It's not always clear whether Bill English is half-way up the stairs or half-way down. But, like Christopher Robin, he seems confident that there isn't any other stair quite like it.

This is not a stimulatory Budget. The Government has made it quite clear that we can't afford that. Getting back to surplus - albeit paper thin - by 2014-15 remains the primary goal.

But then again, this can hardly be called an austerity Budget. Times are tough but we are not in the same league as the likes of Greece, Spain or even the UK where the scalpel is being taken to public spending with deep and painful cuts.

In Spain, where unemployment is running at 25 per cent, there are plans to cut €27 billion ($45 billion) from the Budget this year. That's something like 5.5 per cent of GDP in one hit.


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In New Zealand the slash and burn approach has been avoided in favour of the trim and shape.

Last decade, in the boom years, business people used to say: if you're not going forward you're going backward.

English seems to have reversed the adage for these tougher times: If you're not going backwards you might be going forwards.

There is plenty of new spending but no new cash. Take R&D for example, it is commendable that the Government has committed about $325 million to the key growth sector over the next four years. But look closely and you see that includes the tertiary sector and from the Ministry of Science and Innovation there is just $40 million new spending next year.

The Government will pitch this approach as a careful balancing act. Critics will call it rearranging the deck chairs on the Titanic.

Certainly English has been unafraid to set his course early and he isn't about to change it.

Thus far there has been little reason for panic. New Zealand has been muddling through the biggest financial crisis in a generation propped up by strong commodity prices and low interest rates.

But the threat of a second wave of fallout from Europe and falling commodity prices represent a real threat to earnings.

The answer is far from clear and New Zealand should count itself lucky that it is still in a position where the Government can afford to sit half-way up those stairs.