(Bloomberg) -- New Zealand Prime Minister John Key said he will step down next week and backed his deputy, Bill English, to succeed him.
In a surprise announcement Monday in Wellington, Key said that for family reasons he couldn’t commit to serving a full fourth term as prime minister if his governing National Party wins the next election, due in late 2017. The party will vote on a new leader on Dec. 12, he said, adding he will also resign from parliament next year.
“I absolutely believe we can win the next election, but I do not believe that if you asked me if I was committed to serving out a fourth term, that I could look the public in the eye and say yes,” Key, 55, told reporters. “I’ve given everything I could to this job, a job that I cherish in the country that I love. All of this has come at quite some sacrifice from the people who are dearest to me, my family.”
Since becoming prime minister in 2008, the former global head of foreign exchange for Merrill Lynch & Co. has enjoyed strong popular support as he steered the country through a number of tragedies, including an earthquake that leveled inner-city Christchurch in 2011 and killed 185 people. In close partnership with Finance Minister English, Key oversaw New Zealand’s economic recovery from the global financial crisis and returned the government’s budget to surplus.
‘Say it ain’t so bro’
“It has been an enormous privilege to be prime minister of New Zealand, and these last eight years have been an incredible experience,” Key said. However, too often political leaders stayed too long and he believed it was time for “a refresh,” he said.
Australian Prime Minister Malcolm Turnbull told reporters he had sent Key a short note reading: “Say it ain’t so bro.”
“New Zealand has never been better situated than it is today,” Turnbull told reporters. “That is due to the outstanding leadership that John has shown.”
The country’s benchmark stock index slipped 0.7 percent, while the kiwi dollar lost almost half a U.S. cent. It bought 70.91 U.S. cents at 4.25 p.m. in Wellington.
“There is now greater uncertainty over economic policy for the next parliamentary term, mainly through greater uncertainty over which parties will form government,” said Nick Tuffley, chief economist at ASB Bank in Auckland. “Whether the probability of a change in government is increased or reduced will depend on the incoming prime minister.”
Key Backs English
Key backed English to succeed him, saying: “I have witnessed first-hand his leadership style, his capacity for work, his grasp of the economy, his commitment to change and most of all his decency as a husband, as a father, a colleague and as a politician.”
As National’s leader in opposition from 2001 to 2003, English led to the party to its worst election defeat in 2002 and was replaced. However, since becoming Key’s deputy in 2006 and finance minister in 2008, English, a father of six and a former farmer, has developed a reputation as a safe pair of hands.
English, 54, paid tribute to Key today, saying he leaves New Zealand “a more confident, more assured and more resilient country.” He told reporters he will decide on whether to seek the leadership after speaking to family and caucus colleagues, but that a quick and smooth transition will be important for stability.
Another potential contender is Justice Minister Judith Collins, who told Newshub today that she is “thinking about it.”
While the latest opinion poll put National at 50 percent support, no party has won an outright majority since New Zealand introduced a Mixed-Member-Proportional electoral system in 1996. National currently governs with the support of three small parties.
With economic growth of 3.6 percent in the year through June, New Zealand is among the fastest-growing nations in the developed world, leaving National well placed to fight next year’s election on its promise of tax cuts.
However, the South Pacific nation of 4.7 million people is also in the grip of a housing boom that’s seen prices in largest city Auckland almost double over the past nine years, locking many first-home buyers out of the market and forcing others to take on huge amounts of debt.
“The truth is there are some real challenges for New Zealand,” Andrew Little, leader of the main opposition Labour Party, told Sky News. “We are at an interesting phase in politics generally, and I think next year’s general election is going to be bloody interesting.”
Key was elected in late 2008 with the country in the midst of a recession, and the global financial crisis damaging business and investor sentiment.
His government cut costs and borrowed to maintain welfare payments and social services, restoring growth, only for the nation to be shocked by a tragic mine accident at Pike River in 2010 then the earthquake in early 2011 that devastated Christchurch. A magnitude 7.8 quake on Nov. 14 left two dead and crippled the tourist town of Kaikoura on the South Island.
Key today listed support for Christchurch, his home town, as one of his government’s major achievements. He said his government has also positioned the economy to take advantage of growing demand from Asia, developing trade relationships and making its voice heard globally. It reformed tax, labor and welfare laws, and sold shares in four state-owned companies.
He said his regrets were not seeing the Trans Pacific Partnership achieved, and a national referendum defeat for a new flag that he championed. His wife, Bronagh, and two children had made significant sacrifices during his 14-year political career and it was time to spend more time at home, he said.
“Making the decision to resign has not been easy, and I have no plans as to what comes next in my professional life,” Key said. “But for me this feels the right time to go. It leaves the cabinet and caucus plenty of time to settle in with a new prime minister before heading into election year with a proud record of strong economic management.”