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Sunday, October 08, 2017, 12:11
NZ parties hold talks to form coalition government
By Reuters
Sunday, October 08, 2017, 12:11 By Reuters

This combination of photos, both taken on Sept 23, 2017 shows New Zealand's Prime Minister Bill English, left, and Labour Party leader Jacinda Ardern both talking to their supporters after the election results in Auckland, New Zealand. New Zealanders still don’t know who will next lead the country after a final vote count from a general election held two weeks ago tightened the close race between liberals and incumbent conservatives. (NICK PERRY / AP)

WELLINGTON – New Zealand's small nationalist party which holds the balance of power after an inconclusive election held talks on Sunday with Prime Minister Bill English and separately with the opposition Labour leader as both try to form a coalition government. 

New Zealand First leader Winston Peters has said he would only make a decision on which party to back after the results of the Sept. 23 election become official next Thursday. 

A final vote count Saturday showed the ruling National lost some ground to the Labour-Green bloc from a preliminary tally

Peters remained tight-lipped after talks with the prime minister, saying the meeting was "fine", and later met Labour Party leader Jacinda Ardern. 

READ MORE: Final tally in NZ election opens way for formal coalition talks

Ardern has brought Labour within reach of forming government since becoming party leader in August, with a Labour-Green bloc winning 54 seats, two seats short of the ruling National's 56. 

New Zealand First holds the nine seats needed to meet the 61 seat majority in parliament. 

A final vote count on Saturday showed National lost some ground to the Labour-Green bloc from a preliminary tally, even though it still held the largest number of seats in parliament. 

"It did pay to wait, didn't it?" Peters said, referring to the final vote count. Peters has previously served in both National and Labour governments. 

English said on Saturday that negotiations would now likely focus on the economy. 

ALSO READ: NZ kingmaker party says will not decide coalition partner before Oct 7

Both Labour and New Zealand First have said they want to curb immigration, renegotiate certain trade deals and adjust the role of the central bank albeit in different ways. 

New Zealand First leader Winston Peters is interviewed by the media in Russell, New Zealand, Sept 24, 2017. (NICK REED/NEW ZEALAND HERALD VIA AP)

Analysts expected the political uncertainty to have little impact on financial markets and the New Zealand dollar. 

"I think on Monday the market is going to be a little bit subdued because basically nothing has changed," said Stuart Ive, private client manager at OM Financial. 

"You could say that the policies are probably more aligned to a Labour-Green-NZ First partnership but a three-way coalition is a lot harder to manage than a two-way coalition."

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