Subdued thanks for small Greek mercies

VERNON SMALL
Last updated 05:00 19/06/2012

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OPINION: John Key has enough problems already without a global economic meltdown incinerating what's left of his surplus.

And yesterday he admitted no-one was popping champagne corks in the Beehive after the Greek election.

But the result has boosted ministers' spirits and hopes that the fallout will not burn New Zealand too badly.

Fronting his weekly press conference, the prime minister was clearly relieved the worst had not happened in Athens, but the topic rarely strayed from the economy.

Europe remained the biggest threat, with Greece still on "life-support", he said.

At the same time he revealed ministers were talking to Treasury about an "interim" review of the economy, well before its next scheduled update just before Christmas.

His admission that Treasury may rework its numbers less than a month after the Budget is an acknowledgment of the extraordinary volatility both globally and at home.

It also comes after the Reserve Bank kept the official cash rate at 2.5 per cent and tabled pessimistic forecasts for growth and export income, leading to a two-year delay in the Government's plans to return to surplus.

Mr Key, by protocol, never comments on the bank's decisions.

But he came as close as he could to saying he would have welcomed a rate cut, pointing out an apparent inconsistency – he called it a "dichotomy" – in governor Alan Bollard's view that while things were worse he still left rates unchanged.

As far as the 2014-15 surplus goes, Mr Key repeated he would not lightly let it slip.

Yet by baby steps, he is inching away. He again said he would wear deficits for another year or two rather than push the economy back into recession.

And he conceded to being "a little less confident" than on Budget day because of events in Europe.

His demeanour suggested he was a whole lot less confident – and that the champers would stay on ice for a long time yet.

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- The Dominion Post

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