The threat of extra regulation has sent small business' pessimism about the economy to its highest levels in nearly a decade.
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An ANZ Bank survey of more than 200 small-to-medium businesses shows 30 percent expect economic conditions to deteriorate over the next 12 months - the highest since 2009, up from 20 percent in March and 17 percent a year ago.
ANZ retail and business banking managing director Antonia Watson said regulation was the biggest concern for small businesses, particularly in agriculture.
"While sentiment remains pessimistic, the results suggest small firms are still experiencing sustained demand for their goods and services, however, potentially at a decelerated pace."
Eleven percent of those surveyed expected increased business activity - the lowest in nine years.
Other factors hurting confidence included a slowing housing market and growing online and offshore competition for retailers, Ms Watson said.
The survey covered businesses employing up to 20 people. These make up the majority of businesses in New Zealand.
Expectations of future profits, investment, and hiring were all weaker, and the agriculture and construction sectors were the most negative.
While sentiment declined throughout the country, especially in Canterbury and much of the North Island, Wellington was confident.
The survey mirrors others which show business confidence has slumped since the election.
