Welcome to the hangover. The nation may still be rejoicing and revelling on Cloud Nine. The Treasury, however, brought things back down to earth yesterday with a warning that as far as the economy is concerned, the party could well be over - presuming, that is, that it ever started.

Not that the Treasury is deliberately being a party-pooper. It is obliged by law to produce an update of economic and fiscal forecasts in the weeks leading up to an election.

However, the document should be sobering stuff for an audience intoxicated by the All Blacks' triumph.

"Get real" has been the cry of critics who have pointed to actual economic growth rates constantly falling short of the department's seemingly ever-rosy expectations.


Well, the Treasury has got real - at least in the more cautionary language it is now using in discussing its forecasts.

Those forecasts are not radically different from those in the May Budget. Growth rates have been revised upwards for the current year and forecasts slightly downgraded for succeeding years.

The changes are not so large that they threaten to derail National's election-hoarding commitment to "Balance the Books Sooner".

While some economists think it is now a big ask to get back into surplus in the 2014-15 year, the Treasury says growth in tax revenue over the short term, the reducing costs of the Christchurch earthquakes and tighter control over new spending will see a successive halving year on year of the budget deficit - which reached $18 billion in the last financial year.

That is the good news for National, which could have had a fundamental feature of its economic management policy undermined had the Treasury taken a different view.

What has changed is the Treasury's previously confident optimism about meeting the target date.

The document says "risks are skewed to the downside". Translation: the only certainty is uncertainty and we are in the cactus if things really turn to custard in Europe and the United States.

The Treasury has included a "downside scenario", which, if it played out, would blow National's hope of getting back to surplus by the target date.


Moreover, the Treasury says such a scenario is not "worst case".

Such gloom is in contrast to the equivalent document produced before the 2008 election, which made much of the economy's supposed resilience.

For National, yesterday's update was evidence that the budget could be in surplus in three years, if it stuck to responsible economic management.

For Labour, the document's stress on the rebuilding of Christchurch as a major factor for growth was proof of National's failure to make hard decisions on lifting overall economic performance - such as introducing a capital gains tax.

Whether anyone is listening to National, Labour or the Treasury in the current euphoria is another matter entirely, however.