Finance Minister wary of debt fallout

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Wed, 28 Sep 2011 12:59p.m.

Key says despite the real possibility of another global recession he's sticking by the forecasts for growth (AAP, file)

Key says despite the real possibility of another global recession he's sticking by the forecasts for growth (AAP, file)

By Emma Brannam

Finance Minister Bill English is warning that New Zealand remains vulnerable to the ongoing debt crisis in Europe.

His comments come as world sharemarkets staged their biggest one day rise in 16 months after hopes that euro zone leaders are about to beef up the euro zone rescue fund.

On Wall Street they always smile and clap but today time the enthusiasm was real.

Around the world sharemarkets surged as all eyes remained firmly on Berlin and the hope that a euro rescue fund is edging closer.

The Dow Jones closed up around 1 percent, the London FTSE by 3 and the French and German markets more than 5 percent. Commodities prices also soared, but some analysts doubt it will last.

“This is maybe the eighth or ninth time by my count since early 2010 that the market has said, 'ah ha, Europe has solved its problem', we've had a big rally and all of them have given it up,” says US analyst James Bianco.

The Prime Minister's pretty chirpy that Europe's economic woes won't do New Zealand too much harm.

But his second in command isn't so convinced. Bill English is just back from a meeting of finance ministers in Washington.

One economist thinks the Prime Minister's view may be coloured by the upcoming election, while Labour isn't so polite in its criticism.

But Key says despite the real possibility of another global recession he's sticking by the forecasts for growth.

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Comments

28 Sep 2011 05:55p.m.

Fellowes wrote:

This file photo could almost be a promotion for the National Party, unlike the unflattering photos usually posted of the Labour and Green leaders. I agree with Clarke and Garesh, if a National-ACT coalition are elected then God help us as they will continue to slash benefits making it impossible for the unemployed to feed their families. They will only continue to look after Big Business and sell our state-owned assets and farm land to the highest overseas buyers.

28 Sep 2011 03:05p.m.

Clarke wrote:

A huge problem is what we will have if Europe or the states get worse or if china begins to feel the pinch. 2 of the 3 biggest economic powers in the world are struggling. John Key needs to generate new money from somewhere, stop hiding under the skirts of big business and look at ways of clawing back more money from the wealthy. John Key is a one pony idea man... asset sales... but thats only a one off injection in cash and will likely only half the deficit for one year. At least the greens and labour are looking to claw back the tax cuts given to the wealthy and taxing them further on their capital gains. Thats how a government creates a continuous stream of added income. Not by selling off something once and covering 6 months of your debt... because the next year you have absolutely nothing left to sell. Key is a one idea man... and that idea is the stupidest that any of the parties has come up with to date.

28 Sep 2011 01:58p.m.

garesh wrote:

borrow is the word and hope is the plan.
that is what nz have with national.
they must go in nov or god help nz.