of June.**
Businesses outlook on the economy fell again in June, according to ANZ’s Business Outlook Survey. Confidence fell 12 points to a net 39 percent negative. Business confidence has been falling since June 2017 and fell sharply when the new Government took office.
Businesses outlook for their own activity, usually a better gauge of future GDP growth fell as well, but is still positive. It stands at nine percent, down from 14 percent.
National’s Finance Spokesperson Amy Adams drew attention to declining confidence among businesses for their own growth.
“This another serious drop in confidence not just the headline number but the number that Grant Robertson points to so often which is ‘own activity’” Adams said.
She said that she did not think the Government's spending would lead to sustained growth.
“Businesses are smart enough to know that Government spending, while it provides a short-term fiscal hit, it’s a sugar rush. It doesn’t sustain an economy long-term and it’s not a plan for having the private sector growing and hiring people,” Adams said.
Finance Minister Grant Robertson said he was not surprised by the results given recent commentary and certain persistent business prejudice against a Labour Government.
“We know that Governments that have a Labour party at the core we’ve seen a level of pessimism that doesn’t reflect in GDP growth,” Robertson said.
In the House on Tuesday, Roberson noted that between 2000 and 2008, roughly the period of the fifth Labour Government, business confidence was pessimistic 82 of 99 months, but GDP growth averaged 3.2 percent per anum. Between 2009 and 2017, business confidence was positive 87 of 95 months, but GDP growth averaged 1.98 percent.
The Reserve Bank still expects GDP growth to pick up towards the end of the year as the Government’s expansionary policies kick-in.
Banks concur but there is some disquiet that persistently low business confidence will bleed through into investment.
ASB Senior Economist Jane Turner said that the bank’s key concern going beyond the first half of 2018 “is that weak business confidence spills over into weaker investment and hiring activity, which will weigh on growth”.