Coming to an economy near you: Winter of Discontent 2 - Season of gloom

"Just when you thought it was safe to elect a Labour-led Government."

It has been 18 years in the making but latest confidence surveys suggest the sequel to the fifth Labour Government's epic battle with business is finally here.

The surveys show businesses are feeling pessimistic about the economic outlook and – more worryingly – increasingly down about their own prospects.

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The second part worries economists because it can flow through to investment decisions and further dampen economic growth. There is a risk negative sentiment becomes a self-fulfilling prophecy.

In 2000 New Zealand business leaders pushed back hard against the new Helen Clark-led Government.

They bristled at what they perceived as the anti-business arrogance of finance minister Michael Cullen.

Investment stalled, the dollar slumped and the economy briefly shrank.

Are we in for a repeat?

Despite a lot of hype, it all looks a bit lacklustre so far – 2½ stars at best.

I've always preferred the original British version, anyway. That was hard core.

A particularly cold season across 1978/79 was dubbed the winter of discontent after a series of strikes brought the UK economy to its knees.

Petrol stations ran out of fuel, there were power cuts and rubbish went uncollected. Even the grave diggers went on strike - bodies literally piled up.

Our latest winter of discontent seems to involve a lot of discussion about whether GDP growth will come in closer to two per cent rather than three.

The specials effects aren't that good, either. There aren't even any epic fight scenes about fiscal policy.

The trouble with sequels is they can be a bit predictable.

The only redeeming feature here is strong character actors – especially veteran thespian Winston Peters, finally taking a leading role.

Of course, Peters showed no regard for spoilers when he outlined most of the script last October - predicting an onslaught of business doom and gloom.

But determined not to remake the Clark/Cullen version, Jacinda Ardern and Grant Robertson went on the charm offensive early this year.

Their attempt at a last minute rewrite didn't work.

So here we are, halfway through an increasingly discontented winter.

Are we really talking ourselves into a downturn?

I don't buy Government attempts to undermine the surveys. Business sentiment is genuinely gloomy.

But the Government is right to point to the political nature of it all.

The narrative has divided down partisan lines. Those on the left believe business lobby groups are the villains and those on the right point at Government policy.

Business doesn't really seem to the mind the combination of the charismatic Ardern and fiscally prudent Robertson.

It just dislikes policies - such as proposed employment law, fuel taxes and the ban on oil exploration - a lot more.

This makes a good plot device but it is too simplistic.

It's easy to overestimate the power of domestic sentiment to drive New Zealand's economy which is, after all, export.

This third narrative is far less exciting. It recognises we're in a cyclical slowdown - well under way before the election.

Negative business sentiment doesn't help, but the reasons for the slowdown in economic growth may be nothing to do with the Government.

Two big drivers of domestic economic growth – the housing market and immigration – peaked last year.

Sectors that should still be firing – such as construction - have hit capacity constraints.

We are a small developed economy with pretty average productivity levels.

We simply can't run at GDP growth levels above three per cent for very long.

The good news is this cycle has not (yet) involved an external shock that tips us into recession.

Historically at this point in an economic cycle, New Zealand is stalled by a property crash.

Cranes stop swinging, there are half-finished holes in the ground and bankruptcies and redundancies follow.

As slow-downs go, this winter's version is mild stuff.

And there is fiscal stimulus is on the way in the form of Working for Families payments and Government spending on housing and infrastructure.

It will just take time to flow though. Assuming we do not see an external shock, most economists expect GDP growth to pick up again by the end ot the year or early 2019.

It's never a summer of discontent, is it?

Meanwhile, this economy is very robust - in much better shape than 2000.

In fact it is pretty hard for a government to screw it up in a hurry.

A shift back to less domestic consumption is always stressful for local businesses but is part of the rebalancing act New Zealand has to go through from time to time.

Export commodity prices are in good shape and the dollar falling and we should see the productive part of the economy back to the fore for a while.

That could set us up for another cycle of improving growth.

The low unemployment and low interest rates make us well placed to get through a mild downturn.

A rise in business worries is understandable but it would be a shame to see it made worse by unnecessary hype.

As a spectacle Winter of Discontent 2 offers some interesting twists but ultimately fails to deliver.