Key resigns, endorses English

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John Key has shocked the country by announcing his resignation as prime minister. National will hold a special caucus on December 12 to elect his replacement, plus a new deputy leader. Finance Minister Bill English will take over until then.

Mr Key said he would support Mr English as his successor if his deputy puts his name forward. At a 3pm press conference, Mr English said he had yet to decide. He would consult with caucus before making a decision. The finance minister did say that he would not seek a mandate through an early election if he did run for the leadership.

Political commentator Bryce Edwards says it's a highly unusual move for a departing PM to endorse a successor. He sees it as a possibly an attempt to thwart candidates from the party's right.

He reportedly told the cabinet just 30 minutes before going public.

Commentator Matthew Hooton tells NBR Radio "It is almost certain Bill English will become prime minister" based on Mr Key's endorsement, "and that would be the broad feeling of caucus anyway."

Mr English led National to its 2002 disaster, where the party received an all-time low 21% share of the vote. However, the Southlander faced an incumbent Helen Clark and her formidable political machine. Over National's current term in office, he has clocked up what most consider a solid run as finance minister, if one that hasn't departed far from Sir Michael Cullen's playbook.

Steven Joyce and Paula Bennett are among others expected to be in contention. So is Judith Collins, who this afternoon said she had yet to decide whether to stand. She says National's caucus will meet tomorrow to set the leadership election process ahead of the vote next Tuesday.

Deputy scrap
Mr Hooton sees the real action in the race for deputy prime minister, which he sees as cementing the longer-term direction of the party.

He says the fight for the Mo 2 spot is an opportunity for a new generation of National party leaders to step up, including Amy Adams, Paula Bennett and Simon Bridges.

Another key question: Will Mr English maintain the finance portfolio if he becomes prime minister? There is a precedent, set by Sir Robert Muldoon.

At times happy and relaxed, at times with his voice cracking with emotion, Mr Key said in a Q&A after his short-notice press conference that "the time just felt right ... I'm not the kind of guy to hang on to power for power's sake. I feel like I'm going out on top."

Earlier, during his speech (see full text here) he said "I have left nothing in the tank."

He said he wanted to give his successor time to settle in before the election.

Asked what he would do next, he replied, "I'm a commercial guy." He said he might do something quite "subterranean ... I don't need to be in front of the cameras."

"Too early to do anything..Announcement is only a few hours old," says English. Though he says only a week to decide next PM not a big issue pic.twitter.com/fNkuXxw2mV

— NBR (@TheNBR) December 5, 2016

Mr Key will remain in Parliament until November to avoid triggering a by-election.

Dollar falls
The kiwi dollar dropped on the news that Mr Key, who has maintained persistently high poll ratings as leader, is stepping down before next year's general election.The kiwi dollar fell to 70.98USc as at 5pm in Wellington, from 71.18USc at the start of the day and from 70.9USc in Asia at the end of last week. The trade-weighted index rose to 78.10 from 78 in Wellington on Friday.

"Ten years at the top – it's a long time, it's a lot of lonely nights for Bronagh," Mr Key said at a media conference in Wellington. "I felt this was the opportunity for me to do what very few leaders get to do, to make the transition to a new leader. I really felt I wasn't a career politician."

Mr Hooton says Mr Key is "leaves the prime ministership and politics exactly as he entered it: on his own terms."

POSTSCRIPT: Peters departs from tradition and attacks John Key

Labour Party leader Andrew Little was quick to offer congratulations to John Key as he wrapped up his political career:

John Key has served New Zealand generously and with dedication. I wish him and his family the best for the future.

— Andrew Little (@AndrewLittleMP) December 5, 2016

But Winston Peters defied tradition by eschewing any positive comments in favour of a statement saying that Mr Key was in fact standing down because the economy is in worse shape than he makes out.