Auckland businesses are concerned about the uncertainty around direction of the Government unions and the tax environment.

Auckland Chamber of Commerce's latest survey shows 44 percent of businesses believe the economy will deteriorate further.

In June last year, just eight percent believed the economy would deteriorate over the next six months.

Chamber chief executive Michael Barnett says business confidence has gone into free fall.

"The minimum wage has gone up, they've been told that if they can't afford to pay $20 an hour, in a few years they shouldn't be in business. You've got fuel going up and of course the employment changes. All of this makes small and medium businesses uncertain."

Barnett says the Government's policies are the reason for the dramatic fall.

"I think a large part is just uncertainty in the direction of Government. And I think it's the storytelling from Government about some of the changes coming up, it's creating uncertainty in the minds of small and medium business."