By Tracy Withers Dec. 18 (Bloomberg) -- New Zealand business confidence slumped to a record low in December, suggesting the nation’s longest recession in 18 years may deepen. A net 21 percent of companies expect sales and profits will fall over the next 12 months, according to a December survey released by ANZ National Bank Ltd. in Wellington today. That’s the worst outcome since the series began in 1988. The net figure subtracts the number of pessimists from the number of optimists. Businesses say they plan to reduce workers and cut capital spending as exports of milk, timber and wool subside, the housing market weakens and consumer spending falters. Finance Minister Bill English said today there’s a risk New Zealand’s economy will not begin expanding again until 2010 amid fallout from the global recession. “We are now seeing the consequences as we move beyond the financial crisis itself and into the real economic downturn,” said Cameron Bagrie, chief economist at ANZ National Bank. “No one is immune.” English is cutting income taxes from April. Reserve Bank of New Zealand Governor Alan Bollard has lowered the benchmark interest rate by 3.25 percentage points since July to revive the economy, which has been in a recession since the first quarter. Bollard will lower rates by at least half a percentage point at his next review on Jan. 29, according to a Bloomberg News survey of 14 economists. A net 22 percent of firms expect to fire workers, today’s survey showed. New Zealand’s jobless rate reached a five-year high of 4.2 percent last quarter and the government forecast it may rise to 6.5 percent by 2010. A net 43 percent of companies say profits will fall, the worst result in the 21-year history of the survey, and a net 13 percent expect to reduce investment. Asked about the broader economy, a net 35 percent of the companies surveyed said it will get worse in the next 12 months compared with 43 percent in November. To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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