New government has a big task to revive business confidence, says Evans
THE issue for markets and the Australian economy will be whether the eelection of a new government leads to a marked improvement in consumer and business confidence in particular, says Westpac chief economist Bill Evans. A key dynamic which has been constraining demand in the Australian economy has been the failure to date of business confidence to respond to lower interest rates in the way interest rates have acted as a circuit breaker in previous economic cycles. Consumer confidence has responded to a degree but business confidence and how households feel about their job security have lagged in this cycle.
‘‘Our discussions with our business customers point to three areas which are weighing on confidence: government regulation (both red and green tape); rigidities in the industrial relations system; and an