Business confidence has continued to slide, according to the latest ANZ Business Outlook Survey.

Business confidence, and firms' views of their own activity, continued to fall in July, reaching the lowest levels since May 2008 and May 2009 respectively, ANZ chief economist Sharon Zollner said.

The low levels of confidence – particularly firms' own expectations of performance - were increasing the risk of the economy stalling, she said.

Business confidence dropped to a net 45 per cent of respondents reporting they expect general business conditions to deteriorate in the year ahead, down 5 points.

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Firms' perceptions of their own prospects are a better gauge of economic outcomes, but the news wasn't upbeat here either, Zollner said.

It dropped 5 points to a net 4 per cent expecting an improvement. This is the lowest reading since May 2009.

"This economy feels increasingly late in the cycle. Fiscal stimulus and the still strong terms of trade will support growth," she said.

"However, sustained low business confidence increases the risk that firms will delay investment and hiring decisions, in what could become something of a self-fulfilling prophecy."

Business confidence has become a flashpoint for the Coalition Government.

Finance Minister Grant Robertson yesterday played down concerns and told reporters in Wellington that there was "inbuilt bias" against Labour-led governments.

There is evidence that business confidence tracks lower in response to the election of Labour governments.

"We continue to believe the fundamentals of the economy are sound," Robertson said. "We'll continue to work with the business community on the issues concerning them but New Zealand remains a good place to do business".

But business groups are unhappy about issues such as the reform of labour law and what they describe as policy uncertainty in areas like immigration.

At the National Party Conference last weekend, former Prime Minister John Key warned that New Zealand faces an economic downturn - which could be exacerbated by low business confidence.

Most economists see New Zealand's GDP growth slowing through this year but picking up again next year as Government spending policies start to stimulate the economy.

"The New Zealand economy is delicately placed," Zollner said.

"Fiscal stimulus and the high terms of trade will provide impetus to growth, and the external environment remains favourable. But with businesses in a funk, it's fair to say that the road ahead is looking less assured, and risks of a stall have increased."

National leader Simon Bridges said there was a risk that businesses were less likely to hire more workers or increase wages, meaning fewer opportunities for workers.

"The fact that these numbers are at their worst levels in 10 years show just how worried businesses are and the Government must take responsibility as there is no other driver of this change," he said.

Westpac senior economist Michael Gordon noted the contrast between the economy now and in May 2008 when it was actually in recession, and the tendency of confidence to be lower under Labour Governments.

But he also highlighted the risk that the sentiment was slowing growth.

"We expect a modest pickup in the economy's momentum by the end of this year, as increased fiscal spending and transfers start to kick in," he said.

"However, the ongoing slide in business confidence does raise some concerns about the underlying strength of private-sector activity."

The New Zealand dollar fell about 0.1 per cent to US68.2c after the release.