What an uncertain election result means for households' finances

New Zealand's election has delivered a less-than-decisive result, but what does it all mean for household finances?

With the election result still uncertain until the final count at the end of the month, economists say much depends on how those numbers fall and how coalition agreements are struck.

Massey University economist Matt Roskruge said, if National was able to form a coalition, as many pundits say it is likely to, it would probably mean more restrained government spending, particularly if ACT was to take the finance portfolio.

"That could mean continued pressure on public sector jobs and services, particularly in Wellington, with knock-on effects for local businesses. It could also help contain inflation and interest rates, although that depends on the overall package, including any tax cuts."

He said, if Labour had the numbers, there would be more support for public services and household incomes, which could help employment and those in urban areas.

"There could be a trade-offs with inflation and interest rates, if it adds substantially to demand, but that isn't automatic. It depends on how spending is funded and how much room the economy has to grow."

He said global conditions would matter enormously, no matter who was in charge.

"Strong farm returns are helping support some regions, while many urban households are still facing a difficult job market. AI looks a lot like a bubble, and between political uncertainty and conflicts around the globe, there is only so much our government can do.

"Businesses might hold off on hiring or investment, until the policy direction becomes clearer. A narrow majority could make it harder to advance an agenda, although it doesn't necessarily mean an unstable government.

"Longer term, I think the bigger differences for households will be access to healthcare, privatisation and how much they have to pay themselves, investment in infrastructure and whether we make meaningful progress on housing."

Otago University economist Murat Ungor agreed some of the most important things to households were out of government control.

"I'd be cautious about expecting big near-term changes to household budgets either way. The things that matter most to most households right now, such as mortgage rates, rents, council rates, insurance and food prices, are driven largely by the Reserve Bank's interest rate path, global conditions and the labour market.

"The real policy differences, such as Labour's proposed capital gains tax and cost-of-living relief versus continuity under the current coalition, would take time to legislate and implement. Any multi-party arrangement tends to dilute headline promises, so I'd expect incremental change, rather than a sharp turn.

"In the coming weeks, I'd watch three things - the shape of the coalition or support agreement, any early signals on fiscal settings, and whether cost-of-living help is targeted at those who need it most or spread broadly. The first full Budget in May will be the real test of how far any promises survive."

Infometrics chief forecaster Gareth Kiernan said, based on the current numbers, major changes for households seemed unlikely.

"If you get a switch to Labour somehow and they manage to cobble things together, the policy direction starts to become a bit different. You have questions around what kind of additional tax may come in and then if there is any specific relief around the cost of living as well.

"It's the sort of thing that's not really going to start to have an impact until 12 months down the track.

"It's been clear from both major parties' points of view that they do recognise the tightness of the fiscal position that they're working with. I don't see government policy particularly adding to inflation depending on who gets in."

Westpac chief economist Kelly Eckhold said the result meant that whichever side was able to form a government would not have a very strong mandate to make big changes.

He said a left-wing coalition could have had an impact on interest rates, if it changed the Reserve Bank mandate to require it to take employment into account in rate-setting decisions. Unemployment lifted in the most recent update, but business confidence was likely to be buoyed by a National-led coalition.

There could also be an impact simply due to the uncertainty of the result.

"Markets don't like uncertainty, particularly in the foreign exchange market. Given the New Zealand dollar is already starting on the back foot, we went through the low point Friday night... which is, aside from perhaps a couple of very short-lived episodes in the last 10-15 years, the lowest since the global financial crisis.

"We are in an environment here where you've already probably had a few factors leaning heavily against the New Zealand dollar and this uncertainty, I think, probably will add to those. That's one of things that makes it a bit tougher for the Reserve Bank, because you've got the potential of a bit more imported inflation filtering into the outlook, if you're going to be building in a weaker exchange rate outlook."

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