State of Nation: Christopher Luxon says recovery ‘cut down’ in 2025
Monday, 19 January 2026
Prime Minister Christopher Luxon says the economic recovery was “cut down by tariffs” last year, but has promised that his party is now well-placed to “build the future” ‒ a phrase he mentions 11 times throughout his first speech of the year.
But he has cautioned that there will be no room in the Budget for “extravagant election promises” as public finances remained tight.
His “State of the Nation” made much of the way this America-driven uncertainty had hurt the economic recovery, but made no mention of the new round of tariffs unleashed by the US on countries rejecting its objective to obtain Greenland.
It did not feature any new policies or the election date, which is expected to be announced on Wednesday.
He did caution there was no fiscal room for nice-to-haves even in an election year and government budgets had to remain tight.
“In the middle of last year, when emerging green shoots were rapidly cut down by tariff shocks and global uncertainty, it felt like we were back at square one.”
Read More:
Christopher Luxon’s biggest turnaround job: the 2026 National Party
Ranked: The best places to work (and get paid) in the public service
“I know many of you will be frustrated that this recovery, now starting to blossom nationwide, has taken so long to get traction. For many months it felt like the improving economic conditions at farm gates and on the main streets of Christchurch and Queenstown would never filter through to Queen St, Newmarket and Lambton Quay.”
Luxon said some were pushing for higher immigration or spending at this point but he was glad National had avoided the temptation of “sugar-rush economics”.
He said he was “more confident than ever” the economy was now in a good place.
While not mentioning the new tariffs or the United States directly Luxon did speak about how uncertain the world had become, saying the global rules-based order was “rupturing”.
“Our future prosperity can no longer be treated as an inevitable by-product of global rules and institutions. Trading arrangements are becoming less certain and less efficient, as businesses adapt to a world where tariffs and protectionism, once out of fashion, have made a raging comeback.”
He sought to highlight the India FTA - which will require Labour’s approval - as a partial solution to this level of uncertainty, alongside greater defence spending.
“We might live in volatile times, but this Government is nonetheless working at pace to position and secure New Zealand’s interests offshore.”
The speech made much of more positive economic news that has emerged in recent months, including increasing business and consumer confidence, and lower interest rates since the Government took office.
It was very focused on the National Party, with no mention of his coalition partners, but seven mentions of National as a party and four mentions of the “National Government”.
Labour leader Chris Hipkins said the speech offered nothing but “a whole lot of management-speak mumbo jumbo”.
Hipkins said the books were in a bad state as National’s tax cuts had been unaffordable.
Luxon’s speech was his first public event of the year, and followed his first media engagement on Monday morning - an interview with NewsTalk ZB’s Mike Hosking.