Recession may be over but confidence in recovery takes a hit

Finance Minister Bill English says confidence levels had got unreasonably high in the latter half of last year. File photo / Mark Mitchell

New Zealand has come out of recession but confidence that the economy will improve over the next 12 months is slightly down, compared with November, a poll shows.

TV One's Colmar Brunton poll found 59 per cent of respondents were optimistic about the economy - a sizeable dip since November, when 68 per cent thought things were looking up.

Those who thought the economy would remain the same or worsen over the next year increased from 32 per cent to 41 per cent over the same period.

On Q&A yesterday, Finance Minister Bill English put the dip in confidence down to a "reality check". He said confidence levels at the end of last year were inflated by relief that the financial crisis was not as severe as initially thought.

"I think confidence levels had got almost unreasonably high in the latter half of last year, just a sense of relief that the financial crisis didn't turn into something really bad here in New Zealand.

"Now we're getting a dose of reality - people can see, you know, the housing market hasn't really taken off, there's still job insecurity around and that's why we've got to focus pretty strongly on policy that's going to help to broaden the base of the recovery."

However, Labour's finance spokesman David Cunliffe said the Government should see it as a wake-up call.

"Both John Key and Bill English have confidently declared the recession is over, so shouldn't confidence levels be increasing and unemployment falling?"

He said the Government had failed to provide the long-term plan it kept promising and, instead, resorted to one-off ideas, such as mining on the conservation estate.

Mr English also said he hoped unemployment would not go higher than 7.3 per cent. The Government was doing things that would create jobs, including infrastructure projects and schemes to train young people.

"In the end the long-term policy is what's going to matter for creating sustainable jobs, rather than just buying them short term."

Polls on TV One and TV3 showed Prime Minister John Key's indications that the Government would increase GST to pay for tax cuts in the Budget have had little effect on his popularity or that of his Government.

The TVNZ Colmar Brunton poll of 1000 voters showed support for the large parties largely unchanged - National was on 54 per cent, and Labour 34 per cent - up three points since the last poll.

TV3's Reid Research poll put support for National on 56.3 per cent with Labour down 1.2 points to 29.6 per cent.

In the preferred Prime Minister stakes, both polls had John Key at 49 per cent support, while Labour leader Phil Goff was on 8 per cent.

Smaller parties took a bit of a hit in the Colmar Brunton poll: the Greens dropped from 7 per cent to 4.7 per cent; Maori Party went from 3.4 per cent to 2 and Act was down to 1.7 from 2.2. United Future dropped off the rating altogether, while the Progressives hung on with 0.4 per cent support.

The Colmar Brunton poll was conducted between February 13-17 and had a margin of error of 3.1 per cent.