New Zealand’s centre‑right government unveiled a leaner 2025 budget as economic growth falters. Finance Minister Nicola Willis told the Hutt Valley Chamber of Commerce that baseline spending would fall to NZ$1.3 billion in the 2025 budget, down from a forecast NZ$2.4 billion, because weaker growth and lower tax revenue are hurting the government’s finances. She said slower growth reduces revenue and threatens plans to return to surplus and cut public debt, so spending must shrink to keep the budget on track.

Willis confirmed the government still aims to return to surplus in the fiscal year ending May 30, 2029 under a measure that excludes the state accident insurer. At a December update the government expected to reach surplus earlier, but Willis noted the outlook has since worsened, with the economy growing more slowly than forecast. Since taking office in October 2023, the coalition has faced rising unemployment and lower tax receipts; it has cut public service roles and will unveil a fresh budget and updated forecasts on May 22. Treasury has also trimmed its assumptions for real GDP growth in 2025 and 2026, while still projecting a pickup later in the year.

These spending cuts mean New Zealanders could see tighter government services in the short term. However, officials argue that restraint is necessary to restore fiscal health amid a sluggish economy. The Reserve Bank has already slashed interest rates and economists expect further cuts, underscoring the delicate balance policymakers must strike between supporting growth and reining in debt.

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