Prime Minister John Key used his long flight back from Europe to write a 'memo to self' about why New Zealand would not suffer the same fate as countries such as Spain after hearing from political heads in Europe such as German Chancellor Angela Merkel.

Mr Key said yesterday his visit had reinforced to him that New Zealand was in a better position than many others - and he had written a list of the reasons why New Zealand was likely to escape a similar fate during his flight home.

He would not detail what was on the list, saying it might offend the diplomats of other countries.

"But if you just look through the basic ingredients of New Zealand, relatively speaking they are pretty good."


He listed those ingredients as including a good tax system, flexible labour markets and good infrastructure, as well as good access to international markets and relatively low bureaucracy compared to other countries.

"If you look at those countries that are experiencing significant challenges today, it's because they failed to have the right policy prescriptions."

Mr Key said Europe was an important economic bloc and an important trading partner for New Zealand. Despite the growth of Asia, a failure in Europe would impact heavily on New Zealand.

Asked if he had worked out what tough calls would be needed if New Zealand did falter like European countries, he said it already had many of the policy settings those countries had lacked.

"If there was just one simple thing where we could pull the lever, I'd more than happily go and do it, but it's not obvious what that lever is to me."

The truth is that the low hanging fruit that has been available in New Zealand has been plucked. So what is challenging for New Zealand is lifting competitiveness and productivity from quiet a high base."

Labour leader David Shearer has often accused Mr Key of relying on the economic problems of Europe too often to justify a lack of economic growth in New Zealand.

Mr Key said a recent International Monetary Fund report on New Zealand had shown it had the balance about right.


Mr Key also downplayed successive polls showing National's support was dropping, saying it was still getting support similar to its election result.

"I've just been to Europe where pretty much every incumbent Government is on its knees. Now, that doesn't mean we can't do better and it doesn't mean a number of initiatives we've had aren't slightly reflected in the polls. But you have to have a bit of objectivity."

He said he believed voters saw National as "predictable" and it had insulated New Zealand from the worst of the recession as much as possible.

"We have effectively run a very low level of new Government expenditure over four Budgets, but we have maintained the entitlements that would support people in times of need. We haven't cut benefits, we haven't cut pensions, we haven't cut Working for Families. So in my view, we've got that balance about right."

He said his talks with European leaders were detailed and informative.

"I've come away with the picture of a crisis that will not be easily solved nor quickly resolved."

However, he said there was a strong commitment from the European countries to resolve it, and he believed the Eurozone would make it through relatively intact.