A disturbing aspect of the huge drop in business confidence is the second-largest drop ever in the expectations business people have for their own firms, ACT leader Richard Prebble says.
"Businesses tend to be accurate in judging how their own company will perform," Mr Prebble said.
"This drop in confidence has the potential to be self-fulfilling.
"It's unlikely that an interest rate cut alone can turn around such a strong negative sentiment. That's borne out in Japan where interest rates have fallen to effectively zero without boosting investor confidence.
"ACT believes Dr Cullen must reconsider his rejection of the McLeod Tax Review finding that the 39 cent top tax rate needs to be reduced to 33 cents, to encourage investment. A change in stance on tax rates would send a powerful confidence boost to the economy.
"With our trading partners Australia and the United States cutting their top rates of tax, New Zealand now has the highest income tax rate in the Asia Pacific region," Mr Prebble said.