Business confidence plummets ahead of NZ budget 2024

Still, 65% of Canterbury businesses remain hopeful for change

Business confidence plummets ahead of NZ budget 2024

With the New Zealand Budget 2024 on the horizon, Canterbury businesses are facing a crisis of confidence. Leeann Watson, chief executive of Business Canterbury, highlights the stark reality faced by businesses in the region, calling for targeted actions in the upcoming budget.

The Quarterly Canterbury Business Survey paints a grim picture of the current business climate. Only 19% of businesses are optimistic about their future financial performance, a sharp decline from 34% in the previous quarter and 44% six months ago. Additionally, 59% of businesses now worry about consumer demand, a significant rise from 27% this time last year, contributing to growing concerns about cash flow.

"Business confidence has plummeted over the last three months, clearly signaling the toll that cost pressures are taking. Some business confidence metrics are at the lowest levels we have seen since February 2023, with nearly 40% of businesses reporting significant impacts from rising costs, and well over two-thirds bracing for continued cost increases over the next year,” Watson said.

However, there are still some positive indicators.

"In more positive news, 72% of Canterbury businesses remain confident in their ability to manage disruption," Watson said, adding that the confidence is buoyed by factors such as an influx of migration, a promising winter tourism season, and a resilient primary sector.

The MYOB survey of mid-market and small-to-medium enterprises (SMEs) across New Zealand provides further context to these findings. The survey shows that more than two-thirds of mid-market businesses are hopeful about the budget's potential benefits, with key priorities including support for training and upskilling, and a reduction in the company tax rate to 25%.

SMEs also express a strong desire for policies that would ease business expenses and streamline processes. Increased investment in healthcare, education, infrastructure, and training and upskilling are among the top priorities. Watson said that “tax relief, while important, was only the fifth priority for the 400 plus businesses surveyed.”

With 65% of Canterbury businesses confident that the government can deliver a positive budget, Watson emphasizes that the decisions made and actions taken will be crucial.

"It remains clear that immediate action is required by the Government to support our businesses and the wider economy. We are calling on the government to deliver a 2024 Budget that addresses economic issues head-on. The focus must be on delivering a clear roadmap away from inflationary conditions, balanced with targeted funding in critical areas that support sustainable economic growth,” Watson said.