Media statement Thursday, October 9th, 2008

Business, other kiwis need to hear more from Reserve Bank, Government

The New Zealand economy needs more done to build confidence amongst business and others as the impact of the credit crisis spreads, the Employers & Manufacturers Association (Northern) says.

"Calls to EMA concerning business restructuring and redundancy are running at over double the levels they were last year, and rising fast," said Alasdair Thompson, EMA's chief executive.

"The level of activity in both manufacturing and services industries are contracting. Manufacturing has shrunk for four consecutive months and the Services sector for five months according to their respective Performance indices.

"While the recent tax cuts will help, the Reserve Bank now needs to:

* Cut the Official Cash Rate (OCR) by at least one percent;

* Ensure NZ banks have access to sufficient Reserve Bank credit to ensure responsible lending can continue;

* Reassure business, depositors and lenders that our banks are safe and fully able to keep on lending.

"The Government needs to assure depositors that, should it be required, it will guarantee them even though all our banks are rated amongst the top 26 in the world.

"Now is not the time to maintain and overly narrow focus on inflation. Restoring confidence to ensure the recession does not deepen must take priority."

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